Indirect Lenders Help Many Independent Dealers Compete and Succeed

Automotive dealers who specialize in selling pre-owned cars face unprecedented levels of competition. Letting any sale get away can set an entire dealership back and lead to plenty of associated problems.

There are good ways for dealers who primarily stock pre-owned vehicles, though, to make success more likely. Lenders like Consumer Portfolio Services are ready to help out in ways that make excellent sense for many independent dealers.

Financing Well-Suited to Many Smaller Dealers

Automotive dealerships that own franchise rights offered by the major manufacturers typically focus on serving financially stable buyers. There are many more people who need access to reliable transportation, though, but cannot qualify for most conventional types of financing.

Indirect lenders who make agreements with independent dealers are helping to fill in many such gaps. With each dealer being tasked with assessing and vetting loan applications, the lender steps in to buy the contract only after it has been signed.

This style of financing generally works very well for smaller dealerships that have to compete against larger ones. Partnering with such a lender will often allow such a dealer to sell vehicles to shoppers whose credit records include:

  • Bankruptcy. No financial fault is taken more seriously than bankruptcy, and for good reason. Given that one bankruptcy can wipe out many debts, conventional lenders view those who have been through them with pointed, particular suspicion. Secondary lenders are often willing to be more flexible, even to the point of buying loans issued to people who have worked through bankruptcy fairly recently.
  • Mortgage delinquencies and defaults. Most people prioritize making mortgage payments above all other types of debt service. When a person’s credit record shows late payments on a mortgage or even an outright default, most lenders will be reluctant to extend financing offers. Once again, indirect lenders are frequently willing to fund vehicle purchases made by such consumers if the other details are appealing.

A Great Way to Sell More Cars

When independent dealers become able to finalize agreements with shoppers who have been through such problems, sales volumes tend to climb. That will always be welcome news for the many dealers who need to do everything possible to keep their numbers strong and positive.