Those basically good paying customers with a blemish or two on their record from a job loss or foreclosure are having the most difficult time getting financed today.
That's what a panel of franchised dealers told the American Financial Services Association conference here.
"It's the B and C customer we have got to find a lender for," said William Underriner, president of Underriner Motors in Billings, Mont. "These are people who had a challenge in their life over these last two years. There's a lot of people like that."
During the credit crisis, the riskiest customers in the subprime category - with scores below 620 - had the toughest time getting financed. But as the credit markets opened up, the subprime lenders have got the funds to re-enter the subprime market.
"Subprime finance is increasing - those lenders were the first ones to come back," said Brian Leary, finance and insurance director for Larry H. Miller Management of Sandy, Utah.
He agrees that it's the customers with credit scores of 600 to 650 who are now underserved.
The panelists said lenders must look past the score and delve more into such traits as the customer's payment history, length of residence and job longevity.
Lenders should "not focus on the credit score only," said Michelle Primm, managing partner of Cascade Auto Group Ltd., in Cuyahoga Falls, Ohio. "Lenders should buy the customer. They should look at the three C's - character, collateral and capacity."
Leary said advance rates - the amount lenders are willing to fund toward the loan - have improved. More than a year ago, the advance rates tanked and lenders were requiring hefty down payments.
But sometimes the riskiest customers are loaned more money than the customers with just so-so credit. "We're running into situations where the subprime customer gets 135 percent of the invoice price, while the 650 customer is struggling with an advance rate of 105 percent.
"Six of 10 customers are subprime or near-prime," said Leary. "It's really important to have programs for those customers."