{"id":434,"date":"2015-05-19T08:00:26","date_gmt":"2015-05-19T13:00:26","guid":{"rendered":"http:\/\/efgintelligence.com\/subprimepoint\/?p=434"},"modified":"2016-01-21T16:25:01","modified_gmt":"2016-01-21T22:25:01","slug":"profiting-addressing-subprime-consumer-needs","status":"publish","type":"post","link":"https:\/\/efgintelligence.com\/lendingcurve\/profiting-addressing-subprime-consumer-needs\/","title":{"rendered":"How are You Profiting from Addressing Subprime Consumer Needs?"},"content":{"rendered":"

\"Contributing<\/a><\/p>\n

 <\/p>\n

Contributing Author: Steve Klees, Senior Vice President, Specialty Channels, EFG Companies<\/h3>\n

As the nation continues to recover economically, we\u2019ve seen the subprime market steadily expand. The debate rages on whether to slow or halt this expansion before a subprime bubble forms. Be that as it may, more people who experienced hardship over the last few years are returning to dealerships looking to replace their vehicle, or get into a vehicle for the first time.<\/strong><\/p>\n

As you evaluate your institutions\u2019 future, it\u2019s time to step back and take a deeper look at what consumers are dealing with. Yes, the unemployment rate has dropped, but that does not mean everyone who lost their job in the recession has returned to a comparable position. The most recent report from the Bureau of Labor and Statistics states that 6.6 million Americans are classified as \u201cinvoluntary part-time workers\u201d<\/strong> \u2013 those working part-time jobs due to economic reasons.<\/p>\n

Now, many Americans who once had, or believed in the future of stable, full-time positions can now only find part-time work, or work for much less pay than they previously received or expected. College graduates are still the most underemployed of all age groups. <\/p>\n

According to U.S. Census data by the Georgetown University Center on Education and Workforce, approximately 40 percent of unemployed workers are Millennials, which is greater than both Generation X and Baby Boomers.<\/strong><\/p>\n

As of November last year, average student loan debt approached $30,000<\/strong> according to the Institute for College Access and Success (TICAS). Since 2008, TICAS estimates average student debt increased by an average of 6 percent year-over-year.<\/p>\n

In addition, Millennial Branding and PayScale state that 34 percent of millennials who hold a PhD report being underemployed compared to 27 percent of Generation X and 25 percent of Baby Boomers.<\/strong> It\u2019s no wonder with crippling student debt and a lack of well-paying jobs that Millennials still have a negative savings rate.<\/p>\n

Today\u2019s consumers have graduated from the school of hard knocks, and they\u2019ve repeatedly vocalized that they want to know that someone is looking out for them. The companies who\u2019ve recognized this and adapted their products and services to meet this need have seen significant capital gains.<\/p>\n

For example, in 2009 Hyundai Motor America recognized that in order to sell more cars, they would have to address consumer concerns about the economy, whether they would have a job in the coming months, and what would happen if they lost it. \u00a0Together with EFG, the auto manufacturer introduced Hyundai Assurance<\/a> with 12 months of complimentary vehicle return on every new Hyundai leased or financed through their dealerships<\/strong>. Hyundai essentially promised to safeguard consumers regardless of age, health, employment record, or vehicle type, giving them the freedom to walk away from negative equity without impacting their credit.<\/p>\n

The results of this promise are staggering. By the end of 2009, Hyundai had grown unit sales by 8 percent while the rest of the industry declined by 21 percent.<\/strong> And, over the next two years, the automaker grew its market share by 57 percent.<\/p>\n

Many of today\u2019s subprime consumers are essentially good people who\u2019ve fallen on hard times. After they pick themselves back up, they will remember how they were treated when they were struggling \u2013 and they will be that much more loyal to the companies who treated them well.<\/p>\n

No, it\u2019s not a good idea to loosen credit standards too fast or too far.<\/strong> And, as the year plays out it might be a good idea to consider tightening standards. But, those standards are not the only way lenders can positively impact consumers.<\/p>\n

Evaluate how your institution is working with dealerships to provide subprime consumers a prime shopping experience. Spend time developing your relationship with dealers to truly understand their market demographic and challenges,<\/strong> as well as explain to them your niche and how the two can complement each other.<\/p>\n

Grow your ability to service today\u2019s subprime consumers. Many consumers who finance through dealerships have so much to focus on that they don\u2019t pay attention to who\u2019s funding the loan, just so long as it\u2019s funded. Create a communication strategy to these consumers so they know that it was your institution that was there for them when they needed it most.<\/strong><\/p>\n

Knowing that these consumers are looking to repair their credit, you can even tailor your communication around tips or services you provide to do just that. And, when they contact you directly, ensure your customer service representatives are holding themselves to the highest of standards for customer service.<\/strong><\/p>\n

Do your utmost to ensure that your subprime consumers\u2019 entire ownership experience is one of dignity and respect. One way to further cement this sentiment is to take the Hyundai Assurance approach. You know these consumers are going through an uncertain time in their lives. That\u2019s why they are subprime. Give them a sense of stability and protect your loans from the risk of default with consumer protection products like a vehicle service contract or vehicle return protection.<\/strong><\/p>\n

Products like these can potentially enable subprime consumers to stay current on their auto loan payment when unforeseen circumstances occur, such as a vehicle breakdown. By providing a sense of security from life\u2019s unpredictable nature, you are giving consumers a tangible service of significant value.\u00a0Beyond directly addressing pressing consumer needs, these products also have the potential to increase your bottom line, as well as the dealerships with which you work, through the sale of upgrades.<\/strong><\/p>\n

As a lender, you have the opportunity to increase repeat and referral business for your dealership partners as well as yourself<\/strong> by asking the question, \u201cWhat have I done for consumers, lately?\u201d Reviewing and improving customer service policies, implementing strong communication plans, and providing consumer protection products have the potential to reap long-term results.<\/p>\n

As the innovator behind the award-winning Hyundai Assurance Program<\/a>, EFG Companies<\/a> knows how to enable your institution to reflect today\u2019s consumer needs and capitalize on your efforts. Contact us<\/a> today to find out how.<\/p>\n","protected":false},"excerpt":{"rendered":"

  Contributing Author: Steve Klees, Senior Vice President, Specialty Channels, EFG Companies As the nation continues to recover economically, we\u2019ve seen the subprime market steadily expand. The debate rages on […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[30],"tags":[28,159,118,17,5,119,50],"class_list":["post-434","post","type-post","status-publish","format-standard","hentry","category-business-growth","tag-efg","tag-efg-companies","tag-hyundai-assurance","tag-steve-klees","tag-subprime","tag-subprime-auto-finance","tag-subprime-lending"],"aioseo_notices":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p7ht2K-70","jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/efgintelligence.com\/lendingcurve\/wp-json\/wp\/v2\/posts\/434","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/efgintelligence.com\/lendingcurve\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/efgintelligence.com\/lendingcurve\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/efgintelligence.com\/lendingcurve\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/efgintelligence.com\/lendingcurve\/wp-json\/wp\/v2\/comments?post=434"}],"version-history":[{"count":4,"href":"https:\/\/efgintelligence.com\/lendingcurve\/wp-json\/wp\/v2\/posts\/434\/revisions"}],"predecessor-version":[{"id":520,"href":"https:\/\/efgintelligence.com\/lendingcurve\/wp-json\/wp\/v2\/posts\/434\/revisions\/520"}],"wp:attachment":[{"href":"https:\/\/efgintelligence.com\/lendingcurve\/wp-json\/wp\/v2\/media?parent=434"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/efgintelligence.com\/lendingcurve\/wp-json\/wp\/v2\/categories?post=434"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/efgintelligence.com\/lendingcurve\/wp-json\/wp\/v2\/tags?post=434"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}