To help build a stable of loyal customers, put in extra effort for customers with poor credit scores who want to lease, dealership insiders advise.
During the past year or so, banks and other lenders have made lease financing for those with subprime credit scores easier.
"I remember a time when anyone with a [FICO] score that wasn't 660 or better wouldn't even [have lenders] talk about financing a lease," said Chris Bell, finance manager at New Jersey dealership Freehold Buick-GMC, where about 70 percent of new-car deals are leases. "Times have changed. As long as the deal makes sense, the lenders allow it. And it's a win-win for the customer and for us."
Certainly, any nonprime financing deal has more risk and tends to be less profitable than a prime deal. But savvy F&I professionals who know their customer bases can use that knowledge to analyze financial histories and determine whether they can make a solid financing deal.
"A lot of this is asking questions to get the customer's story," said Stephanie Cooper, a finance manager at Timbrook Automotive in Cumberland, Md. "You have to look at customers' backgrounds, listen to them and decide what deal structure will get approved. A 19-year-old who has no credit history and wants to buy a $40,000 truck is different from someone who is struggling through a difficult financial patch and is trying to keep their job and family together. You have to consider the human element."
That's what Cooper did recently when a disabled military veteran with poor credit came to the dealership hoping to replace her 10-year-old Jeep.
"I told her just be patient with me and we'll get it," said Cooper, who took two weeks to close the financing. "She has a 15 percent interest rate, but she also has another chance. She went into another dealership, and they pulled her score and sent her on her way" rather than spend extra time working on a deal that wouldn't net much profit. But "working with this woman is the right thing to do."