You will be able to make big money selling cars off of interest if you offer in house used car financing !
Have you ever flipped a car?[an error occurred while processing this directive]
Offering used car financing to your customers offers more opportunities to make big money selling cars.
- They don't have the money together to pay cash
- Customers can get a nicer car if they finance.
- Its an opportunity for a customer to build up their credit.
- Your customer may want to keep money in the bank in case of an emergency.
- They may need their money for something else. There are three different types of financing. Customer pre-approved loans, Dealer acquired financing with lenders, and In-house financing.
- Customer Pre-approved loans:This type of loan is generally for something who has decent credit. The customer goes and finds their own loan at a credit union, finance company, bank, etc. They get pre-approved for a certain amount of money, and shop around at dealerships. When they find a car they want to purchase, they have the dealer contact the lender. The dealer sends the title to the lender, and they become the lien holder on the vehicle. The dealer gets a check paid in full from the lender, and the buyer makes payments to the lender. If your customers asks where they can get pre-approved for a loan, you can direct them to Capital One Auto Finance. They'll set your customer up with a loan so you won't lose the deal. I send a lot of customers there. The lender makes the money on the used car financing not the dealer. The lender takes care of repossessing the car if the customer doesn't make their payments. People with bad credit can't get these types of loans. Keep in mind that if your a dealer buying a repo car at an auction, the auction will give you a check along with the title to pay the penalty fees from the repo. You have within sixty days to pay the penalty fees. When you pay the fees at the DMV, your also going to have to pay a $15 repo fee, and a $15 transfer fee. The title will then be transferred into your dealership name. [an error occurred while processing this directive]
- Dealer acquired financing with lenders: The dealer acquires the financing themselves for the customer with an outside lender. The customer fills out a credit application and the dealer sends it out to an outside lender. The outside lender replies back, and lets the dealer know if the customer qualifies, and what type of rate they can get. Then the dealer sends the title off to the lender, and they hold the title until they get paid in full from the customer. The customer drives off in the car, and the dealer gets paid in full from the lender.
- [an error occurred while processing this directive] The dealer receives a small commission but doesn't make any money on the used car financing. Lenders will only finance cars with clean titles, and low mileage limiting the cars you can finance.
- Your going to have to get the necessary forms, financing software, and a special printer for in house, and dealer acquired financing. The software will make it easy to fill out the finance forms, and a dot matrix printer will print everything out for you on the sales contract.
- Now go and establish a relationship with a lender!!
If your shopping for a car, and are wondering if you qualify for financing Capital One Auto Finance is a reputable finance company to work with.
- In-house financing / Buy here pay here :In this scenario the dealer is the lender. The dealer makes the money in the financing. The dealer decides who gets approved, and who doesn't, the interest rate, and the terms.
- The dealer is responsible for repossessing the vehicle. Most people who get in house financing generally have bad credit.
If your willing to do in house financing you can make much greater profits off your cars as opposed to selling them cash. You also get to collect all the interest on the loan which can end up being a lot of money if it's a long term loan. The negative is dealing with your customers.
[an error occurred while processing this directive] Lot's of dealer advertise "No credit bad credit", "No license No problem", "First time buyers welcome" You can make more money financing these people off the interest if you can endure all the headache they'll provide with it.
- Many of these customers don't make their payments on time.
- They get mad when you charge them late fees.
- They don't make their insurance payments or just never get it. Dealers require their customers to get full coverage insurance when they finance their cars. The dealer, or the lien holder is the "loss payee" on the insurance policy. If the customer crashes and ruins the car. The dealer collects the insurance pay off since they are still the owner until the car is paid off. If the customer doesn't continue their insurance payments and wrecks the car the dealer loses the car.
- many buy here pay here customers expect the dealer to do any repairs on the vehicle during the finance term.
Some dealers repossess the vehicles themselves by making an extra set of keys. California law states that you have to call the police ahead of time and notify them that your going to do the repo. They do it late at night when their customer is sleeping. The customer will come out,and think the car is stolen. When they call the police to report a stolen car, the police will ask them first if they owe money on the vehicle. When your customer finds out you repossessed the car, they'll have to pay the Repo fee as well as what's owed on the vehicle. Most customers want to get their cars back. They've invested money into them by making mechanical repairs, or adding after-market parts. Whether a dealer or a repossessing company does the repo, they have to tell the consumer exactly how much they have to pay and what else they have to do.
The day after the repo you have to send a letter certified to your customer called "Notice of intent to dispose of motor vehicle." A customer in California has fifteen days to pay off the car and get their car back. The customer has the write to request a twenty day extension by sending back to the dealer the request in the bottom of the repo form. Repo fees are expensive if you higher someone to do it.
[an error occurred while processing this directive] I don't recommend doing a repo by yourself. If you do, bring someone with you, and a can of mace because things could get ugly. I once did a repo by myself. As I was putting the keys in the car they saw me and came out. They got really agitated and threatened me with violence. I had to leave and go get the police. I only did it myself because I didn't want to pay the three hundred dollars for the repo fee. Next time I'll pay someone I know to pick it up.
[an error occurred while processing this directive] Lots of Hispanic dealers I know who have dealerships in low income communities do a lot of in house financing. Some of them will finance anyone, and not even check their credit. There selling cars to illegal aliens without drivers licenses. They also get away with taking advantage of them since they're are not from America, and not familiar with the legal system. If an illegal alien gets pulled over in California without a drivers license they lose the car. Since the dealer is the lien holder on the vehicle, and not the customer, they can get a vehicle out of impound for a customer who is an illegal alien. The customer gives the dealer the money to get the car out. Illegal aliens will buy inexpensive cars cash because they know they'll lose them if they get pulled over.
Have you ever heard the expression "The greater the risk, the greater the reward" Theirs more risk in financing people with lousy credit, but you can make a lot of money charging higher interest rates.
In order to offer used car financing You'll have to check peoples credit scores.