Subprime Should Be Separate

Dealers should establish a separate special-finance department to maximize subprime lending success, says dealer CPA Jeffrey Jensen, of Murray, UT. Co-mingling subprime with prime customers is time-consuming and can be a turnoff for sensitive shoppers, says Jensen, whose firm, Jensen & Keddington, P.C., is a member of the AutoCPA Group. Customers should perceive the subprime office as the mecca of

Dealers should establish a separate special-finance department to maximize subprime lending success, says dealer CPA Jeffrey Jensen, of Murray, UT.

“Co-mingling subprime with prime customers is time-consuming and can be a turnoff for sensitive shoppers,” says Jensen, whose firm, Jensen & Keddington, P.C., is a member of the AutoCPA Group.

“Customers should perceive the subprime office as the mecca of credit solutions and the starting point for a secure future,” says Jensen.

He adds: “To be most successful, dealers should make it possible for F&I managers in the special finance office to be 100% committed to it.”

Noting that subprime lending is growing and lucrative, Jensen urges managers and dealership principals to find lenders who are committed to the special-finance business “for the long haul.” Like the most successful subprime dealers, they should have “people devoted solely to the subprime product.”

Jensen offers these other pointers:

  • Have specific policies and procedures on how to handle the nonprime customer.
  • Determine as quickly as possible that shoppers are subprime on credit scores so they can be directed to the special finance office without wasting time in the conventional F&I process.
  • Stock vehicles that are specifically tailored for subprime customers — both in types and prices.
  • Advertise to subprime customers directly — using media that reach that market.

“It has been proven time and time again that the dedicated inventory will result in greater sales than trying to find the right vehicles out of the dealership's regular inventory,” says Jensen.

He says one of his largest clients set up a separate subprime facility and inventory that now averages about 1,000 deals a month.

His firm services about 50 Western dealers including the 35-store Larry H. Miller Group in Utah.

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