How Adding More Finance Sources Helps Buyers Now More Than Ever
This past September 22nd the Fed raised the prime lending rate another .75%. This has sent further shockwaves through the financial industry and some say it may spur a recession in the first part of 2023.
No shortage of doom & gloom, right?
Auto finance has taken a huge hit with originations down YOY with major lenders and indications that delinquencies are already starting to rise. More car buyers are being priced out of the market for not only the car itself but for the payments necessary to make it happen at all.
For dealerships, though, the rise in rates across the board has not been all bad…
Finance reserve, which accounts for much of the PVR on a deal, has risen and is helping to contribute to record profits of over $2499 average per transaction in early ‘22.. Motivated buyers and higher base rates have combined for more opportunities for extra profit even at a time when the quantity of deals is lower due to the inventory shortages.
Ah…there’s the silver lining..
But for the buyers that have challenged credit that fall into ‘near prime’ or subprime, rising rates present a bigger problem. For those dealerships trying to help buyers at a different level, it’s important to have a deep variety of lenders who can help.
More Lenders - Needed Now More Than Ever
Dealerships that have limited themselves to captives or a handful of local area banks or credit unions may have been finding themselves scrambling to find the best deals for near-prime or subprime borrowers. For continued success, F&I departments are better off casting as wide a net as possible to make sure every buyer has a chance at a manageable rate.
More choices, more profit.
The reality is that there are plenty of auto finance companies that may not have moved their own rates as much as others and having a larger range of sources to choose from better serves your buyers and helps sell more cars.
Here’s the ‘Net’ You Need
TruFinance, powered by TruWarranty, helps make casting that wider net easier by connecting your store to more indirect financing sources for your customers.
For a wide range of borrowers, you will have a host of indirect finance companies ready to help.
All within one F&I menu, you get:
- Faster pre-offers and blazing-fast funding
- Up to 125% LTV of NADA retail plus room for VSC and GAP (bonus!)
- Aggressive allowances for ancillary products (double bonus!)
- And immediate integration with major DMS platforms
And here’s a few key differentiators:
- Expansive integrations with vendors/products across the previously siloed auto purchase lifecycle.
- Superior workflow and UX in an industry that still does things manually.
- Normalized data and confidence in collateral to reduce fraud and increase trust.
- End-to-end financial solution primed for ‘no-touch’ buying environment providing investment opportunities in a zero yield environment.
Today’s dealership challenges are many...between navigating a post-pandemic environment, rising prices for new and used cars, and the chip shortage...it’s a lot.
But having more finance options in-house brings a little bit of control back into F&I by being able to better help borrowers that are being squeezed by higher rates.. And that can be a bright spot for you and your customer.
We would love to talk with you about how TruFinance can be launched at your store and how we can flip the switch to pair up TruVSC and TruMenu for a seamless profit powerhouse for F&I. Give us a shout today…
In light of the latest moves from the FTC regarding F&I products and what is or is not looked at as a ‘beneficial’ product to sell, dealerships may have to polish their sales skills a bit to make sure customers see the value in every ancillary product you offer.
When times are good as they are now in the market, this is the best time for F&I directors to take the pulse of the department