Deal Pack Blog
Dealerships, Get Ready for Tax Season and Protect your Assets!
Traffic increases during this time of the year because of tax returns. Customers are coming in with cash to cover high down payments and they are trying to buy luxury cars, but are they really qualified for the car they are trying to purchase? Are customers behind on their payments and need some head way to correct their account? Here are some tips on how to survive as a dealership through this Tax Season!
#1: Make sure the dealership is actually underwriting potential accounts.
Taking credit applications or creating scoring models to aid in approving customers can decrease your chances of those customers defaulting on their loan later in the year. Credit applications should include the most detailed information to help in decision making. This might mean more questions for the salespersons to ask and the customer to answer, but in the long run, taking more time to understand the customer’s overall situation will help to reduce the overall default on loans.
#2: Use customer’s tax refund money to catch up on payments.
Most customers are already thinking of how to spend their tax refund money before it even hits their bank account. If they are currently behind on their payments, the finance company can put the delinquency to the side for now having the customer go back to making his/her regular payment and have them pay the delinquent amount when their tax return comes in. This helps them to worry less about their finances at the moment and less likely to default in the future.
#3: Capture the sale before the W-2 arrives.
W-2’s have to be sent out by January 31st every year and most customers have an idea of what they are going to be getting back before that W-2 arrives in the mail. By having early promotions, say in November of the previous year, you can capture the sale and be flexible in financing so they can succeed in their loan. For example, if a customer comes to buy a car in November, turning them away because they don’t have the full $1,200 down payment could hurt the dealership. Now say for instance they have $800 now and will pay the other $600 when their tax return comes in, this can help to seal the deal early and the customer will drive away in their new car.