Five Keys to Success for Subprime Lenders When Expanding to New Markets

Subprime lenders are in growth mode and rapidly expanding in 2013.  With expansion to new markets comes a myriad of challenges for the lender.  Some of the challenges are faced directly by the lender itself and some possibly by the F&I Managers at the auto dealerships with whom they do business.

Here are five keys to success for the subprime lender when expanding to new markets.

1. Understand specific state laws and requirements.  Most lenders are likely very familiar with the laws and compliance measures that require attention in order to conduct business in a new market.  For example, making sure your retail installment contract is state compliant is an obvious first step prior to moving in to a new market.  However, if the lender markets its own suite of consumer protection products, it’s important to ensure the product administrator has done its due diligence to secure appropriate state approvals and has made necessary adjustments to its contracts as well.  Handling all the state-specific requirements up front will facilitate a smooth transition to success in a new market.
2. Know the demographic trends and how they impact buyer behavior.  If a subprime lender is making a move to enter a new market, the demographic study and analysis has already shown a viable business opportunity.  However, do the market indicators for unemployment, the local income metrics, and consumer confidence provide an unique opportunity for lending and the sale of the lender’s consumer protection products?   If so, what is the strategy to capitalize on this new market’s opportunities?  Answering these questions will help a lender tailor a meaningful, successful loan product offering in the new market.
3. Ensure your consumer protection products are a fit.  Different markets may present opportunities for the lender to differentiate its loan offering.  Ensure the consumer protection product offerings provide a solution to a consumer need in that market.  Be confident that the marketing, pricing and product features speak to the demands of the new market and provide an opportunity to realize a profit.  The right loan offering with appropriate protection products in the market will help drive success.
4. Delivery mechanisms must be sound.  Once a sound strategy is in place to facilitate the loan transaction and deliver the lender’s retail installment contract, ensure a stable electronic platform is in place to rate, contract and submit the consumer protection products.  The demand for e-commerce has never been stronger, so providing an e-solution to fulfill contracts is essential.
5. Maintain your brand.  Whether the lender operates with a direct or indirect model, it’s imperative that the lender effectively communicates and manages its brand.  From an engaging and up to date web presence, to SEO, to effective brand reputation management, the lender should pay close attention to its brand and all its brand promises as it looks to expand and grow in to new markets.

EFG Companies has a proven track record in helping lenders expand their reach in to new markets. Contact EFG today to develop a strategy designed to help you realize success as you grow your business.