Subprime auto lenders for independent dealers can be very important partners for these small businesses, which do not have the benefits of scale or corporate-level partnerships enjoyed by franchise dealers.

There are substantial benefits offered by targeting this segment of the market, and utilizing the right partners can make the process very efficient for dealers, allowing them to concentrate on their core business while generating additional cash flows.

Subprime Auto Lenders for Independent Dealers Widen Your Reach

Subprime auto lenders for independent dealers provide access to higher sales volumes. Subprime loans represent roughly one-quarter of total car loans originated in the United States, so this makes up a meaningful market segment. Creditworthiness can have major impacts on the underwriting process, so institutions might require different expertise to determine the availability and rates for loans across different groups.

Independent dealers can represent an especially strong match for many prospective subprime consumers, but it is unfortunately difficult for small or newly opened independent dealerships to identify and build relationships with the strongest providers of financing for these subprime consumers. This problem is amplified by the higher risk that subprime lenders are more exposed to causing more program changes than their risk adverse peers. During economic downturns, lenders that specialize in subprime can even exit the market which creates a shifting landscape and the need for independent dealerships to have a finance operation with multiple lenders.

Independent dealers are more often smaller-scale organizations, and the relative lack of scale can have major implications for risks to success. Each individual sale represents a much larger proportion of revenue and profits for independent dealers than their larger counterparts, so it is important to maximize every opportunity. Subprime auto lenders for independent dealers can open doors to otherwise untapped market segments.

For dealers that are not using a floorplan, losing a sale can also drastically impact their ability to reinvest in inventory for growth, crippling performance in the future as well as the present. Having the capacity of providing financing to subprime customers can therefore significantly expand the addressable market, especially among dealers that target less affluent consumers.

Subprime Auto Lenders for Independent Dealers Drive Revenues

Outsourcing finance operations to a trusted finance and insurance (F&I) expert can connect independent dealers to the market’s best available lenders in ways that might not be available otherwise. F&I firms bring relationships and clout, the benefit of which are extended to clients, creating opportunities to provide financing to a wider variety of prospective car buyers.

Once a relationship is established with an F&I partner, dealers can apply for financing through their platforms. Those applications will result in decisions from banking partners, which are communicated back to the dealer via the F&I company’s communication channels. After terms are agreed, loan documentation is sent to the lender via the F&I partner and funds are disbursed to the dealer once the loan paperwork and title work are processed.

F&I firms can also offer auxiliary products, such as extended service agreements and GAP plans, which often generate revenues for the dealership.

Independent dealers who would like to build relationships with subprime auto lenders can contact representatives at Vantage Financial to discuss their lending partners that specialize in subprime loans.