There’s a lot of prep work needed for a successful January to March tax “Christmas” season. So if you’re an auto dealer who has found yourself a little behind the curve, here are some simple ways to improve your situation and things to avoid doing altogether for next year’s tax season.
- Forgetting about underwriting guidelines
While the biggest generator of sales is between January to March due to tax season, it’s also the time period that contributes the most delinquencies. Sure, your car buyers may have the down payment from their tax refund available, but who’s to say they will continue payments afterwards? In fact, most delinquencies occur 4 to 5 months after vehicle purchase, according to the Center for Responsible Lending.
Other than performing the basic STIPs verifications, some things you can examine are car buyers’ previous auto loan performance, whether they are able to make the minimum car payment after their other necessary expenses (ie. housing & food).
Make sure you have an air-tight application and ensure that your staff is well aware that an incomplete application, even during a busy tax season, is absolutely unacceptable.
- Not having a way to control delinquencies when they occur
According to a TransUnion report, auto delinquencies have reached its highest rate in Q4 of 2015, the highest level since Q4 2010. When delinquencies are on the rise, it’s becomes more important than ever to manage higher-risk customers.
Consider GPS tracking to help you lower the risk associated with low-credit customers and control the high costs associated with vehicle repossession. You’ll also be able to negotiate more favorably with your lenders if GPS tracking devices are installed in your vehicles.
If you’re not able to estimate how many GPS trackers you’ll need right away, make sure that the GPS tracking provider you choose is able to ship out GPS devices immediately upon purchase. If you don’t have the time or manpower to complete GPS device installs yourself, ask your GPS provider if they provide installation service available in your area. As part of our promise as a GPS vehicle tracking provider, our installation services are available nationwide!
- Not having enough vehicle inventory
It’s not uncommon for dealers to stock up on car inventory in the prior year, and buy up cars from auto auctions around October or November of each preceding year. That’s typically the time when it’s slower and prices are lower.
For more tips about auto auctions, read our blog on auto auction tips here.
- Not securing the deal
Go the extra mile to make your customers happy. Include service add-ons that will make customers happy, such as new tires or service/warranty contracts. These extras can make a huge difference on whether or not car buyers will keep your deals.
Your customers may not have the financial means to address future repairs needed on their used car. The chances of them returning a car that they dislike or a car that is non-functioning is extremely high. Set aside some collateral in their contract to ensure that they get the satisfactory service repairs they need, so they’ll keep making payments for a car they are happy with.
If you don’t want to take a chance on risky deals, check out our GPS vehicle tracking solutions here or call us at 1.800.557.1449 for more information.