As Stevie Ray Vaughan so accurately puts it in his song “Crossfire,” “Money’s tight; nothing’s free.” That remains true today for the American car-buying public, as falling credit scores and ongoing recession have combined for lean times. Wards Auto reports that used vehicle sales are outpacing new car sales, and the market for subprime used car loans has kept pace, a possible indicator that things may be heating up on the lending front in America.
Non-prime and subprime loans a positive sign for credit liquidity
Credit must flow (subprime or otherwise), and vehicles must sell if the automotive market is going to recover. While lenders and dealers with in-house financing options are not targeting the subprime market specifically, the nature of America’s consumer landscape of late has lent itself to such activity. But product availability remains an issue. Ed Rykulski, used car manager for Al Serra Auto Plaza of Grand Blanc, Mich., told Wards that “We employ 18 salespersons in the sales center and buy heavily at the auctions to keep sales at 2009 levels, when we sold 3,212 used units.”
More saleswomen employed to serve subprime female buyers
Saleswoman Nancy Koehrman of Taylor Used Car Center near Toledo, Ohio, pointed to a growing trend in the current used vehicle sales market: employing more women as salespeople.
“Women customers prefer women to be handling the vehicle selling and the finance and insurance side, too, especially if they’ve been classified as subprime,” Koehrman told Wards.
But subprime used car loans are hardly exclusive to women. Fair, Isacc and Co. Inc. indicates that more than one quarter of American adult consumers (more than 43 million people) have FICO scores of 599 or lower. Thus, there’s a huge market to be tapped. Consumers with FICOs from 650-699 are frequently being declined for standard car loans, which moves them in the subprime pool.
Off-lease stock playing a big role in bolstering inventory
Rykulski indicated to Wards that the Serra group obtains much of its used stock from off-lease vehicles. The company’s Grand Blanc used car center is one of the largest of any Ward’s 500 member (dealerships that receive the highest marks from the publication for reliability and a host of other factors). Unfortunately, as used cars are currently popular even with non-subprime customers, it remains difficult to keep sufficient inventory on hand.
Car Deal Expert helps you find the best rates on used car loans[apply_button]