Picking out and financing a vehicle for the first time can be a tricky task, but one used-car dealership in Michigan is rolling out a program to make the process a little less daunting.
Viers Auto Sales in Lapeer, Mich., has teamed up with a local credit union to run a crash course in auto financing for young, first-time buyers.
The First Time Auto Buyers Program, which is headed by Viers' sales and finance manager, Chris Babcock, aims to help young people leave the lot with more manageable payments and to create a pool of long-term customers.
"We used to always have young adults come in without a co-signer or without a sizable down payment, and in those cases, all we could offer were these unfavorable interest rates," he said. "We were just setting them up to fail."
Babcock teaches a "buyer's training" course, which can be taken in a classroom or online, with Amy Ford, Team One Credit Union's community relations representative in Saginaw, Mich.
Students learn about building credit and financial responsibility and are even required to prepare a written budget. At the end of the course, the potential buyers are tested on their ability to manage the loan they might qualify for.
Those who complete the course must meet five underwriting requirements to qualify for a low-interest rate auto loan, including job and income minimums, according to the course brochure on the viersautosales.com website. (See box, right.)
"It's not easy, but it's not supposed to be," Ford said of the final exam and qualification process. The students are required to "show a real sense of responsibility as well as an understanding of just how serious it is to finance a vehicle."
Babcock and his team encourage course participants to take things slowly. Sales representatives cannot allow their customers to start and finish the course in one day, and younger buyers are asked to bring their parents to the class.
"We've gotten the most overwhelming positive feedback from the parents so far," Babcock said. "Getting them involved really keeps the ball rolling."
Viers Auto and Team One Credit Union launched the buyer's training course on a pilot basis in September.
"It's a little too early to tell how successful this will end up being, but I can say that we have had absolutely zero delinquencies since the program went live on Sept. 1," Babcock said.
As far as building a new pool of long-term customers goes, he said the effects of the program already are apparent.
"Starting in about the middle of January, the referrals really started picking up," he said. "We're earning the trust of these young buyers, of their parents, of their siblings and of their friends. That's a huge deal for us."
If the 18- to 24-month pilot proves successful, Team One will consider rolling it out at other dealerships in the area, but only at select stores. The partnership with the credit union works only if a dealer has an honest staff to run the show, Babcock said.
"The credit union has given us a lot of authority here," he said. "You need a team you can trust."