Bank says dealers are missing non-prime opportunities
Alain Henry: [email protected]
Many dealers are missing out on closing deals with the one-third of Canadians that Equifax Canada reports now find themselves in the non-prime lending space.
“Many franchised dealers are not really paying close enough attention to the non-prime segment,” said Alain Henry, a veteran banker who has spent 30 years in the automotive lending space.
Henry is the Vice-President and CEO of Scotia Dealer Advantage Inc., a wholly-owned subsidiary of Scotiabank that caters to the non-prime lending market. “Some customers are impacted by financial hardships that are very temporary,” said Henry. “Others might have missed a few payments, but are otherwise good credit customers.”
He said rather than turn them away if their prime FI sourced application is declined, dealers can work through their financial application with them and have a conversation about other options.
That means educating the customers that they will face a higher cost of borrowing on a purchase, and that it could impact the vehicle they can afford and the payment they can manage.
“Take the time to work through it with your customer,” said Henry. “It’s a more complicated application to work through, and will require a longer conversation with your customer, but if you find a vehicle to fit their profile, you will have a happy customer — and possibly a lifetime customer.”
Henry heads a dedicated team of non-prime specialists at Scotia Dealer Advantage across Canada who are focused on the non-prime space. They cover the entire country, with Area and Regional Sales Managers actively working with dealers and helping them to capitalize on non-prime opportunities.
In time, as their credit improves, the customer can move up to a different vehicle, and they stay within the dealership family.
Henry said a dealership’s non-prime customers are going to buy a vehicle somewhere, and it’s important that dealerships ensure it’s with them. In time, as their credit improves, the customer can move up to a different vehicle, and they stay within the dealership family.
Henry said his team can help show dealerships how to turn on the bank’s cascade functionality that can be activated within their lending finance portals. “We have a flow through process,” said Henry.
“If you send the application in and it gets declined by Scotiabank’s prime financing unit, we have a flow through feature where you can get a response back from Scotia Dealer Advantage. It will have an uptick in the payment and rate depending on their credit profile,” said Henry.
Henry said the bank is aware that many Canadians are going through a tough patch. Vehicle affordability has been a problem for a few years, and higher interest rates haven’t helped, he said.
Henry said dealers operating in the non-prime market need to also make sure they have enough of the right inventory, particularly in their used car operations, to meet the needs of a wider range of customers.
He said last year the bank also introduced a new non-prime StartRight initiative aimed at newcomers to Canada which includes foreign workers and permanent residents. “This program has been getting a lot of support from the dealers,” said Henry.
These car buyers might not have established credit in Canada, but they will need access to transportation quickly. Henry said working with Scotia Dealer Advantage, dealerships can work on these applications and find viable financing solutions for these individuals.
“As we go through the challenging months ahead, Scotia Dealer Advantage will be here to support our dealers and consumers in their driving needs,” said Henry.
