F&I For A Buy Here-Pay Here Operation

F&I For A Buy Here-Pay Here Operation

Many dealerships who have a buy here, pay here operation tell me that part of their success is due to keeping the customer’s payment low and affordable. They are, therefore, reluctant to offer those customers a service contract.

Consider the following list of reasons why customers have poor credit in the first place:

1) My dog ate the payment book.
2) I never received my payment book.
3) My paydays were changed.
4) My job was changed.
5) My wife took the car; she can have the payments.
6) My husband took the car; he can have the payments.
7) The lawyer said I would have clean credit after the BK. What do you mean it still shows?
8) The vehicle turned out to be a lemon.
9) I thought the payments were deferred until 2020.
10) I could not afford the repair bill, and I won’t make payments on something that doesn’t work. You can understand that, can’t you?
11) I moved.
12) I could not locate my mailbox.
13) I located the mailbox but could not find the key to open it.
14) The vehicle was in the shop again.

While many of these customers have a “need-versus-want” mentality, we should provide them with the means by which they can keep their vehicle in good repair without placing their fragile monthly budget in jeopardy.

I fully understand the need to keep the customer’s payments low. I also see value in each customer having a service contract that eliminates the unplanned repair expenses for the major components of the vehicle. Many people find themselves in financial trouble due to the high cost of mechanical repairs. When the budget is stretched, a decision must be made to leave one or more of the bills unpaid. A service contract can eliminate the need for this choice because generally speaking, the contract provider will cover the major repair bill.

If we are too conservative on the deal structure and do not present any additional items, we may actually add to the list of reasons why a customer’s credit remains challenged. When customers enjoy a positive financial experience during the vehicle ownership, they pay their obligations in a timely manner. The result is a better credit rating and a repeat customer.

Dealer Marketing Magazine, May 2007, P. 49