Auto dealers are competitive by nature. That “beat the dealership down the street” mentality means looking at every angle to gain an advantage. A game-changing (and cost-saving) strategy that’s making a big impact is simply leveraging soft pull credit reports. Soft pulls offer a wealth of advantages and provide dealerships with critical insights that optimize their sales process.
Understanding Soft Pulls
A soft pull, also known as a prequalification, soft credit check or a soft inquiry is a credit inquiry through Experian, Equifax, and/or TransUnion that doesn’t impact a potential buyer’s credit score. It offers valuable, high-level insights into a buyer’s credit standing. This information is crucial for auto dealerships to assess creditworthiness without conducting a full hard pull credit report at the initial stages. In a rapidly evolving digital age where consumers expect quick and seamless transactions, soft pull pre-qualifications significantly enhance your dealership’s efficiency and customer experience.
Five Key Reasons to Leverage Soft Pulls
- Cost-Effective Approach: Traditional hard pulls can quickly become a significant expense and aren’t really needed until you’re ready to close and/or fund the deal. Soft pull credit checks or pre-qualifications are more economical than hard inquiries, allowing you to manage your costs effectively while gaining essential insights into your prospective customers’ financial status.
- Early Buyer Assessment: Using a soft pull pre-qualification allows you to gauge a customer’s likelihood of qualifying for financing early in the sales process, and understand how many credit inquiries they’ve had in the last 30 days, even their current car payment(s) and loan terms. All of these data points give dealers insight into the customer’s likelihood of and ability to purchase a vehicle.
- Customer-Friendly Strategy: The potential negative impact on their credit scores makes many potential buyers apprehensive about hard pulls. Offering a soft pull credit check as an initial step reassures customers, and fosters trust and a positive relationship from the get-go. This customer-centric approach aligns with today’s consumer expectations of non-invasive, customer-friendly practices.
- Streamlined Operations: By enabling you to filter through leads swiftly, a soft pull pre-qualification optimizes your sales process, enhances your conversion rates because fewer pieces of information are needed, and consequently, increases your profitability. It provides your sales team with a clearer direction, making your dealership’s operations more efficient.
- Compliance Risk Mitigation: Navigating the regulations around credit checks can be challenging. Soft pull credit checks are fully compliant with the Fair Credit Reporting Act (FCRA), reducing your dealership’s exposure to compliance violations. They don’t require written consent from the customer, unlike hard pulls, which aids in maintaining FCRA compliance while streamlining your process.
A soft pull pre-qualification is more than just a cost-effective tool; it’s a comprehensive strategy for enhancing operational efficiency, fostering improved customer relationships, maximizing profitability, and mitigating risks.