Customers purchasing cars sometimes need to be extended credit from an automotive company in order to obtain the car they desire. As a result, if you’re on your way to becoming an automotive business manager, being able to read and understand credit reports will come in handy during your career. That’s because knowing how to read a credit report helps you determine who is deserving of having credit extended to them, and even provides several other benefits as well.
If you want to become an automotive business manager, here’s some information about why credit reports are important and how they should be read.
1. Automotive Managers Get Clients to Fill out Credit Applications to Meet their Needs
Credit applications can be a useful tool to increase the chances of a customer getting the car they need. For example, if a family comes into your dealership looking to purchase a minivan, credit gives them the opportunity to do so with minimal risk. In fact, according to a recent report by the Financial Consumer Agency of Canada titled Auto Finance: Market Trends, car sales in Canada have hit record highs for the third straight year in a row, and that increase has gone hand in hand with helpful financing options. As the report states, “Record sales have been accompanied by a significant expansion of Canada’s auto finance market, which has nearly doubled in size over the past eight years, from roughly $60 billion to $120 billion.” It’s no surprise, then, that checking credit scores is an important part of managing any automotive business and helping customers get the cars they want!
2. Protecting Against Fraud is Important for Automotive Business Managers
If you’re an automotive business manager, you know that credit applications can help protect dealerships and automotive businesses against fraud and needless test drives. When potential customers want to test drive a car, for example, it’s sometimes important to run a credit report in order to determine if the client actually has the potential to afford the car. There is also the potential of car theft during test drives, which does happen occasionally, and is another reason to check a client’s credit history.
Using this process to ‘screen’ potential clients requires excellent inter-personal skills in order to not ‘scare away’ potential customers. When a credit report comes into play, negotiations also often begin to speed up and become more serious.
3. Auto Business Manager Training Teaches You that Credit Reports Help Sales
Another additional benefit of a having a client fill out a credit application is that automotive business managers can then gauge how exactly to proceed with the sale. As you begin your automotive business manager training you might learn that those with excellent credit might be more receptive to direct and persistent sales tactics due to the confirmation of their credit resources. Buyers with excellent credit can also be asked if they would like additional insurance coverage products or car upgrades. But first, automotive managers need to know how to read a credit report.
4. Automotive Business Managers Understand what the Credit Report is Saying
The credit report is basically an outline of a potential client’s loan histories. It is provided via a reporting agency such as TransUnion or Equifax. It details, among other factors, when clients opened accounts, the amount they owe, whether payments were made on time, and whether they exceeded their credit limit. Through analysis of these various factors, each potential customer will be given a score from 300-760+. Scores in the range of 300-559 are deemed poor, 560-659 are fair, 670-724 are good, 725-759 are very good and 760+ are excellent. The majority of Canadians, 57%, actually have an excellent credit rating—good news for automotive business managers!
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