There’s nothing more disheartening to a service advisor than presenting a customer with a list of service recommendations only to hear the customer agree that they need the service, understand its importance and value, but they simply don’t have the available funds to complete it.
In such a highly competitive market that service advisor knows that when the customer walks out the door, the likelihood of them returning is not great. They will probably price shop the service and end up getting the work done elsewhere.
Sure, there are times when the “can’t afford it” excuse is simply that… an objection. But even the service advisor with the best sales skills can’t overcome the objection when the customer truly doesn’t have the money to pay for the services. However, there is a way to overcome those objections and assist customers that want the service but can’t pay for it all at once, regardless of their credit:
Offer them options!
I’m not saying start accepting bitcoins, or trading service for cows. But here’s the deal: Many dealerships limit the forms of payment they accept to cash, check and credit cards. And some now even refuse payment by check.
Not all of your customers have money sitting in the bank waiting for emergencies, or credit cards with available credit just waiting for their use. There are, however, plenty of options available for all types of credit customers. They are worth investigating so you can offer your customers all the many types of financing available – and let them choose the right one for their needs. It is a great way to improve the customer experience. And today’s sales process is increasingly all about that customer experience.
With that in mind, many of the dealers I talk to don’t really know about the different types of service financing options available. Here’s a brief summary of potential options depending on your customer, which I hope helps:
- Low Risk Customer: For customers with excellent credit
- Credit Cards – This is the option that almost every dealership accepts as a form of payment. While the upside may seem to be that it’s simple, there are unseen costs involved including processing, terminal and service fees, etc. And, just like any credit card processor, you pay a percentage of the total charge. Plus, you are banking on the fact that the customer has enough available credit on their card, which isn’t always the case.
Options: Synchrony, CFNA, OEM Manufacturer Card
- Mid Risk Customer: For the broadest spectrum of customers
- Simple Interest Loans – These loans are similar to car loans in structure – but in much smaller amounts. They allow a customer to finance the repairs – oftentimes at much lower interest rates than a normal credit card – and, in many cases, offer an interest-free period where the customer can repay the loan with no interest. Several companies offer this type of loan. While the interest rates are credit-based, many have a wide range of credit scores they consider for loans and can finance the more credit challenged customer as well.
Options: Confident Financial Solutions (CFS), NetCredit
- Highest Risk Customer: This is a point-of-sale solution for those with no other options
Options: Springleaf Financial, One Road Lending
- Secured Loans – This type of loan is typically secured by some sort of collateral. Because of this – and depending on the collateral – lower credit scores are considered and could qualify for these loans. While not as high of a cost to the consumer as a payday loan, the interest rates for low credit customers can go as high as 40%.
- Lease Agreements – This type of financing is typically reserved for the highest risk consumer. Leasing auto parts (and service) is costly but could be a viable option for those customers with the most challenged credit. The pros for the dealer are that they get the service business. It also gives that consumer who has no other resources an avenue to get their vehicle repaired. As opposed to rent-to-own products, this arrangement tends to come at a high cost to the consumer, typically resulting in repayment of double the amount financed over the entire term. However, it will help those that are truly in need.
As you can see, there are many options for payment you can provide for your customers. The simple fact of offering all of these options will, by itself, help increase service revenue as car repairs, in general, are a necessity for many and maintaining a vehicle properly will, in the long run, cost them less.
I am not in any way suggesting that as a dealer you should act as a financial advisor. Just provide your customers with all the available choices. Let the customers decide which payment method best fits their needs. You may be surprised which they select. Either way, you’ll get the service business that might otherwise have walked out the door and down the road to your competition.