I’m dealing with the “bad credit conundrum”. When customers tell us they have bad credit, should we ask them to complete an online credit application to save time, or should we just bring them in? I’ve asked my team to come to a consensus. BDC agents say it would be easier to just invite them in, but my F&I team and sales managers say they should be qualified first. I’d love your thoughts and Merry Christmas. I read all of your blogs.
This is a great question, and a common one. I can certainly give my $.02 regarding credit challenged customers as I sectioned off a part of my department to be a sub-prime BDC while in retail. We were even buying sub-prime leads so our process had to be defined.
Regardless of economic climate shifts, I will state that I never sold a sub-prime customer that didn’t show up at the dealership.
Here are some questions and answers that will let you understand my philosophy.
- Are all credit challenged customers created equal? No.
- Are many of them incapable of buying/financing a vehicle at that time? Yes, of course.
- Have I seen instances where people in bad financial positions were able to come up with money down or cosigners? Absolutely.
- Have miracles happened where a bank got a little loose and bought deep on a customer they normally don’t? Of course.
- We can sit back and pre-determine who can afford a car and who can’t. That is easy.
- Will some waste your time or that of your salespeople? Yes. (But what else does your staff do all day?)
- Will bringing some in that we know have an uphill battle waste their time. Yes. Sadly.
- Is it possible your F&I managers and sales managers want only pre-qualified candidates in-store because it makes their job easier, and not because it is best for the client? More than likely, yes.
- If your F&I and sales managers had a credit app on every client before coming into the store, might they find reasons to have them not visit? You bet your butt they would. (Judging people isn’t the best way to run a retail organization.)
We still live in a world where people get attached to vehicles and find a way to come up with more money, and we still live in a world where people need transportation regardless of the size of their paycheck. Give them that chance by inviting them in to have all avenues to a vehicle purchase explored.
For subprime customers, realize you aren’t only selling a vehicle. Sometimes, you’re selling them dignity. The dignity to not have to take public transportation to work, and the ability to hold their head up high by owning something of value to call their own. Every client deserves the chance to find a vehicle that is right for them. More often than not, it requires a trip to a dealership for them to make that vehicle discovery.
Hope that helps.