Inventory can sit on the lots of car dealerships for months in low-income areas or when economic conditions are less than ideal. Potential customers that need to buy cars may not be able to walk away with the keys because of a lack of financing. Customers with low-incomes, sub-par credit scores, or with blemished credit reports can find the car buying process challenging. Dealerships often have to turn these individuals away, resulting in lost sales. Thankfully financing companies like Consumer Portfolio Services can back loans extended to individuals who have low-incomes or problems with their credit reports.
Ordinarily, customers need a credit score in the 600 to 800 range, a solid credit history, and a monthly income of at least $2,000. Traditional financing options exclude clients that have bankruptcies, foreclosures, or repossessions on their credit reports. If customers’ incomes fall below $2,000 a month, their credit reports show late payments, or they do not have sufficient credit histories, they often need to have a co-signer or pay cash. However, in some cases a co-signer is not available and paying cash is unrealistic.
When cash or a co-signer are not available, financing companies that specialize in funding loans to clients with low-incomes or questionable credit histories can help. Although these companies still have qualification standards and stipulations, car dealerships that use these companies can create more win-win scenarios. The car dealership is able to qualify more customers for loans and move more inventory off the lot. The customer is able to get a much-needed vehicle and does not have to deal with the embarrassment of being turned down for a loan. First-time buyers and those with limited credit histories are also able to establish a more substantial credit history.
Sales representatives and managers at car dealerships can struggle when there are not enough customers that qualify for loans. They can face greater challenges if the dealerships are located in areas with high poverty rates or major job losses. By using alternative financing options, dealerships can qualify more customers and move more cars off the lot. These options can also benefit customers who can afford to make payments and need to re-establish their credit histories.