As the US economy continues a steady acceleration in GDP and job growth, more consumers find themselves in stronger financial standing with greater purchasing power. Unfortunately, consumer credit scores don’t always reflect the same progress. A 25 percent tariff hike on imported vehicles, if imposed, would push subprime consumers away from new car options and into the used realm.
The Tax Cut & Jobs Act of 2017 brings another set of impacts. A more generous Child Tax Credit will increase from $1,000 to $2,000 per child under the age of 17, which could lead to refunds of up to $1,400. Earned Income Tax Credit was raised by up to $6,431 for married taxpayers filing jointly with three or more qualifying children (for households with modest annual incomes). Income tax brackets have been revised, with lower rates now covering larger income ranges. In total, dealerships should see customers show up with more money in their pockets.
This could very well lead to a prosperous tax season for BHPH dealers.
BHPH dealers can expect to see up to 50 percent of their annual business during tax season. Tax refunds have more than doubled in the last decade. This coming tax season, dealers have a huge opportunity to cash in on the unfolding market dynamics.
Even large lenders have taken notice and are relaxing their credit score requirements to attract the subprime market. Opportunity is knocking; however, there’s a lot of competition to answer the door.
With more options than ever available to subprime buyers, dealers and lenders need a game plan. Here are four ways to start preparing now to maximize your revenue this tax season:
- Start preparing immediately! Now that the PATH Act is federal law (as of 2017), tax refunds won’t go out until after Feb. 15. Don’t wait until then; your competitors won’t. “What’s the PATH Act?” Visit our Tax Season Resource Center for everything you need to know.
- Get the word out. Consumers have already begun doing their research online. Let them know now why they should do business with you. Use a mix of print ads, online ads, and social media.
- Streamline the sales process. When you can close deals faster, you minimize the risk of customers simply walking away to avoid the hassle.
- Stick to your underwriting guidelines. It’s easy to lose sight of good business practice when anxious customers are waving big tax refunds in your face. Stay strong and always make sure buyers aren’t biting off more than they can chew.
- But wait; there’s more …
We have four more recommendations to maximize revenue this tax season, along with a list of eight pitfalls to avoid, nine ways a GPS solution can simplify the process, and a complete tax season checklist. To see them all, download The Definitive BHPH Dealer Guide to 2019 Tax Season industry report and keep it tuned to the Tax Season Resource Center all tax season.