"Combating Negative Publicity: Sub-Prime Under Attack" On December 8th Dateline NBC aired a program entitled "Too broke to buy a car?" and proceeded to again give customers the negative side of special finance. While watching this show and later reading the transcript it was apparent that NBC only chose to focus on the "Buy Here- Pay Here" used car lots that appeared to take advantage of innocent customers. At no point did I see interviews with franchised dealers who operate first class special finance departments. The problem with this type of journalism is that the consumer now believes all dealerships are in this group and walks into the store with a defensive attitude as opposed to the right attitude about re-establishing credit. Dealers are now forced to take action to insure that customers understand the facts surrounding sub-prime financing and it's benefits. I have compiled a list of items that should be reviewed by senior management that will not only combat this information and perception but also make selling to the special finance customer easier.

Review the entire transcript of the Dateline NBC show. It can be obtained over the Internet at http://www.msnbc.com/news/221470.asp. Once the material is received pay close attention to the areas involving legal issues. Training should be conducted to educate staff members on how to overcome customer objections that may arise from this news show. Training is more important now than ever before. Customers, lenders and laws are changing rapidly in the sub-prime arena and dealerships need solid training programs. Having spent the past 5 years training dealerships in the area of sub-prime it is apparent that in most cases senior management does not understand the structure of sub-prime and does not support the special finance manager. Successful dealerships start education at the top and continue to make adjustments in order that the department functions properly. Accountability- Staff members must be held accountable for all facets of the business and customer satisfaction. When staff members explain the transaction properly and follow up with customers after delivery the results are positive and referral business is very easy to obtain. Senior management must insist on complete customer satisfaction for sub-prime in order to maintain the professional image of the dealership. Lender selection should be taken seriously in sub-prime. Many lenders have hidden stipulations on loans that require dealers and customers to produce unnecessary paperwork plus charge higher than normal interest rates. When selecting lenders pay close attention to the interest rate as compared to other lenders who buy the same level of loans. If the rate is excessive be aware that the customer may leave the dealership with a negative opinion of the finance department that could have been avoided by placing the loan with a lender who charges a lower rate. Remember that the interest rate is normally based on the credit quality of each customer by national lenders. Many brokers and sub-originators increase the rate in order to make additional profit. Dealers should compare underwriting guidelines; interest rates and discounts before signing up with new lenders. In cases where lenders allow dealership rate participation dealers should set guidelines for rates charged by the special finance department. Vehicles should be properly reconditioned and ready for delivery. Customers who take delivery of vehicles that have numerous problems not only complain they also find reasons to seek legal advise or not pay the monthly payments. In either case the dealer looses! Lawyers love to take average customers to court against franchise dealers because the success rate is very high. On the other hand lenders who receive numerous repossessions from one dealer will terminate the agreement causing dealers to loose good source for customer loans. All vehicles should be delivered properly! This means that someone should explain the equipment, go over all paperwork, introduce customer to the service department and conduct follow up calls within 3 days. Advertising should be complete and accurate. If you use automated 800 services do not imply that the service has live operators. Make sure the advertising explains what qualifications are needed for special finance, i.e.; proof of income, time on job, residence, discharged bankruptcies and other necessary stipulations. Do not try to attract all customers regardless of credit unless you have lenders who will approve this type of loan. In other words if you only have "C" lenders do not advertise for customers with "D" or buy-here pay here credit ratings! In closing I have a few comments and questions for the writers who scripted the Dateline show. Have you not heard of payment caps based on income? Who was the person from a finance company that claims customers could be raised $100 per month or excessive products could be added on the back end? Apparently this executive has no knowledge of the national lenders that do business with franchised dealers or they would have known it is not possible under lender guidelines. As for the industry pioneer, Doc Watson, who is this person? Negative publicity can often be turned into a positive by understanding and researching the information. Franchised dealers can use this show to educate consumers why it is important to do business with established companies who sell quality vehicles at reasonable prices and arrange financing for credit impaired customers that will allow them to re-establish credit and enjoy good transportation! Good Selling!