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Five Universal Rules for Increasing Down Payments

“Customers today don’t have any money!” “We had 15 ups today and couldn’t sell any.” “Typical, they only want the vehicles they can’t afford.” I hear comments like these at every dealership I visit, including our own. My answer is always the same: People who have bad credit are in their situation because they don’t have enough money! Money is always a factor with special finance and always will be.

The solution to this universal finance problem is simple. However, we in the car business tend to make it much more difficult because, for whatever reasons, we deviate from the “Road to the Sale” and blindly navigate through the deals. We only look at the surface of the situation and begin taking the customer’s answers at face value. Then, to make the job more difficult, we cut corners, pre-screen and make stereotypical generalizations.

If this sounds familiar, stop what you’re doing and try something different before you go insane. If you follow The Special Fi Guy’s Five Universal Rules for Increasing Down Payments, you will sell more cars and earn more money regardless of your dealership or market. These five simple rules have been tried and tested for years, and I promise you they work! If your deals are lacking significant down payments, it is because one or more of these rules have been broken.

RULE #1 – Work Every Deal Like it IS a Deal
Never give up! Whether the glass is half empty or half full is a matter of perspective. In special finance, you have to approach every deal looking for ways to make it happen and never look at any deal trying to find reasons why it won’t happen. Customers are at your store and want to buy. They need a vehicle, and they will find someone to sell them one. It’s that simple. If you take a pessimistic approach at anything, especially sales, you are guaranteed to be unsuccessful. If you work every deal like it is a deal, it will become one in time.

You may not sell a vehicle to every customer that visits your dealership today, but if you do your job correctly, the customer will buy “into” you, your dealership and your program. When they are ready to buy, you will sell to them. The fact is that time changes all things and all situations.

RULE #2 – Understand the Situation
Why is the customer buying a vehicle? When do they have to buy? Every time I am on the desk and a deal is brought to me, I immediately ask these two questions. It is imperative that we fully understand the customer’s situation. Every deal is different; before we begin asking for large down payments, we need to know if the customer is committed and ready to act now.

Last month, I was working the sales desk for a client in Charlotte, N.C., when a mother came into the dealership to look at SUVs. The eager sales team was ready to show her a fully-loaded, beautiful, black and tan 2005 Ford Explorer. I immediately called my usual time-out and noticed that the antsy salesperson responded to my questions just like my 17-year-old daughter on a Friday night before going out with friends. It was evident through his deep sigh and eye roll that he though I just wasn’t getting it. Nevertheless, he patiently walked me through the scenario in a valiant attempt to inform this old-school car guy who appeared a little slow on the uptake.

I asked three presumptuous questions: Where did she finance her 2003 Ford Windstar? Will her husband be part of the purchase decision? Is she only interested in purchasing an SUV? The salesperson replied to all three with an, “I don’t know,” and together, we went to further interview the customer. People do not want to be sold; they want to be understood. In this case, we had a whole lot of homework to do before we could even begin to do our job of understanding our customer and satisfying her needs.

Let me give you some important facts about the deal. The customer, Gloria, had a scheduled appointment generated from an Internet special finance lead, so we knew her credit would be an issue. She was driving a nice, low mileage van that ran well and had no apparent problems, so why was she shopping for a vehicle? She told the salesperson she wanted to upgrade to a nicer vehicle, which sounded reasonable enough. However, experience was telling me there was more to the story. Lastly, she was shopping with her four young kids. Now, without sounding like a narrow-minded sexist, it has been my experience that most couples make joint decisions when it comes to an automobile purchase. Besides, I needed to know her motivation for buying and her sense of urgency.

After further investigation, we discovered several key facts that were buried under the surfac. It is amazing what people will tell you when you actually take time to establish rapport and earn trust. We learned that Gloria recently filed for a divorce and just started a new job paying $2,500 per month. Now, let’s take a moment to ask a rhetorical question. Does Gloria have a significant down payment? The chances are, no.

The point is, she is probably not ready to purchase yet. so when the salesperson and I returned to the sales desk, I gave him his marching orders. I told him that his number-one job was to make Gloria feel like the most important customer in the world and not to worry about anything else.
RULE #3 – Empower Your Customer with the Freedom to Choose
A common mistake in special finance occurs when dealerships try and force customers into a vehicle that fits the customer’s budget and makes the dealership money. Although this is necessary for success, the mistake happens with the technique. Special finance and BHPH customers used to be captives with limited options. Today, they now have choices thanks to good ole fashioned capitalism and competition.

The secret to success is to guide the customer through a process that allows them to make the most educated decision and empowers them with the ability to choose. Always remember, they have pride just like you and me. Choice is a necessity in all purchasing decisions, and today’s customers have more options available than ever before. If you establish rapport, build trust and have patience, you will guide your customers to the right vehicle the majority of the time.

In Gloria’s case, we gave her three options. The first was the 2005 Explorer (her choice), which was the wrong vehicle financially. The two other choices were a 2003 Chevrolet Venture and a 2005 Ford Taurus. The salesperson professionally presented each vehicle and to no surprise, she chose the Explorer. Nevertheless, she was treated like a “customer” who has the power to choose.

RULE #4 - Always Go on the Demonstration Drive
There is a simple rule in  used vehicles. It’s Murphy’s First Law of Used Car Sales, and it states, “If something is going to go wrong with a used car, it’s going to occur when you are presenting it to a customer.” This is the primary reason that the salesperson MUST go on the test drive with their customer each and every time. Not if, but rather “when” something goes wrong or an objection to the vehicle occurs, the salesperson is immediately made aware so he or she can address it right away. Otherwise, the dealership may never know that the reason the customer did not buy.

The second reason to accompany the customer on a test drive is to build value by helping them take mental ownership of their new vehicle. This is easy to do and so important to the deal. A salesperson’s job is to create and enhance desire and the test drive is show time. 

RULE #5 – Always Perform a Consistent Four Square Presentation
After establishing rapport, building trust, taking the demo drive, getting the customer’s final decision to purchase, finalizing a credit decision and performing a thorough needs analysis, it’s time to present numbers. Now, it’s time to talk business; it’s time to ask the customer to act and don’t be shy. It’s time to ask for money and lots of it, regardless of your gut feeling.

Every special finance deal should be presented to the customer using the Four Square technique or some similar approach. The key is to employ a consistent process with confidence. The best approach is to present numbers to the customer three separate times. This builds value into the deal with a strong sense of negotiation which is an important need for every customer. If done correctly and consistently, it will increase your down payments from customers.

In Gloria’s case, we initially asked for a $5,823 down payment that factored for a $473 monthly payment. The final pencil yielded a $4,693 down with a $428 monthly payment. Gloria left the dealership disappointed about the results. I was confident in our approach and credit decision based on her limited credit file, which included a 523 score and recent slow pays on the current car loan. Because her estranged husband was the maker on the current AmeriCredit loan, I was especially confident she would return and make the right decision.

It’s always a gamble whenever a customer leaves a dealership without buying. The gamble is whether they’ll come back. However, if you do your job consistently and confidently and fully understand their current situation, needs and goals, this gamble becomes a sure bet (especially when you’re vying against other dealers across town).

Gloria shopped my client against several other dealerships, but nobody came close to matching her experience on the day of her initial appointment. The sales team took time to get to know Gloria, treated her with respect, listened, presented a list of viable options, built trust through a proven sales process and earned her business with exceptional service. They also understood the situation and discovered the unsaid emotional factors of the sale. Gloria’s primary desire was for independence. She wanted a vehicle that did not involve her soon-to-be ex-husband.

Three weeks later, on the day after her divorce was final, Gloria came back to my client’s dealership and purchased a 2004 Dodge Grand Caravan SE with a $2,100 cash down payment and a $325 monthly payment. She knew exactly what was necessary to accomplish her goals. The dealership made a profitable sale to a satisfied customer. They gained three additional referrals from that customer, and everyone was happy. The sales team stuck to the plan and followed these five simple rules, and the process worked just like it does in any market and at any dealership.

vol 5, Issue 1


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