Lenders say that servicing prime and subprime loans are very different endeavors, with subprime loans requiring more attention. When a lender is thinking about taking the subprime plunge, therefore, it’s important to go slow and execute on an implementation plan correctly.
This is all the more timely today as more lenders are expanding their credit horizons. Some lenders say they are working on adding the necessary tools and capabilities to make full-spectrum lending, including subprime, possible.
These tools are crucial. Subprime, when managed well, can be a great business to be in and the space can enhance dealer expectations around full-spectrum offerings. With the proliferation of services, there’s more opportunity to play on both sides of the credit fence. Here are the keys to running a successful subprime business:
- Provide good service;
- Move quickly but efficiently with loan decisions;
- Keep consistency with funding; and
- Make the funding process simple for F&I shops.
Tools such as customer scorecards, cross-team capabilities, strong underwriting and collections centers are all important too, but ultimately relationships in the field make the greatest difference.
