EP 9:05 The Fundamental Guide to Special Finance: Inventory, Banks, and More!

In this insightful episode of "Academy Class Turn Podcast," host Sean V. Bradley, the President of Dealer Synergy and creator of the Millionaire Car Salesman Group, discusses the intricacies of special finance with Bob Harwood, VP of Sales at Interactive Financial, and Cody Carter, a finance expert. The focus is on how dealerships can efficiently manage subprime leads, optimize their special finance departments, and increase their profitability by understanding and catering to a segment of the market that is often overlooked but highly lucrative.   The episode delves into the fundamentals of special finance, defining it comprehensively and exploring the strategies dealerships can use to cater to customers with bad or no credit. With the help of detailed data and firsthand experiences, Bob and Cody shed light on the importance of having the right inventory, establishing robust relationships with a diverse range of lenders, and the significance of a well-trained and specialized team. They also discuss the high profitability of special finance deals, highlighting real-world examples and actionable insights.   Key Takeaways Understanding Special Finance: Bob Harwood explains that special finance includes subprime, deep subprime, ghosts, and ITINs, comprising about a third of the market according to Experian. Profitability: Special finance deals are often back-end heavy due to higher interest rates and ancillary product sales, leading to significantly higher average gross profits per vehicle. Inventory Strategy: Having the right inventory that books out well is crucial. Dealerships should focus on vehicles that fit subprime customers' budgets and financial capabilities. Team Training: A dedicated team well-versed in special finance can greatly enhance customer service and improve closing rates. This includes specialized training for BDC agents and finance managers. Proactive Lead Generation: Using targeted marketing strategies like online leads, radio, and direct mail can help dealerships proactively attract and convert special finance customers without tarnishing their brand.     About Bob Harwood Bob Harwood is the Vice President of Sales at Interactive Financial. With a career spanning over 25 years in special finance, Bob has been a prominent figure in the automotive finance industry. He has been with Interactive Financial since 2004 and has been instrumental in training thousands of professionals and aiding dealerships in processing millions of applications leading to substantial car sales.   About Cody Carter Cody Carter is acknowledged as one of the industry's leading finance experts and the #1 Car Salesman in the World. Known for his exceptional skills in leasing and handling high-credit scores, Cody consistently outperforms many traditional dealership finance managers. His expertise is particularly noted in his ability to navigate complex finance scenarios and cultivate strong relationships with credit unions and banks.     Resources Dealer Synergy & Bradley On Demand: The automotive industry’s #1 training, tracking, testing, and certification platform and consulting & accountability firm. The Millionaire Car Salesman Podcast: is the #1 resource for automotive sales professionals, managers, and owners.  Also, join The Millionaire Car Salesman Facebook Group today! Win the Game of Googleopoly: Unlocking the secret strategy of search engines.     The Millionaire Car Salesman Podcast is Proudly Sponsored By: Dealer Synergy: The #1 Automotive Sales Training, Consulting, and Accountability Firm in the Automotive Industry! We have been building Internet Departments and BDCs for over two decades! It is this experience that has allowed us to develop the absolute best automotive Internet Sales, BDC, and CRM solutions for car dealerships. We have created the most effective training programs and processes. Phone scripts and rebuttals are our specialties, while CRM action plans, strategies, and templates are our expertise! Dealer Synergy will take both your tools and your people to the next level. Bradley On Demand: Automotive Sales Industry’s #1 Interactive Training, Tracking, Testing and Certification Platform. With over 7,500 training modules, our platform has everything you and your dealership need to sell more cars, more often and more profitably! Money Mind Mapp (M3): Visit MoneyMindMapp.com for help in revolutionizing your business to help you sell more cars by tracking, projecting, and forecasting your personal sales goals!     The Secret to Winning Big in Special Finance: Insights from Industry Leaders Unlocking the Secrets of Special Finance Special finance, including bad credit, no credit, and subprime loans, represents a significant and often overlooked opportunity in the automotive industry. This concept can be incredibly lucrative if approached with the right strategies, tools, and mindset. Ease into the nuanced world of special finance with the insights from automotive experts Sean V. Bradley and Bob Harwood, as they reveal compelling tactics to maximize profits and help more customers drive away happy. Key Takeaways: Diverse Lending Options: Understanding the importance of varied lenders is crucial to cater to different special finance needs. Customized Processes: Having tailored processes and CRM strategies significantly boosts success in the special finance market. Specialized Training: Proper training and dedicated roles for handling special finance customers can drive significant profits and customer loyalty.   Understanding the Importance of Special Finance Why Special Finance Matters Special finance isn't just about selling cars to people with bad credit; it's about tapping into a massive, often underserved segment of the market. As Bob Harwood emphasizes, "22% of U.S. consumers have a FICO score below 620, and another 12% have no credit file at all." That means about a third of the population falls into the special finance category. This isn't just an afterthought; it's a comprehensive business strategy that can drive significant profits. Sean V. Bradley, a seasoned expert in automotive dealership strategies, supports this notion. Talking about his experience at Pine Belt, where they sold nearly 100 subprime units a month, he illustrates the potential of a well-implemented special finance strategy. "Instead of seeing subprime as a headache, view it as a massive profit center." When it comes to high-line stores like Lincoln or BMW, Harwood asserts, "Any dealership can do well with subprime if there's a top-down commitment." Special finance customers aren't just confined to budget models but can also aspire for high-end brands, provided they find the right dealership to meet their needs.   Building a Proactive Special Finance Strategy Essential Components for Success To truly excel in special finance, dealerships must adopt a proactive approach rather than relying solely on walk-ins or random opportunities. Harwood highlights that "if you're not proactively soliciting the business and it's something you want to do, you're just not going to get those folks as walk-ins." Inventory Management: Having the right inventory is vital. “If you don’t have cars that book out, they’re not going to be able to get funding or make any money on it,” explains Bradley. Vehicles that retail for $25,000 or less and book out well in terms of value are most suitable for subprime deals. This ensures dealers can keep the payments within an affordable range for customers, typically around $500 a month. Funding and Financial Partnerships: Diversifying your lender base is equally crucial. Harwood suggests a broad range of lending partnerships, from full-spectrum lenders like Capital One to niche ones catering to specific borrower profiles. "Understanding the lender’s program is essential, as it helps in effectively structuring the deals," he notes. Customer Satisfaction: A tailored process for special finance deals is indispensable. Harwood points out, “If the customer feels respected and gets a deal that fits their needs, you have a customer for life.” Special finance customers, though often seen as high-risk, can be highly loyal if treated with respect and empathy.   Implementing Tailored Processes and Training The Power of Customized CRM Strategies A well-implemented Customer Relationship Management (CRM) strategy tailored for special finance can make all the difference. "Dealerships should have a defined process outlining each stage of the sales process,” advises Bradley. The automation and AI in CRM systems should be customized to cater specifically to special finance customers. The experience at Pine Belt further solidifies this approach. They used a pseudonym, Auto Credit Approved, to keep the special finance branding separate from the main dealership branding. This ensured the high-line brand of Pine Belt Cadillac remained untarnished while still capturing the subprime market effectively. Training the Right People: The people handling special finance customers should be well-versed in credit issues and financial options. Bradley underscores the value of specialized training: "Properly training and having a dedicated role for special finance makes a significant impact on profitability and customer satisfaction." Effective Communication: Follow-up communication strategies should reflect the urgency and shorter buying cycle of special finance customers. Bradley mentions, "50% of special finance buyers end up purchasing within 30 to 90 days from the time they first start looking."   Maximizing Leads and Opportunities Generating High-Quality Leads Having the right opportunities aligns closely with success in special finance. Harwood suggests a mixed approach depending on the dealership’s capability and branding strategy. Traditional Media: "TV, radio, and direct mail can drive a lot of subprime traffic," he says. These methods work best for dealerships willing to accommodate high traffic and sort through many leads. Online Marketing: For those concerned about brand image, online lead generation through third-party providers like Carloan.com offers anonymity and effectively filters leads. "Using a company like ours, we generate the traffic without the dealership’s name ever being attached," Harwood affirms. Referrals and Social Proof: Continuous engagement with existing customers can also drive more special finance leads. Creating satisfied, loyal customers who spread the word about the dealership's ability to handle special finance needs can generate invaluable referrals.     The nuances of special finance are intricate but incredibly rewarding for dealerships willing to adopt a proactive, customer-centric approach. Diverse funding options, customized processes, and specialized training can significantly amplify success. By creating a robust special finance strategy, dealerships can not only increase their profitability but also build long-term customer loyalty. This deep dive into the world of special finance reveals untapped opportunities and strategies that any forward-thinking dealership can implement to drive success and customer satisfaction. Happy selling!