Although special financing in dealerships has continued to grow for the past decade, many dealers find themselves struggling to maintain this valuable profit center. With bankruptcies reaching new heights and the price of vehicles in the tens of thousands, proactive dealerships have a tremendous opportunity to grow market share, increase gross profit, and build a loyal base of customers with a concentrated focus on their special finance department. Here are a few tips:

Start with the right business plan

Outline all areas of the department for next year, including inventory, advertising, lender relationships, and funding, staffing, and growth strategies. Commitment and accountability to your well-thought out plan are keys to success and profitability.

Select the right people

Hire a special finance manager who is detail-oriented, honest, and great with people. He or she must interview potential lenders to find the best three to four programs for your dealership, and conduct professional credit interviews with all your special finance customers. It is imperative you assemble proper funding packages that are paid quickly, as funding is the number one reason why special finance departments fail. Developing solid relationships with your lenders and customers sets the foundation for higher credit approvals, referrals from satisfied customers, and loan packages that are paid quickly.

Send the right message

Make sure your inventory has high book and term values that customers want, and then never stop asking for the business. Start by calling the references listed on each credit application to prospect for new customers. And although you will want to start slow, advertise to the type of customers who can obtain financing. Small, attractive space ads, direct mail, and electronic media work best.

Finding the Right Prospects

To effectively and cost-efficiently get your message in front of the right type of buyers, you should purchase high-quality sales leads and mailing lists from a reputable source. As a good rule of thumb, start by analyzing and profiling your current customers so you can locate new customers like them. Below are some ways to zero-in on your best sales prospects. Select leads by:

·- Type of dwelling: Renters may have limited disposable income and may represent good candidates for special terms. Homeowners-especially new homeowners-have gone through extensive financial and credit reviews, and potentially stretch themselves pretty thin. They also represent excellent prospects for special financing.

·- Geography: Some communities have high percentages of residents who fall into the middle class. Other communities may have a large number of low-income households or upper middle class. You may want to choose your best prospects by zip code, by city, by state, or by telephone area code.

·- Demographics: It is possible to make broad assumptions of buying power based on age and lifestyle. Retirees, for example, may need special financing terms because of their fixed income. Recent college grads, on the other hand, may need help in building an exemplary credit rating.

·- Financial status: With consumer debt rising so is the number of bankruptcy filers. Owning this particular segment of the market before your competition does is a significant advantage!

Running a prosperous special finance department takes commitment and accountability. However, in todays complex and competitive buying environment, special financing is the right ticket to increased sales and revenue for your dealership.