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Special Finance®

Steering Subprime Leads

October 2009, F&I and Showroom - Feature

by Gregory Arroyo - Also by this author

Tim Parker’s 2001 startup company doesn’t just deliver any type of lead, it delivers financeable subprime leads. F&I sits down with the founder of DealerLink to get his secret.

F&I: Guaranteeing financeable leads is a bold claim.

TP: That’s made possible through an alliance we have with a major financial entity, which provides the scoring mechanism for us. So, if a consumer in a certain ZIP code applies through one of our Websites, we submit him or her for scoring. If he or she meets the criteria based on the score the dealer is looking for, then the customer is delivered to the dealer for processing.

F&I: So what’s your screening criterion?

TP: First, we require a minimum income of $2,000 per month. Frankly, I don’t know of any finance source that’s accepting anything less. We also screen out customers with a repossession within the last 12 months. The third item we screen for are open bankruptcies. Obviously, all of this is contingent on whether the customer answers our screening questions properly. That’s why we encourage a dealer to return the lead if the information provided to us is invalid.

F&I: What else separates you from your competitors?

TP: We currently have in operation more than 500 consumer sites optimized for search terms commonly used by consumers. And everything we do is live and time stamped down to the second when the consumer applies. So, we have never accepted a credit application from a consumer who didn’t grant permission for his or her credit to be pulled.

F&I: Do you work with both independents and franchised dealers?

TP: About 90 percent of our clients are franchised dealers. And if you’re a Ford-Suzuki-Hyundai dealer, we exclude all Ford-Suzuki-Hyundai stores in that marketplace. We also don’t require a 30- or 60-day notice to terminate the program like other providers do, as we will turn you off immediately. We also never charge any signup or monthly fees.

F&I: Now, tell me about the program you released this year.

TP: When HSBC pulled out of the market, we knew others would follow. So, we came up with a way to score the customer’s credit prior to the dealer seeing the customer. Our Gold program is the cream of the crop in special finance, and those credit scores range from 530 to 599. Most of our dealers have lenders that can address that spectrum. Our Platinum program handles scores from 600 and above.

What we found since the program was launched in January was that subprime lenders were adding tiers to address consumers with credit scores in the mid 600s and below. Most dealers use both programs because of that, but they will establish an internal cutoff for special finance customers. What’s surprising is that score appears to be 650. In some cases, it’s 675 or 680.

F&I: So, where’s the sweet spot?

TP: Anywhere from 530 to 650 is where most vehicles are being delivered.

F&I: Now dealers aren’t your only customers, correct?

TP: We provide leads to many entities. See, we generate leads in markets where, unfortunately, we don’t have dealers. And since our goal is to try and find a home for every lead, we’ve formed partnerships with almost everyone in the industry.

F&I: Do you have any recommendations for managing a lead?

TP: Well, I would never allow an e-mail to be sent to a special finance customer unless seven to eight attempts to reach him or her by phone are made. As for the follow-up call, I can guarantee any dealer who uses a generic word-track in the initial 30 seconds of the phone call will see their success soar in terms of setting appointments. See, you just don’t know the customer’s prior experience with a car dealership, and the last thing you want to do is introduce yourself as being with a dealership. Instead, try introducing yourself as being with an auto credit center, or something generic like that. In the end, you will tell them where to come, but at least you’ll get the courtesy and respect to at least respond to any objection.

Remember, the ultimate goal is to set an appointment, because you’re not going to sell a customer over the phone. What we tell our dealers is to use the call to validate the information the customer provided.

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