Keen to try a "finance only" strategy for a month. Thoughts?

[Nick M.K. 574]

In times when good stock is hard to find and I struggle to keep up with the prep I am keen to try a finance only strategy for a month. My worry is that I'll pick up some bad reviews along the way, especially from the eBay last price warriors...

 

 

[Mark101 536]

On a couple of stickers, I was consifering chopping them to money back but on finance only - not sure of the legalities?  Or maybe even a Finance price and a Cash Price - I know some car supermarkets used to do it but not sure if the world has changed since FCA.

[Nick M.K. 574]

1 minute ago, Mark101 said:

I was consifering chopping them to money back but on finance only - not sure of the legalities? 

I've checked with Lawgistics and you can sell only to finance buyers if this is what you want to do.

Mark, how do you have a LIKE button? I have the Edit back but no Like. 

[NOACROSS 414]

A nice idea mate(s).  My only worry with my customers is the vast majority have their own money and certainly don't need finance.

Also, just a point that might be worth mentioning is that some people say 'cash' when they actually mean debit card/no finance.  

They seem surprised when you say that you'd rather not have cash and that, in-fact, even a debit card or bank transfer payment isn't as good for the business as a finance deal.

Same with 'no PX'.  It's often a better deal for the business if there is a PX as can usually stand it in at a sensible price.

[Mark101 536]

24 minutes ago, Nick M.K. said:

Mark, how do you have a LIKE button? I have the Edit back but no Like. 

I must be special - well enough people tell me I am 

[justina3 518]

If your stock profile fits then why not give it a go.

[SC Derby 259]

Would you honestly turn people away willing to pay full whack in person though?

Seems silly to me.

[Nick M.K. 574]

Imagine this: someone pays you the full whack, the car is gone. That same week you get 3 more enquires for it and they are all for finance. 

Only you haven’t another car like this to offer and miss out on the comission. Which on a £9000 car would be 14% if the buyer puts down a£1K deposit. 

So that’s £1120 of missed income. 

Or 11 grand over a month if you sold average numbers to the cash buyers only. 

[SC Derby 259]

Big if though. What if you turn down the initial buyer and then the car sits for 2 months...

[Nick M.K. 574]

If it was a straightforward decision with no IFs I would do it across the board immediately without asking for thoughts here :-) 

[James01 21]

Nick I had exactly the same thought with a couple of cars that have been in stock for a while. 

Reduce the price and make up the margin via finance commission. 

Problem is as you say you will no doubt end up pissing some people off who have borrowed from the bank or have savings. 

The only other thing I was thinking was some sort of cash back incentive if purchased on finance. 

Edited February 19, 2019 by James01

[Nick M.K. 574]

Deposit contribution yes. It also reduces your Vat bill as HMRC sees it as a discount. The problem then is my 6 months clawback which means no comission if the buyer settles their finance in the first 6. 

 

[David Horgan 564]

I always ask how are you funding this purchase ?

No credit cards , no actual cash , both to expensive to bank . 

If they mention bank I have been known to say this is on finance only and it works too , "this Sunday proved it twice with "I can get cheap money from the bank " my answer was but the bank isn't selling the car ." Both went out with finance . 

Third party finance like 24/7 & Zuto I wont entertain at all at any cost . I am not paying them to sell my stock . Zuto are gearing up to charge soon too £180 + VAT 

If they say debit then its all over and I sell and move on . 

 

 

Love the theory though Nick , Thought about it many times . 

[Nick M.K. 574]

I need to come and work for you (free of course) for a weekend David, I think it will make a real difference to my dealer education :-)

[trade vet 697]

I have done this before.However you can’t discriminate against buyers who don’t require finance.What we did was to give those people requiring finance a £500 discount on the cash price to offset their finance interest charges.We were retailing stuff at virtually cost but with finance income from commission and volume bonuses with no VAT it did work well.To get round the  loss of finance income from early settlements we got the punters to sign paperwork agreeing to pay an admin fee if they settled before making 3 monthly instalments.This was a good while ago and it did work for us for about 18 months but today when Punters can buy money for 5% APR from Tesco,I am not sure whether it would work....But you have to try different things in this job to try and get ahead.

[David Ayers 171]

22 hours ago, Nick M.K. said:

In times when good stock is hard to find and I struggle to keep up with the prep I am keen to try a finance only strategy for a month. My worry is that I'll pick up some bad reviews along the way, especially from the eBay last price warriors...

 

 

Come on. Surely you replied.

”Oh go on then. Bring £8989 cash in the morning “

[Mojo121 229]

Just to avoid pissing people off it maybe worth putting into the ads of cars you're looking to trial this with "this car is only available to buy on finance".

If they call up or message and haven't read it at least you have it to fall back on. 

[Area 51 33]

Billie not reading the advert details, whatever next...

[Nick M.K. 574]

David Ayers, this car was actually sold before the email and I just used the opportunity to see what the potential reply might be. There was nothing further from him after that. 

[Rory RSC 596]

Seems to work when targeting sub prime with run of the mill stuff. I much prefer a finance sale. We seem to be pretty consistent with finance and usually seem to do about 1/3 of all sales this way but keen to do more. Most of the social media sales result in finance. 

[James01 21]

34 minutes ago, Rory RSC said:

Seems to work when targeting sub prime with run of the mill stuff. I much prefer a finance sale. We seem to be pretty consistent with finance and usually seem to do about 1/3 of all sales this way but keen to do more. Most of the social media sales result in finance. 

Wish I could get 1/3 I’d say that’s an excellent ratio considering how cheap money is from the banks atm. 

I have been trying to push social media with monthly payments instead of an overall price.

No results yet but i will stick with it, our average retail value is about £10,000 so one would think that is prime for finance. 

[JimmyGlen 13]

Gearing your business up to live on finance is ignorant and short sighted. You need to remember 'your' finance commi isn't guaranteed. An early settlement, or default resulting in legal action (repossession ) will result in all your commish being clawed back. We once had a 1200 comm being clawed back at 40 months into a 48 month PCP.

Do the job right, make your earnings on well bought stock, marketed properly (which you do) and view comms as a bonus. 

Thinking about all the extra money you 'could' make only distorts the great earnings you are already making from finance.

Dont get greedy. 

Trying to force customers down an avenue to suit you and your earnings is only going to end badly. And if I'm honest, deservedly so. 

We can make a good living out of this job, without forcing it. Offer good rates, and the convenience we can provide over the banks (which most of the time are a complete pantomime)

Stevie

[ExCouncilJobsworth 27]

50 minutes ago, JimmyGlen said:

Gearing your business up to live on finance is ignorant and short sighted. You need to remember 'your' finance commi isn't guaranteed. An early settlement, or default resulting in legal action (repossession ) will result in all your commish being clawed back. We once had a 1200 comm being clawed back at 40 months into a 48 month PCP.

Do the job right, make your earnings on well bought stock, marketed properly (which you do) and view comms as a bonus. 

Thinking about all the extra money you 'could' make only distorts the great earnings you are already making from finance.

Dont get greedy. 

Trying to force customers down an avenue to suit you and your earnings is only going to end badly. And if I'm honest, deservedly so. 

We can make a good living out of this job, without forcing it. Offer good rates, and the convenience we can provide over the banks (which most of the time are a complete pantomime)

Stevie

Very well said. 

Plus you should be focusing more on the current market factors; diesel / no diesel / Brexshit etc

Last thing you want to do is focus on finance only, you miss out on cash sales, then comes Brexit day and Tweezer Maybo realises she needs more cash then diesel tax is hiked by 500% and diesel cars are worth peanuts and you're stuck.

It might sound exaggerated but we live in the UK and it's all unpredictable nowadays. 

Also my example on diesel could be on any factor or manufacturer. 

Those that want to climb the ladder quickly always fall down quickly too 

[Nick M.K. 574]

23 hours ago, JimmyGlen said:

We once had a 1200 comm being clawed back at 40 months into a 48 month PCP.

Hi Stevie, interesting thoughts. 

I don't actually offer PCP (I do in theory but avoid it actively).

I negotiated my clawback period down to 6 months on HP and this is a risk period I can certainly live with. 

 

I will ignore the diesel comments by the ECJ for now because it is still the fuel of choice for over 50% of customers and I am not prepared to wave goodbye to those sales just yet because someone might do something in the future.  

I also can't comment on Brexit but SO MANY people on this forum told me "Don't worry Nick, we'll be absolutely fine after Brexit, Europe needs us" that I have found a lot of comfort in that thought. 

[JimmyGlen 13]

1 hour ago, Nick M.K. said:

Hi Stevie, interesting thoughts. 

I don't actually offer PCP (I do in theory but avoid it actively).

I negotiated my clawback period down to 6 months on HP and this is a risk period I can certainly live with. 

Nick, I'm sure you will find, no matter what you have negotiated, if the deal goes smelly and ends up legal - even on the last month - you can kiss you commission goodbye. Also, its matters not a jot whether it be PCP of HP - I was only using that particular finance case as an example. It could easily have happened with a Hire Purchase customer. 

Its good you keep looking for ways to improve ROI, but this is one way that really is best left alone IMHO.

Stevie