Regardless of which way the subprime breezes are blowing, GWC Warranty explained there are certain steps dealers can take to ensure their own subprime business doesn’t fluctuate with the annual ebbs and flows of the subprime market.

The company that specializes in used-vehicle service contracts and related finance and insurance products sold through dealers pinpointed three specific strategies stores could use.

1. The right Inventory.

GWC Warranty emphasized that it starts with selection of inventory and moves on to the inventory dealers present to each individual customer.

“Head to auction with the subprime customer in mind,” the company said in a recent blog post. “Do some research with your lenders beforehand to see which vehicles they’ve had subprime success with and target a few of those each time you’re acquiring inventory.

“And then once they’re on your lot, present them to customers who pre-screen with subprime credit,” GWC Warranty continued. “Once you engage with the customer, try something along these lines: ‘Thanks for reaching out Mr. Smith. I have three great vehicles here that match what you’re looking for and they’re vehicles I know we can get financed for you.’”

2. The right finance companies

GWC Warranty insisted that part of being able to select, present and finance the right vehicle for a subprime customer is having strong contract-purchasing partnerships.

“Seek out lenders who know the subprime space well and operate in it frequently,” GWC Warranty said. “Many can be local providers so finding lenders who know your area well will help too.

“Lenders that meet this criteria will more consistent with their decisions and help you get more subprime deals approved on a regular basis,” the provider added.

3. The right protection.

GWC Warranty acknowledged that a common struggle on a subprime deal can be adding a vehicle service contract on the back end with a limited subprime advance.

“This is an obstacle you can certainly overcome — especially if you’ve worked on the first two points we’ve discussed,” the provider said. “It’s a simpler solution than you’d might think too. Just ask. And you might have to ask more than once, but good subprime lenders will understand the value of a service contract on a vehicle. Remind them of that if you need to.

“A service contract will keep a car on the road, protect a customer’s monthly budget and, in turn, lower the likelihood of a default,” GWC Warranty went on to say.

Editor’s note: This blog post and others from GWC Warranty can be found here.