A recent F&I Master’s class taught me about having a conversation with purpose. Since we are having a conversation, let’s make it count – especially if you are working in a high-line dealership catering to affluent customers with higher credit scores.
Many business managers forget, or aren’t familiar with, a seldom-used sales tool: the one-pay lease. To a cash customer, this is a way to purchase the vehicle by writing the dealership a check for the total of payments on a 36-month, single-payment lease. One advantage is a lower interest rate, which means lower payments. Another is that the upfront payments make credit approval easier.
At the end of the 36 months, the customer can choose to renew the lease, turn in the vehicle or buy it outright.
The cash deal has evolved and sometimes is a financing deal in disguise. Customers have been known to walk into a dealership with a shoebox filled with dirty 20- and 100-dollar bills they hoarded during the pandemic. Now that the world isn’t ending, they want to get rid of that cold hard cash. Remember, if you receive $10,000 or more in cash, report it by submitting a FinCEN8300 form to the IRS. If you aren’t sure, my advice has always been, “When in doubt, fill it out!”
What is a cash deal in disguise? That’s when you get a cash buyer who is using an outside lienholder. You still need to present your F&I options menu, however. Most F&I managers will print up a CASH menu and start their presentations. After reviewing the total cost of each product, they may forget that if the customer is using an outside lender, the customer ultimately will be making a payment.
In this instance, it’s still important to review with your customer, based on the terms of their own financing, what the base payment will be and the impact of adding protection items on that monthly payment. Ultimately, you’ll close the sale on a payment, even though it’s “cash.”
Present these types of cash deals as finance deals with different payments and you’ll be surprised how much more F&I products you will enroll your customer in. Show these products to them in terms that fit their budget. On actual-cash deals, sell the value in the product – that’s all you can really do. If they use outside financing, appeal to their budget and explain the benefits of your products.
How does cash affect pricing? I get asked all the time if customers can get a better price if they pay cash. My answer is always the same: “We give the same great pricing to ALL of our valued customers, regardless of how you choose to pay for the vehicle.” Other than the occasional factory rebate that is connected to financing, the dealership’s selling price is the same whether it’s cash, lease or retail installment sales contract.
Appreciate and welcome the cash deal. The best part about a cash deal? Not worrying about funding issues! The only thing you have to do is be a great salesperson.
As motivational speaker Jim Rohn once said, “If you stoke the fires of their desires, then you’ll not fail to make the sale!” Remember, if a person can sit down at your desk and write a check for $85,000, they certainly can afford another $5,000-$10,000 for whatever protection options they want.
Don’t be afraid of the cash deal or the cash buyer. They usually are disciplined, persistent, highly intelligent people with four common traits: capacity, ability, stability and equity. They want to buy; they just can’t be sold. You’ll have to earn it the old-fashioned way, by being genuine and serving them with the heart of a teacher and the right spirit of intent.
Remember to try a one-pay lease for a great cash conversion, present outside finance deals like regular finance deals, and on actual cash, put on your selling shoes and tap in!
Justin B. Gasman (pictured above) is financial services director at McCaddon Cadillac Buick in Boulder, CO.