Based on a report from Businessweek auto loans were up in the 2nd quarter 5.5% over the same period last year and these loans were not all from car buyers with great credit. In fact they said that nearly 44% of these auto loans were taken by buyers with risky credit. That’s good news for us that are selling cars for a living and trying to pay the bills. Even though the 2nd quarter is history as we would say in the business. The bright spot of the report is that more investors are buying securities backed by subprime auto loans. Market offerings of sub-prime debt are up nearly 51% from the same period in 2011, that’s huge. That means that more car loans will equal more car sales.
For the past 4 years or so credit has been an issue with so many of our customers. There is no question that things have gotten gradually better since it hit bottom in 2008, but the fact that investors are putting money in the market for car buyers with weak credit is great news. You may have already noticed that the lenders your dealership use are buying more car loans and deeper deals than they were in the past and based on what is going on in the market we should continue to see that happen for a while.
More Cars Sales When Your Customers Can Get Loans
Sure we have been selling cars without a problem to buyers with great credit, but they are usually the ones that have done their research and rarely let us make much gross which in turn means a smaller commission. The thought of being able to finance more prospective customers with less than desirable credit can be exactly what we need to get our car salesman income back on track.
I can’t even begin to tell you how many car salesmen and women have been complaining about working with a customer for an hour before you find out that they can buy anything because of credit. Pent up demand and the ability to sell more customers with lower credit scores is a just the ticket for selling more cars.
Later, Fresh Up on the Lot