null What Franchise Dealers Should Know about Subprime Financing
While offering subprime auto financing may not seem necessary for
your franchise car dealership, it can mean more for your car sales
than you may give it credit for—pun fully intended. If your dealership
currently does not offer subprime financing, you’re turning away
potential car buyers who may not have the credit scores necessary to
qualify for traditional vehicle financing. In other words, you’re
losing car sales.
There is a substantial number of U.S. adults who have low credit
scores. The most recent research from Experian suggests that
approximately 34 percent of consumers fell into the subprime FICO®
credit score range in 2019. Millennials, who currently represent America's largest generation of adults, are
experiencing higher credit denial rates than older generations.
According to a Bankrate.com survey of 2,500 U.S. adults, 58 percent of
millennials have been denied approval for credit cards and/or car
loans because of having low credit scores. Since there is an entire
market of credit-challenged car buyers who are in need of credit
approval, franchise car dealers may want to consider offering subprime
auto financing for consumers who have bad credit or no credit established.
Understanding Subprime Auto Financing
Subprime auto financing is credit available to car buyers whose
credit scores are in the non-prime or subprime ranges. According to
Experian, FICO® credit scores in this range generally fall between 580
and 669. Because franchise dealers typically work with car buyers who
have prime and super-prime credit scores (670 to 850), there is a
common misconception that they can only finance older, high-mileage
vehicles through a subprime auto finance company.
That is a false assumption. In fact, car dealers that are enrolled in
Credit Acceptance’s subprime auto finance programs are able to finance
nearly any vehicle through our program, including new cars.
Advantages of Offering Subprime Auto Financing
On top of being able to finance any age, make or model vehicle,
franchise car dealers that offer subprime auto financing through our
program also have the ability to offer credit approval to consumers
who may not qualify for traditional vehicle financing. This gives you
the ability to approve every potential car buyer who walks into your
dealership. A few additional advantages of working with a subprime
finance company like Credit Acceptance include:
Competitive advances: Car dealers enrolled in our auto
finance programs receive upfront advances, which can be used to
cover business expenses and/or invest in more inventory.
Same-day funding with eContracting: With eContracting, car
dealers enrolled in the Credit Acceptance program can receive
same-day funding. Processing begins as soon as the contract package
and funding proofs are electronically submitted and approved by
Seamless integration with Dealertrack®, RouteOne® and other lead
aggregators: Credit Acceptance is integrated with a number of
lead aggregators, helping to maximize efficiency by reducing double
entry and facilitating a seamless car-buying experience for
consumers with bad credit or no credit.
If you’re a franchise car dealer looking to expand your customer base
and increase your car sales, Credit Acceptance can help. Sign up on
a Dealer page to learn more about our subprime auto finance programs.