Finance Manager 101: The Dreaded Cash Buyer
Most mainstream car dealerships sell the majority of their cars on a finance contract with the bank. The customer obtains financing at the dealership, more often than not negotiating payments to buy right on the sales floor. But when the dreaded cash paying customer shows up, you can hear the giant sigh out of the business office all the way from the parking lot.
If you’re a finance manager working in a busy car dealership, and most of your deals are finance, then I would be willing to bet on two things. One, that you hate cash deals because you perceive that you can’t make any money. Two, predictably, you don’t make any money, or almost no money on cash deals. If you’re one of those finance managers that has gotten completely full of self-importance, you might not even take the turn, choosing instead to send a salesperson out and get a signed bill of sale. If that’s you, well, in your defence you probably have to leave early to pick up that new tailored suit.
I remember a circumstance not that long ago that proved to me that prejudging the cash-paying customer is a huge mistake.
Do you really think all those items in the business office have so little value that a person paying up front with cash, doesn’t value them? I remember a circumstance not that long ago that proved to me that prejudging the cash-paying customer is a huge mistake. We had a customer that required a co-signer. These can often, if done right, be great opportunities for extra gross, but that’s a whole other video. In this circumstance, the co-signer was quite far away. So far that documents needed to be couriered. It was a parent or sibling, something like that. When the co-signer received the documents, they were shocked by the payments and the interest charges. So much so that they told the finance manager that they would prefer to pay up front, pay cash, and if he could send out a new bill of sale. The finance agreement included a rather expensive and profitable warranty in the deal. When the co-signer requested the deal to be changed to cash, the finance manager removed the warranty. In fact, he was so convinced that someone paying cash or upfront wouldn’t want the warranty that he removed it without even asking. He printed a new bill of sale and sent it off to the client and co-signer.
Unbelievably, what happens next? The co-signer calls. “You took out the warranty, could you please put it back on.” The finance manager was shocked and surprised, and maybe learned a valuable lesson.
You have to believe in the products you sell.
You have to believe in the products you sell. The value of the products. The quality of the products. The value being exactly the same for a finance buyer and a cash buyer. Someone paying up front for a vehicle is making a considerable investment in a very important part of their lives; the part that involves a vehicle. Getting from place to place. Perhaps living on a budget. Taking pride in the vehicle. Having family that may be driving the vehicle. All the same things that a payment buyer is focused on, maybe even more.
If you can’t sell to a cash buyer, it says several things. First, you don’t believe in the value of the products you sell. Second, you are probably prejudging your cash buyers and not spending the time trying to sell them. Cash buyers need warranties. Cash buyers want their cars to look nice and last a long time. Cash buyers want to take pride in their vehicle. Protect their investments. Protect them from unexpected costs down the road. Enjoy their ownership all in the same way as a finance buyer.
Yes, you may not make as much on a cash buyer as a finance buyer because certain financial products are off the table. But if you believe in the products you sell, and you focus on presenting them every time, you will find that those cash buyers who can pay tens of thousands of dollars up front for a vehicle may come up with a few extra thousand dollars to enhance their ownership experience. So good luck and good selling.
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