Converting Customers to dealer financing

My mentor Steve and I had separate offices that were connected by a sliding glass window. This window was designed so that we could pass documents to each other.
It also served as a convenience for listening to what Steve was telling his customers. What better way for me to learn than to listen to his phraseology while I was doing routine F&I paperwork? Through that window I heard Steve conduct many conversions.
This is the first of several columns discussing ways to convert your customer to dealer financing from paying cash or from borrowing from other sources.
By financing your customer’s purchase, you collect interest on the amount financed, and you also are in a better position to sell additional F&I products and services.
In future columns, we’ll provide sample conversations between Steve and his customer. Hopefully, you’ll be able to adapt these conversations to your own situation.
Heart and soul of the F&I process
Keep in mind that these are very important columns for any business manager. Why? Because they contain what Steve called the “heart and soul” of guiding a customer through the F&I process. Your ability to direct and advise a customer is determined by your ability to convert the customer to “dealer financing.”
Dealer financing allows you the opportunity to sell more F&I products. You can’t sell credit insurance unless you finance the customer. And selling extended protection is certainly much easier when you can roll it into the payments.
But not all customers are immediately willing to allow the dealer to handle the financing. Usually, this is because they are not aware of the benefits described in this column.
Dealer financing
So, you have to ask yourself, why should a customer decide to forego paying cash and agree to dealer financing? Study the following.
Most customers who pay cash plan to later replenish their savings. But cash customers who allow the business manager to finance their vehicles don’t have to replenish their savings.
And by making comfortable monthly payments, they have created a “forced” savings program. This forced savings of making monthly payments requires less discipline and will power than starting a savings effort from scratch.
There are many investment alternatives for today’s smart investor, including real estate, mutual funds, life insurance investments, etc.
Some customers would experience a loss of investment opportunities if they chose to pay cash for their vehicle.
When customers pay cash, they get the vehicle and the dealership gets their cash. If they get sick or injured, they have the paid-off vehicle. Sounds like the smart way to go. Right? Perhaps not.
Wouldn’t it be better for the customer to have the vehicle, the cash and have someone else making the monthly payment until they get well?
Furthermore, if they should die, wouldn’t it be better for their estate to have the vehicle and the cash that they originally wanted to give to the dealership?
Financing provides flexibility
By not paying cash for their vehicles, cash customers have greater flexibility. If they wish to make other purchases such as a mortgage down payment, monthly prepayments, furnishings, appliances, etc., they can do so with their saved cash.
These same funds could be used to help the customer and/or their family in case of a sudden, unexpected emergency.
Customers who pay cash for everything may be doing themselves a disservice. What could be more important to a person’s financial well being than good health (the ability to earn money) and good credit (the ability to get money)?
Cash buyers who haven’t established credit need to get started today. Cash buyers who have not borrowed money for some time should consider renewing their credit worthiness.