According to a recent report from the JPMorgan Chase Institute, many Americans need more than a year to recover from a $1,500 financial hit.
That’s apparently the approximate amount nearly 40 percent of American families paid to cover what they describe as extraordinary medical, auto repair or tax bills annually — requiring more than a year to recover their financial footing, with potentially serious impact to their physical and emotional health.
For this study, the JPMorgan Chase Institute examined anonymized data from about 250,000 Chase checking account customers (weighted for age and income to reflect national averages) from January 2013 to December 2015
I am sure you have seen many ROs that are $1,500 or more. So, what is that customer to do when faced with an unexpected auto repair bill, if they happen to be one of that 40 percent who simply cannot handle the financial burden? You could argue that they should simply use a credit card. However, thirty two percent of Americans already have high credit card debt and may not have the available credit to cover the expense.
The irony of traditional credit cards is that you can get credit when you don’t need it, but can’t when you do. Someone carrying high credit balances is less likely to be approved by that OEM credit card your dealership offers.
Consider offering more payment options. Many dealerships simply offer the normal cash, debit or major credit card (including OEM branded ones) to their customers. There are, however, other alternatives that exist for service financing. The more options provided to the customer, the more likely they will accept the repairs based on the terms that best suit their needs. This then relieves them of any anxiety due to unexpected repair costs, and provides your dealership with the service revenue.
It’s the same in car sales — all that matters is to help that customer buy a car on terms that work for them, within their financial budget and constraints. Customers that are offered alternative payment methods – such as low or zero interest short-term financing – tend to perceive that offering as a helpful act by the dealership, which helps create a relationship and a loyal customer.
Author: Tim Clay
Tim Clay, Chief Revenue Officer, Confident Financial Solutions. Tim Clay is Chief Revenue Officer with Confident Financial Solutions, a consumer finance company that offers an auto repair financing program for service centers and their customers. Clay has more than twenty years of experience in the automotive retail space and is a graduate of NADA Dealer Candidate Academy. Previously, he was COO and Co-Founder of ClickMotive, an automotive technology company. He has instrumented one successful automotive startup exit and one successful medical company exit.