Opportunity of Tax Season 2019
By Reggie Ponsford, Senior Vice President of Automotive Solutions Sales, Spireon
Child Tax Credit, EITC
revisions, and more will put more money in the pockets of car buyers. Include
these three strategies to prepare your dealership now.
As the US economy continues a steady acceleration in GDP and
job growth, more consumers find themselves in stronger financial standing with greater
purchasing power. Several new tax laws and a 25 percent tariff hike on imported
push subprime consumers away from new car options and into your used
The Tax Cut & Jobs Act of 2017 includes a more generous
Child Tax Credit increase
from $1,000 to $2,000 per child under the age of 17, which could lead to
refunds of up to $1,400. Earned Income Tax Credit (EITC) was
raised by up to $6,431 for married taxpayers filing jointly with
three or more qualifying children (for households with modest annual incomes).
Income tax brackets have
been revised, with lower rates now covering larger income ranges.
Welcome to a potentially golden opportunity for BHPH dealers,
courtesy of Uncle Sam.
Refunds have more
than doubled in the last decade. BHPH dealers typically expect to
see up to 50 percent of their annual business during tax season. This tax
season, dealers have a huge opportunity to cash in on the latest tax laws and unfolding
Even large lenders have taken notice and are relaxing their
credit score requirements to attract the subprime market. Opportunity is knocking;
however, there’s a lot of competition to answer the door.
Here are three ways to start preparing now to maximize your revenue
during the 2019 tax season:
1. Start Preparing Immediately
Now that the PATH Act is federal law (as of 2017), tax
refunds won’t go out until after Feb. 15, meaning money will not hit buyers
hands until the last two weeks of February, though the first week of March,
about a 10-day window in which a tsunami of car buyers will be hitting lots. Your
competitors won’t wait to act until then, and neither should you.
So where do you begin? Get the word out now. Consumers have
already begun their research online. Let them know now why they should do
business with you through a mix of print ads, online ads, and social media.
Also make sure you’ve created clear policies regarding
partial payments, asset recoveries, and vehicle tracking to support collection
efforts. These policies will allow you to provide flexibility and transparency
without putting your business at risk.
2. Differentiate Your Business
a tried-and-true way to stand out from the competition in this business: by
streamlining the sales process. When you can close deals faster, the risk of
customers simply walking away to avoid the hassle is greatly decreased. Initiate
a “drive now, pay later” program. There are tax partners out there that can
estimate customer refunds in advance and offer early payments.
you considered vehicle add-ons to differentiate you from the dealer down the
street? For instance, you can offer aftermarket connected car features on any
car you sell. Provide your customers a unique mobile experience with luxe tech features,
such as instant vehicle tracking, driver behavior alerts, low-battery warnings,
insurance premium discounts (where applicable), and theft recovery tools, all
for a nominal fee added into the loan. Or maybe you throw it in free of charge to
close the deal. With bigger refunds flying about this tax season, it’s not a
bad time to give customers more value for the buck.
3. Manage Risk
season may feel like a land grab, but you still have to protect yourself long
term. So remember, stick to your underwriting guidelines. It’s easy to lose sight of good business practices when anxious customers
are waving tax refunds in your face. Hold fast. Relaxing your risk profile now
could cost you later.
goes a long way to know with whom you’re doing business. Follow through on
STIPs verifications and use automated verifications where possible. Profits are
only profits after they’ve been collected. Confirming application data is
time-consuming, but technology is available to automatically verify home and
work addresses at a minimum.
delinquency controls also is a must to protect and recover delinquent assets.
Installing GPS devices on your
vehicles offers a host of upside in the event things don’t work out.
Get More From the
Latest GPS Technology
Proper preparation, differentiation, and risk management combined
with smart technology can not only get you off the ground this tax season, it could
make your entire year. Don’t sleep on a full-featured GPS solution that delivers
proactive risk management, decreased late payments, and faster vehicle
recoveries. Find one with a consumer mobile app add-on with connected features
to boot, and you’ve got yourself a very appealing package come tax season.
Reggie Ponsford is Senior Vice President of Automotive Solutions Sales at Spireon. Reggie oversees sales
for the vehicle finance market segment, including BHPH dealers and rental
operators. For more information about tax season 2019, visit Spireon’s Tax
Season Resource Center at spireon.com/path-act-resources-car-dealers.