When Don Hewlett moved his flagship store from its rural location in Georgetown, Texas, out onto Interstate 35 — the main drag into town — increased sales came naturally. But to beef up those numbers even more, and to better serve some of those new customers, Hewlett began to place special emphasis on nonprime financing.

Although it has taken close to five years to fully get off the ground, Hewlett’s nonprime finance program has grown to make up 15 percent of his three dealerships’ business (a fourth has just broken ground), and is expanding fast. Last year alone, the nonprime finance operations doubled their output.

“Nonprime finance is a growing part of our business here and it’s very important,” says Jeff Zuelsdorf, finance manager for the Hewlett Family of Dealerships. “To grow vehicle sales in today’s market you have to have it. You have to have it because you have to find every angle in which to sell vehicles to what has become a very large market.”

Operating in a high income-per-capita area north of Austin, Hewlett says that the nonprime finance program became necessary as his dealerships began to grow and new, non-local customers with less-than-stellar credit became potential buyers.

“When we got those buyers in here who didn’t have the higher scores, we had to have sources that could help us capture that market,” Hewlett says.

Drumming Up Sales

To help drive new nonprime financing customers into his stores, Hewlett has tried marketing programs such as mailers, pre-approval sales with specific subprime lenders and, of course, the Internet.

Not wanting to make any customer feel inferior, Hewlett ensures that once those customers seek out his dealerships, his employees treat them the same as prime customers. In fact, two things that Hewlett stresses are customer service and keeping everything close together.

New and used vehicles stand side by side on Hewlett’s sales floors and he personally greets each and every customer that he possibly can.

To ensure that its staff is trained and up to date, the Hewlett Family of Dealerships plans to take part in specialized F&I training with Reahard & Associates Inc. this spring. Zuelsdorf says that the financing staff has taken part in Reahard’s training program in the past and has continued to use the training and role-playing exercises during periodic meetings throughout the year.

The F&I department has also made presentations to the dealership’s sales staff to ensure that it fully understands how the F&I process works. Zuelsdorf says he feels that helping the sales staff understand what the F&I department does has helped relieve fears when sending customers to finance.

“We show the salespeople how the menu system works and how simple and non-confrontational the whole process is,” he says. “They become very relaxed afterwards because they know their customers aren’t going to be beat over the head with a stick; they’re just going to come in and be offered products that they can choose to purchase or not.”

To remain in compliance, the dealership keeps all confidential information under lock and key in the main F&I office. It also has a strict policy against deal jackets or any other sensitive materials being left in any sales office.

Spot checks are done quarterly, and a written agreement to remain compliant is signed by all sales employees.


Identifying Target Customers

Hewlett says that identifying nonprime finance customers isn’t difficult or time consuming at all, and usually has little to do with credit scores.

Most times, he says, customers who have special circumstances will come in and identify themselves, or are responding to Hewlett’s targeted marketing materials. This in turn makes it easy for the dealership to service its specific customers’ needs by getting them in contact with the correct person in a timely manner.

While some customers identify their own need for nonprime financing, customers who have dealt with repossessions or bankruptcies often require a little more time and special handling.

“We have an interview process where we would then go out and sit down with the customer and get a lot of background information as to what happened. That way when we’re talking to our lenders, we can let them in on the exact story,” Zuelsdorf explains. “To have those types of answers for lenders does help in getting approvals for customers.”

Hewlett feels that in some ways dealing with nonprime customers can be simpler than dealing with prime finance customers.

“In conventional financing, people pick out a car and want to be shown how they can buy it,” Hewlett says. “With nonprime financing, people want to be shown what they can buy. They are looking for somebody who will talk to them who realizes what their problem is and will help them work through it. So you go through what their options are, and in the end, hopefully, make a customer and a friend out of them.”

To keep track of the 30 different prime and nonprime lenders that the dealerships work with, Zuelsdorf created a spreadsheet that outlines the specific guidelines for each bank or financing company, highlighting what they will and will not accept.

That way, he says, the dealership won’t try to hammer out a deal through a lender whose guidelines will end up causing a problem for the customer.

With Hewlett’s nonprime financing program amassing 15 percent of the approximately 450 sales a month, the dealership is currently searching for ways to increase that share even more — ideally to 25 percent by the end of the year.

“We would very much like for that to happen,” Zuelsdorf says of the dealership’s lofty goals. “Taking into account that two or three years ago nonprime financing was almost non-existent, if we could grow that 15 percent to 25 percent, it would be a definite win.”

Those goals may not be quite as far away as they sound. Hewlett has already hired a person to take care of its rapidly growing nonprime financing Internet sales leads full-time, and continues to grow its customer base through direct marketing programs and specialized financing sales.

“There’s too many people looking for a reason to be in it or out of it; we’ve just stepped up to address it,” says Hewlett about nonprime financing programs. “Many people are not in this situation of their own choosing. Something may have happened to them that can happen to any of us, so you just try to counsel with them. Sometimes that’s what you are more than anything else: a counselor rather than a salesperson.”