Sub Prime Finance

[betginge 73]

I currently sell vehicles all be it in a small way from my mot garage repair business, with a 5-7 vehicles pitched up for sale at anyone time using social media, gumtree, ebay and word of mouth as I am well known in my area. 

 

Anyhow I have been looking for while to get into the dirty depths that is Sub prime finance, Looking to gain FCA licence get a bigger pitch to stock say 20 vehicles and promote vehicles mainly for people who have less than perfect credit history or near prime etc. Looking to deal with vehicles around 2.5-6K and keep to the basic family flyers, (astra, Focus, Cmax, 207, Qashqai, Zafira etc).

Why I hear you screaming !!!,  Well I have fellow traders in other towns who are doing very nicely in this market, there seems to be a good selection of lenders out there for this market and I would say it's never been easier to get finance for sub prime customers. Now am sure we can debate the morals of this type of lending but to me from what I have been seeing on a business grounds it makes complete sense to tap into this market.

 

Does anyone have experience in working with subprime lenders, such as Money way, first response, VTG,  Advantage, and TCFC ???

and the customers, are they a different breed to your average  cash customer. ?

 

I have been sitting on the fence for while about this, A fellow trader in this sector says it's nothing like normal retail, its paperwork and lots of telesales, but he has a small pitch 30 cars and is selling 7-10 vehicles a week with a markup average of £1500 per unit,  YES 1500 per unit running on 3 staff (him included).  And is spending £400 on advertising per week, not on AT with main traffic from Social media and Adwords with a good website with tag cloud. 

 

Thoughts ?

 

 

 

[Rory RSC 596]

I have done quite a bit of research in this area. 

The lenders you mention are good for sub prime but you also need a couple of the black box type company's who have pin code boxes fitted to the cars. 

You need to sell the cars at max advance whether that is calculated using cap or glasses varies lender to lender. 

Good stock profile suggested with the family favourites I would just be looking at stocking really basic models and average run of the mill stuff. Plenty of 7 seaters.

 

It it is paperwork orientated and these sort of places make sure the customer has everything done and all proofs with them on the day, if they haven't the application does not get progressed ( my understanding) 

I see the customer expectations for aftercare being hard to manage. They are not going to want to spend any money or have any money to spend fixing their cars when things go wrong.  

 

Growing sector, spending equivalent to an autotrader bill on marketing I think would work and I think you could do very well. 

I would go for it and for me personally I would not completely rule out moving into this sector via separate business name and premises in the future. 

[betginge 73]

Thanks Rory

 

Yes intend to use a new name new pitch. I do see an issue with aftersales as you touched on, However in my circumstances with a garage with staff available I would be able to deal with warranty claims quickly and cheaply, with the exception of long distance customers which I think a third party warranty would be the best option. 

With the mark up on the units I would be potentially selling in this market I couldn't foresee a major headache with stock providing there well purchased and pre checked to a good standard, this should weed out the shitters and re block if its bad purchase.

 

TCFC seem to be the finance company that fit the boxes to the car that switch off on a missed payment, this option is really for the poor of the poor credit wise. My trader friend does use them but only 3 out of 10 finance sales, most are now being placed with moneyway who seem to plugging the gab between TCFC and First response who are in my opinion the market leaders in sub prime and seem to be a good firm to deal with.

Has anyone had any bad experiences with sub prime lenders,??  

they do have a habit of disappearing when the economy takes a downturn, I remember Park Finance & BCT some years ago going bump. 

 

 

 

 

[Rosemotors 31]

I had carfinance247 call me the other day wanting to market my cars on their website. Only pay when making a sale. Worth looking at.

[whitestone679231 113]

Rose Motors, out of interest how much did carfinance 247 want on a sale? I have sold a few via them and paid £150+vat but others I speak to are paying different amounts.

betginge if you intend dealing with subprime be prepared for a long drawn out paperchase, I have dealt with most of them and the deal aint done till you are paid, usually after a couple of weeks lots of faxes, then lots more faxes cus the ones they asked for just had a dot in the wrong place, then more faxes cus you haven't signed something even though they initially told you that you don't need to sign,,, but on the whole it is worth it for an extra sale.

[sparky 274]

11 hours ago, Rory RSC said:

I have done quite a bit of research in this area. 

 

Would you mind throwing some of you research this way . I can share mine, you can share yours

When it comes to Sub Prime, my preferred lender is First Response. In complete contrast to a few years ago, they are super efficient in all aspects of the process, easy to communicate with and once the docs are in (which there are not many of) payout is super quick. They pay a little commission which helps and they are happy to provide as much point of sale stuff as you like, even balloons! They would be my first point of call.

As for black box/PAYD finance, I'm set up with The Car Finance Company which is a lot more complicated as it involves their rep signing the customer up, umpteen proofs and the fitting of the box. That said, their online dealer proposal system is very good in my opinion and keeps you in the loop. 

In terms of numbers, I maybe do one sub prime deal a month as it's not something I've really looked to get into, but no doubt it's big business. I do feel a little uneasy about what they charge and would never force someone into it, but there are plenty of sub prime customers out there who are in the market so I feel I may as well try and have a piece of it. What eases my guilt somewhat is that my sub prime customers are driving around in decent stock cars that are well serviced for them and as long as they continue to look after them they will do them just fine whilst maintaining some value. It's the customers of sub prime out fits that weld these customers into the **** that nobody at auction wants then wash their hands of them  that I feel sorry for.

[Tom 164]

1 hour ago, whitestone679231 said:

Rose Motors, out of interest how much did carfinance 247 want on a sale? I have sold a few via them and paid £150+vat but others I speak to are paying different amounts.

 

Same as me just signed up to trial it, £150+vat is not cheap and I prefer getting commission doing it myself but if it gets a sale then that's a bonus!

[sparky 274]

56 minutes ago, Tom said:

Same as me just signed up to trial it, £150+vat is not cheap and I prefer getting commission doing it myself but if it gets a sale then that's a bonus!

Worth doing. £150 + VAT is not cheap but you do get full screen price with them. I've not used them for a while and then out of nothing have done two in a week. Both went with Moneyway,  I doubt either would have happened if I wasn't set up with them.

[Rory RSC 596]

Regarding cf247 I pay less than any of you have quoted here and am set up on there system with stock feed. 

 

They  deliver leads that do sell cars for me. 

Done a real wave of them recently and tend to be happy to do the business. 

[Tom 164]

2 hours ago, Rory RSC said:

Regarding cf247 I pay less than any of you have quoted here and am set up on there system with stock feed. 

 

They  deliver leads that do sell cars for me. 

Done a real wave of them recently and tend to be happy to do the business. 

What do you pay then and where are the cars advertised as I'm getting a stock feed but cant see where they advertise them. 

[sparky 274]

2 hours ago, Tom said:

What do you pay then and where are the cars advertised as I'm getting a stock feed but cant see where they advertise them. 

www.carcraft.co.uk

[Rory RSC 596]

£100 plus vat I am sure of it. 

[Tom 164]

Carcraft?! Thought they went pop!

30 minutes ago, Rory RSC said:

£100 plus vat I am sure of it. 

Have a look at your Direct Debit 

[Rory RSC 596]

Yep and bills it's £100 plus vat.

they always call up and say we owe X amount because they introduced so many deals we then go thought it and establish exactly where the customers came from. 

Most recent was they said we owed for 6 deals and it was only 2 we actually owed for. 

[betginge 73]

Thanks for all the replys on this one guys, 

I see dealing with Cf247 has helped dealers with sales and leads etc, so well worth a register even if its £150 per a sale taken.  However do you guys deal with cf247 as your finance broker for sub prime or just using them for leads etc.  Would it not be better to register with several finance houses from near prime to bad credit with the added bonus of commission with some of the companies.

 

 

[Rosemotors 31]

I managed to negotiate £75 ex VAT because my cars are very low priced/smaller margins.

So cheeky, buying the carcraft domain. Fair play 

[betginge 73]

RoseMotors

 

The question is are you getting less leads or interest from them to send you customers because of the lower fee ?

Was a good move to buy carcraft domain, I think the real value though is all the tagcloud, blogging and SEO work that has gone into that domain that has made it so prominent on google, that's where the money was put in by Carcraft. Good buy CF247

 

However the looser out of this deal would be fords of winsford, they bought car craft trafford, and I would of thought been offered or had the opportunity to buy this domain, if they did turn it down then it was a very bad move, as it seems to be a marketing gold mine

[umesh 336]

Personally I think the 'carcraft' name had such negative name that I would not wanted to be associated with it ! You just have see some of the alleged horror stories on the net ! Maybe that will change as times go on ....

[betginge 73]

Umesh   I agree That Ford of winsford should not have taken on the carcraft Name, much better to plug there own name, all be it a little strange calling it fords of winsford when its based in Trafford Park, Manchester, I think They are trying to shorten it to FOW.  My point was more why turn down that website asset, It could of been a good feeder of customers as CF247 are now reaping the reward.

 

There loss has been RoryRS, Sparky and Rosemotors Gain,  

[sparky 274]

Moving slightly off thread, but I feel you have got to hand it the the brothers who started 247 as well as the guys who started carloans4u. Such a simple idea really that anyone of us could have come up with.

 

[Rory RSC 596]

Definitely sparky they have done really well.

we have sold a few cars to Zuto staff members and I have not heard anyone say a bad word about the company or its owners everyone is full of praise for them and in my experience that is very rare. I believe one of the owners of Zuto has a 1000bhp GTR, an aventador and a couple of other cars so a massive petrolhead.

off topic again maybe Zuto/cf24/7 director/owner would be someone good for an episode of trade plates ?