It can be quite astonishing to think how many people look at car dealerships as places that ONLY sell cars. In fact, there are a great many other things that are done at a dealership. Many dealership owners might be of the opinion that if they take their attention away from the new vehicles, they will completely lose focus and sales will suffer.
That actually could not be farther from the truth. Many times, there are other things that can and are done in a vehicle dealership every single day. These “other services” are the ones that will keep the customer coming back and when it is time to get a new vehicle, the dealership that they go to for everything else will be the one that they go to for the new vehicle too.
In the next couple of articles, we are going to take a look at some of these other services and how they can benefit the dealership by keeping the customer happy.
Financing
Most of the time, car dealerships offer various methods of financing for qualified buyers. These types of financing include leases, loans and also allow for potential buyers to find their own financing if they choose.
Financing can actually be quite lucrative for a dealership. That said, there have also been many scandals involving dealerships and financing. These have included things such as discriminatory lending and even predatory lending practices.
A direct result of those scandals can be seen in the regulations that most states have imposed on vehicle financing.
While the terms of the financing are generally dealt with by the dealership, the actual financing is generally done by a third party lender. However, in certain places the dealership will actually handle their own financing. These dealers will be the ones with the means to do vehicle recovery operations in the event that the customers default on the loans.
Most of the time, there will be indirect lenders used. This is where the contracts are resold or assigned to third party finance companies which are generally related to vehicle manufacturers.
These would be like General Motors Ally Financial or different banks which will actually pay the dealer for the cost of the vehicle and then collect the payments each month.
In order to make this practice work, there are several contracts known as standard form contracts that are used and pre-approved by many lending institutions. A popular form of this type of contract is sold by a company known as Reynolds and Reynolds.
Customer relations are helped when customers are able to get better interest rates from the dealer than they are able to find through a private lending institution. At times though, manufacturers will offer rebates or very low interest rates to keep the customers from using the dealership to finance the purchase.
In these cases, the customer is left trying to determine where the best deal is available.
If dealerships can manage to make this easy for the customer then they will find that not only will the get more business, they will also get more repeat and referrals business.