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Non-Prime Lending Strategies

By Michael Moore, Vice President, Senior Account Executive Sales

Competing Non-Prime lenders are all up against similar challenges today. The focus is generally on growth, managing loss, and being more efficient while addressing customer/dealer satisfaction. Growth is the most difficult and important focus. Lenders have additional challenges building a comprehensive risk model especially with the progression of indirect/digital customer acquisition strategies.

Lending Strategies for Non-Prime

  1. Marketplace vigilance – Staying attentive to the marketplace.
  2. Competitor awareness – Staying aware of competitors in the market.
  3. Bench-marking – Comparing business processes and performance metrics to industry best practices.
  4. Responsiveness – Reacting quickly and positively to borrower’s needs.
  5. Level and depth of customer risk targeted – Higher-risk credit applications are more complex and need more underwriting effort.
  6. Pricing – Within comparable credit-risk bands the primary capture-rate driver is pricing.
  7. Increasing capture rates – Sales increasing capture rates and number of non-prime loans.
  8. Marketing and advertising methods – Generating direct-to-consumer volume through marketing and advertising methods such as partnership arrangements and search engine marketing campaigns.

Whether a lender is basing growth on expanding current customer relationships, different scoring strategies, or different Spectrums of credit, responsive and encompassing strategies backed by alternative credit data seems to be the key to success.