Sourcing Hard-to-Find Special Finance Inventory

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Shawn FosterExecutive TrainerSourcing Winning SF Inventory5 Keys to Success

5 Keys to Success1. Understand your data2. Determine your needs3. Know your lenders4. Develop a strategy5. Use discipline

What Can You Sell?Historical dataWhat is selling from the dealership Reconditioning abilities What can you get done effectively?Customer demographics. What is the makeup of the customer in your store? Credit, income, market demands?

Sample Dealer DemographicsScore# Bureaus% of Bureaus# Delivered% of Burs. in range deliveredZero Score456%49%1 48416922%117%485 - 5397510%34%540 - 61913818%1914%620 - 6608311%1720%Military344%515%Open Chap 7274%00%Prime (661+)24933%5924%Total759100%11816%

Opportunities Stand OutScore# Bureaus% of Bureaus# Delivered% of Burs. in range deliveredZero Score456%49%1 48416922%117%485 - 5397510%34%540 - 61913818%1914%620 - 6608311%1720%Military*344%515%Open Chap 7*274%00%Prime (661+)24933%5924%Total759100%11816%

Opportunities Stand OutScore# Bureaus% of Bureaus# DeliveredAvailable Inventory (units)Zero Score459%431 48416933%113485 - 5397515%32540 - 61913827%1911620 - 6608316%1738Military344%53*Open Chap 7274%06*Prime (661+)24933%5991Total759100%118157

Subprime Credit Tiers(example based on SF company data)Special Finance TiersFinanceCompaniesCredit Score, Income & Other Customer TraitsGeneral Term and APR RangeMonthly Payment AverageTier 4

Tier 3

Tier 2Tier 1CAC/WestlakeGO / UACSantander/GLS / ACA

Chase/WellsExeter / CPSGM FinancialCapital One

GM FinancialCapital OneAlly / ChaseWells FargoSantander450 540Low and hard to prove incomeMissing docs

525 575$2,500 - $3,000 Short job or residence

540 610$3,500 - $4,000

580 660$4,500 - $5,00045 months25% APR

62 months21% APR

66 months16% APR

69 months11% APR$300 - $330

$375 $425

$400 - $450


The ProblemsUnicorns

High reconditioning

Everyone wants them

Usually trades, not purchases

What are They?ACV usually less than 10K

4-9 model years old

Typically serves the bottom tier programs

Used Vehicle Inventory by TiersTier/Niche % of StockUnitsMax. AgeMax. ACVMax. MilesAvg.MonthlyPaymentNo Score9%49$11,000 90,000$359Tier 442%179$11,500 125,000$400Tier 315%76$12,800 80,000$407Tier 227%135$14,000 75,000$403Tier 116%84$15,000 50,000$397Open Ch 7(part of T3)4%35$12,500 70,000$419Military(part of T3)4%36$13,500 75,000$403

Pre-Owned Subprime Inventory and Where to Buy itTierVehiclesSourceT1 (best non-prime credit)Current year used (like-invoice), near luxury, well equipped, upper end rental units, off-lease units.Physical & online auctions, off-brand franchise dealers vehicles.T21 3 year old rental cars, less expensive current year (like-invoice), off-lease, fleet returns (PHH, ARI).Physical & online auctions (fleet & lease lanes), GSA, rental car companies, off-brand franchise dealer vehicles, street purchases.T3Less expensive rental cars & fleet returns, new (or late model) trade-ins.Physical auctions (fleet & lease lanes), GSA, CarMax, rental car companies, off-brand franchise dealer vehicles, street purchases.T4 (worst sub-prime credit)Older, higher mileage units most often taken in trade, inexpensive rental cars.Units taken as trade-ins, street purchases, franchise dealers, CarMax and GSA.

What Should I Buy?EverythingCars with slightly higher mileageRental carsLease turn ins, ReposPrivate Owners

Higher Mileage UnitsUnderstand where the finance company limits are and use discipline.

Many subprime finance companies are going 66+ months on vehicles under 70,000 miles.

These units are great payment cars.

Rental UnitsWith the average amount to finance in Tier 3 at $16,798, rental units are a great source for this customer.

Newer car with slightly higher mileage

Lease Returns and ReposMay run later in the sale

Often have low floor amounts and are there to go away.

Public boardsAppraisal eventsBuy events instead of sale eventsPrivate Sellers, Estate Sales, Retirement centersHousing complexes




Physical auctions3rd party auctions(list some here)?

UCM/Inventory DisconnectUsing tools vAuto/AAX/Redbumper and MMR.Often does not work lease/repo lanes.Often does not buy units with slightly higher mileage.Does NOT know what the need is.

If any of these describe your UCM, your used vehicle profits are lower than they should be.

Start looking

Start asking

Start winning

(In the Mirror)

In Your Store (Dealership)

Employee ProgramsSignageService DriveData Mining

Dealer Groups

EmployeesEstablish a buying program for the employees referrals.Friends, family, others.$300 - $400 fee attached to vehicleHigh Gross Deals when sold30 employees, 1 car per year, $100,000 in found gross profit

Service DriveConsider putting a salesperson on the drive.Customers with high ticket repairs on older carOffer free appraisals while the car is in the shop.Spiff your service personnel to spot potential customers who may trade.



Cars That Can Be FinancedUnderstand your finance company demographicsUse a spreadsheet to isolate opportunitiesLearn the deal killers or knock out carsBehind NADA Clean Trade (target is $500 or more after service on the lot)

How Can You Make It Easier?

SummaryUnderstand your customersUnderstand your inventoryUnderstand your finance companiesHave a strategyUse discipline

Thank You. For More Information: Visit Call our office @ 877-811-8107

Sheet1Adjustable Inventory Purchasing GuideMileage79.9K69.9K59.9K49.9KBuy for >$1,200 under TradePmt Term2436424854606672Buy for >$1,200 to $7502252,1003,4004,0004,6005,0005,5005,900Avg BookBuy for $1,200