Detroit-area auto dealer Rich LaLonde hopes to boost vehicle sales by offering high-risk consumers a new service: credit counseling.
Last month LaLonde held a weeklong series of free credit clinics at his two Kia stores. The 120-plus people who attended the sessions at Summit Place Kia of Waterford, Mich., and Summit Place Kia of Mount Clemens, Mich., received one-on-one credit counseling, he says.
On hand were LaLonde, representatives from financial institutions and a credit-repair specialist available for hire in case an attendee wanted to dispute claims with the credit-rating agencies.
LaLonde says one goal of the clinics was to sell cars. But he says consumers also need a comfortable place to discuss their credit problems. He says he hopes they will remember the service when they are in a position to buy a vehicle.
"These people get lied to all the time," LaLonde says of sales pitches. "They're told that if they come in, their financing will be approved or that they'll get great rates. Then they drive 45 minutes and there's nothing there for them.
"Our passion is to help people with their credit. Sometimes their expectations are too high."
Subprime borrowers are in the spotlight across auto retailing as lenders become increasingly more willing to accept lower credit scores and dealers look to keep the annual U.S. vehicle selling rate above 15 million units. According to Experian Automotive, 36 percent of outstanding auto loans in the third quarter this year were subprime.
LaLonde is hardly alone among auto dealers interested in combining consumer credit rehabilitation with car sales.
Karl Malone Toyota in suburban Salt Lake City plans to open what it calls a Credit Rebound Center next year, says Andy Madsen, CEO of Karl Malone Group.
The $2.5 million used-car showroom and offices will offer subprime buyers credit advice in an upscale atmosphere featuring leather furniture, an aquarium, music and refreshments, Madsen said.