Digital Dealer - January 2018 - 36

FINANCE & INSURANCE

By Eric Mélon
President of Sales,
Innovative Aftermarket
Systems (IAS)

Turning Cash Buyers
into Auto Financers
How to Drive
Financing Forward
in the Middle of
a Cash-Paying
Market
Advice from national,
well-known financial
advisors is trending these
days, with recommendations for consumers to
pay cash for everything
- including big automotive purchases. It's
advice that's not always
welcome at your car
dealership and can
sometimes be a nuisance
for today's F&I manager.
That advice - on top of
recent trends in the economy coupled with a rising
federal funds rate - could
lead more customers to
enter your dealership
ready to pay cash for a
vehicle.
So, how do you
ethically persuade those
customers to finance?
You can help your customers make the best
decision by arming them
with important information they may not have
considered.

LET'S TALK RAPID
DEPRECIATION.

A former wholesale
producer once gave this
advice to a colleague of
36

JANUARY 2018

mine back in the 1980s:
"Don't buy a depreciating asset with your own
money. Use someone
else's money." Despite
changing times, his advice still holds true today.
The average new car
will depreciate 50% of its
value within three years
of a purchase.
Depreciation is something your customer may
not have thought about.
Is your customer sure
they'd want to pay cash
for a $25,000 vehicle
only to have it be worth
$12,500 three years from
now? That's like going to
your banker and investing
$100K and then waking
up three years later to
find out you only have
$50K!
By encouraging customers to finance at a
low rate, they'll be able to
keep their money in the
bank and hopefully earn
interest from those funds.
ASK CUSTOMERS TO
PAY IT FORWARD AND
HELP SOMEONE ELSE.

Apply some emotion to
your customer's decision.
If your customer isn't
worried about depreciation, educate them about
credit scores and approvals. Your well-off customer may not realize that

D I G I TA L D E A L E R . C O M

if they finance with their
high credit score, it will
affect your dealership's
credit portfolio and allow
the finance department to
approve someone with a
lower credit score.
A simple, "I can get
them in through you,"
may encourage your customer to pay-it-forward.
After all, life happens and
a family may have a lower credit score, but that
doesn't make them unworthy of a car purchase.
You never know what
someone else has been
through to lower their
credit score, whether it is
a sick child or some other
unexpected life event that
turned their credit score
into a downward spiral.

PAY IT OFF IN
90 DAYS.

Assure your customer
that if he or she has a
change of heart, they can
still pay their loan off early
(within 90 days if they
choose) and not have
to worry about monthly
payments. Your customer
benefits because they
have options and more
time to make an important
decision. Your dealership
also benefits because
you still get the customer's A+ credit rating in
your portfolio. Also, you'll

know you did everything
in your power to get the
customer to finance,
even if it's just for those
first 90 days.
USE THIS ADVICE
TO STEER TOWARD
A MORE POSITIVE
FUTURE.

As the economy continues to improve from
the 2008 crash, interest
rates are bound to go
up. By employing these
simple tips to help your
cash-carrying customer
to agree to finance, you'll
be training your entire
F&I department to steer
in more financing deals.
These tips will benefit
your customer and help
them make a smart money choice. As a result,
your dealership will also
reap benefits through a
stronger credit portfolio
and the ability to approve
a wider range of credit
scores.
ERIC MÉLON has more
than 30 years of experience
in the automotive industry.
Eric serves as President
of Sales at Innovative
Aftermarket Systems (IAS).
To take advantage of more
advice from Mélon and his
team, visit iasdirect.com.
EMAIL: EMelon@IASDirect.
com
http://www.iasdirect.com http://www.DIGITALDEALER.COM
Table of Contents for the Digital Edition of Digital Dealer - January 2018
