We have used car lot on new car dealer row. We get all kinds of customers but most of them usually have credit issues but sometimes we get customers who do have good credit. So the problem is if we don't price are cars, the good credit and cash buyers won't stop unless the car is priced.

On the other hand when the subprime customer comes to pick up his car he sees that the price is much higher than the posted price. What do you tell this customer? If we were to use the price that is posted on the car we can't make any money, we would actually lose money because the way these subprime companies do their"calculations".

A lawyer could easily make a case and sue the dealer and the finance company. Because it is illegal to raise the price just because the customer has bad credit,isn't it?  Especially if the prices are posted. I am very concerned with this. It seems to me the only way around this is not to post prices. Is there anyone out there that has encounter this problem?

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I really don't understand what you are saying here?  When you say "competitively within your trade area" what are you referring to as far as being competitive?  Who is your competition; the new car store, the conventional independent sales operation, the secondary market, or the B/H-P/H?  Is it possible to reach all of them or must you try to reach only one large market at the expense of abandoning another large market?   

Its a matter of selling to all customers in your market but knowing who they are generally before they come in the store. Are most customers coming in needing financing or do they have cash falling from their pockets. I think most Dealers, if being brutally honest, would say 85%+ customers are finance customers.The next question you have to answer is "Who are my customers? Good Credit or Bad Credit?" IF you have 70% ++ with bad credit you need to be less aggressive with pricing. BUT you must also get better at servicing your better credit and cash customer with indentifying questions before you get into asking them are you paying cash or financing? That is the WORST question you could ask ANY customer on your lot.

Unfortunately that is the 1st quesiton that almost always comes out of a sales persons mouth as soon as the customer asks "whats the price."This is a very common issue with ALL dealers in todays market.

Training of sales and owners has gone out the window as we all look to decrease costs. However, there is a definable process that can be followed that will allow you to sell to ALL customers without breaking laws.

It isn't an either/or case as most think BUT you have to be on the smae page top to bottom in the Dealership and train and manage that expectation.The training process WORKS



That is exactly right. I have forgotten after so many years in the business that if you don't train and role play with your staff you can expect them to read your mind. Once  everybody understand how the process should be then it is easy.

Again I still have trouble legally how to advertise the vehicles specifically on the net. You must have a price on the internet and I know for compliance sake all prices need to be honered to all customers regardless off credit. So the only answer I see in dealing with this after many members wrote back is to decide if I am a "Credit Dealer" or just :Used Car dealer"? Know your customer base and advertise and sell cars accordingly.

I have been on the retail side of the automotive industry for 15 years (franchise and independent) prior to moving to the banking side.  While at the retail side my duties in addition to Sales Manager, Special Finance Manger and Finance Director was compliance manager. 


The issue you bring up is an interesting one as appearently there is a great deal of misinformation regaurding the law.  In the 5 cent version of the law it basically states that the initial starting price for the vehicle must be the same for all customers regaurdless of how the vehicle is being paid for  (cash, check, charge, financing).  The law also states that once a price is given it can not be increased due to a customers credit.


On a new vehicle its easy as every vehicle has a Maroni Sticker.  The question comes up in regauds to used cars.  The "best practice" is to put the words "Retail Price" or "Asking Price" along with either the highest possible price or atleast a price that has enough spread in it to discount it for the customers that demand the discount or allows you (as a dealer) to cover any "Bank Fees".  You will need to train your sales people that when a customers asks "how much is it" they answer the same way each time "the asking price is...".  If the customer says is that your best price, the best follow up is "if this is the vehicle you want I'm sure we can come up with an agreeable price".  This works for cash customers, customers with great or challenged credit customers, but most of all keeps you legal.


I hope this helps.



That is a good practice. It all comes down to training the sales staff properly to deal with all customers. Unfortunately, we need to attract customers to the lot and if we don't post our best price on line or on the car we won't get that customer that can buy the car without any problems. So how do you suggest you deal with that?
Keep some cars set aside without prices on them for your subprime clientele.

Instead of Financing the vehicle, consider leasing the vehicle.

Staff can be trained not to use BHPH sale and/or finance terminology because its a lease, not a sale.

This will avoid the potential for confusing or deceiving customers or violating federal and state advertising and disclosure requirements.


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