Auto Dealers Seeking Indirect Financing: Start Here
By: Web Finance Direct
In today’s market, the ability to offer financing options is essential for maintaining a successful auto dealership. This has become an increasingly valued selling point for consumers, and if you don’t offer some sort of financing—whether that’s direct dealer financing or indirect financing—you’re likely to lose to your competitors who do.
Beyond staying competitive, what are the other benefits of securing financing options for your dealership? And how do you go about doing this? Here’s what you need to know.
The Benefits of Indirect Financing for Dealers
As we mentioned before, financing options are a must-have for any auto dealership that wants to stay competitive. Indirect financing is an excellent solution for independent dealers who may lack the resources to offer in-house dealer financing but still want to offer lending services to customers. Here are some of the perceived benefits of expanding your lending options through indirect financing.
Reduce Overhead Costs
By offering indirect lending, auto dealers are able to keep costs low by outsourcing finance and insurance (F&I) services. In this financing model, a specialized third party handles the financing process. This gives the independent dealer the bandwidth they need to focus on converting sales, while the lending company handles matching customers with a lender and facilitating service contracts and insurance packages. Not only are you saving money by not paying the overhead associated with employing in-house F&I services, but you’re also saving time because someone else does this for you. All of this while still offering the same (if not better) services a larger dealer might offer through dealer financing.
Better Customer Service
Indirect financing allows dealers to focus on the things most important to them. Among these is providing top-notch service to customers. Outsourcing your F&I needs gives you the extra wiggle room you need to improve your sales process and efficiently run your dealership. Using an indirect financing company also benefits your customers because these companies specialize in finding the best financing options for buyers. By streamlining the process, you’re able to provide a higher quality experience and help more customers in less time.
Offer Better Rates
Indirect financing companies are extremely connected when it comes to lending networks. The relationships that indirect financing companies build and maintain with lending partners often allow them to get better rates and faster application approval. This is something that would be much more difficult for a dealer financing its own loans.
Serve a Broader Consumer Base
In addition to accessing better rates, dealers that use indirect financing are also able to serve a wider range of customers. Because indirect lending companies are so ingrained in their network of lenders, they’re able to provide lending options to even those customers who may have bad credit. This is a huge advantage when it comes to serving customers who are unable to get a bank loan. It also reflects well on your dealership because you won’t be discriminating against buyers based on their FICO score or credit history.
To discover more of the advantages of indirect financing for businesses of all types, check out our list of benefits here.
How to Decide on an Indirect Financing Service
There are tons of financing companies out there that offer indirect financing for car dealerships. It’s essential that you narrow down your options to those that understand the unique challenges of your business and best suit your dealership’s needs. Here are some of the things to look out for when choosing a service.
A Good Track Record with Profitability
As we hinted at earlier, indirect financing can be helpful in driving profits while reducing costs. This isn’t always the case, though. Many financing services focus on their own profits and take a substantially larger share of profit than the auto dealers they serve. This often results from the financing service overlooking options that are more profitable for the dealer client in favor of loans that they know the customer will accept right away. Financing services with a bigger emphasis on profitability for the client tend to be more trusted by dealers. When choosing an indirect financing option, pay attention to what clients have to say and seek out cases studies that demonstrate how businesses have profited more by using their services.
A Variety of Products and Services
The best indirect financing services typically offer a wide range of products and services within their system. Seek out companies that advertise full F&I offerings. These can include financing, competitive rates, back-end products (such as warranties and insurance), lending programs, and customer service. The benefits of a full-service financing company are multi-faceted. On one hand, the dealers benefit by having the ability to be competitive, offer multiple financing options, and provide a solution to more customers. On the other end, customers benefit by getting a streamlined process for loans and a better deal at the end of the day on their purchases. It’s a win-win situation for everybody involved.
Prime and Subprime Options
Dealers that are able to direct customers to both prime and subprime loan options will thrive. This goes back to our earlier point about serving a broader customer base. Having both prime and subprime options available keeps your dealership flexible and able to serve more customers but also able to more easily adapt to changing markets. By choosing a lender that offers both, you set your business up to withstand the test of time.
Web Finance Direct Checks the Boxes
Ready to take your independent dealership to the next level? Web Finance Direct offers the products and services you need to give your customers financing options that work for them. Expand your network of lenders, access competitive rates and terms, discover our back-end product offerings, and increase your bottom line.
If you’re an auto dealer in need of premium F&I services, Web Finance Direct is the company you can trust. Want to learn more? Connect with us today!