Three Vehicle-Service Contract Myths Busted

Selling F&I products often requires that car dealers dispel customers’ pre-conceived notions.

Mark Pierret

October 5, 2015

2 Min Read
Three Vehicle-Service Contract Myths Busted

When dealerships try to sell vehicle-service contracts, a big hurdle is the pre-existing misconceptions many consumers hold. Let’s bust some of the most common myths and show how to overcome them.

Myth 1: Vehicle service contracts are a scam.

Busted: It’s unfortunate that a few shady companies can give an entire industry a bad rap. All those “urgent” extended-warranty notices your customers get in the mail may not be the most trustworthy, but that doesn’t mean all VSC programs should be tossed in the junk pile.

Dealerships offer VSC programs that are backed by the vehicle manufacturer, so when purchased during the sales process, consumers should know their investment is safe.

How to Overcome: It’s important for dealerships to exude credibility in all aspects of the sales process, but especially when talking about vehicle-service contracts. Because so many shoppers turn to the Internet to research before stepping foot in the showroom, put some information about your VSC options on your dealership website. Be transparent and make it clear that you’re in compliance with government regulations.

Myth 2: Vehicle-service contracts are a waste of money.

Busted: While VSC costs vary, there are many options that provide a good balance between cost and tangible value. The great thing about a VSC is that it can be tailored to a customer’s specific needs.

So if someone is dedicated to keeping up the value of their vehicle, they may be more interested in a maintenance contract. If a customer is concerned about being able to pay for a potential repair, a mechanical contract may be a better option for them.

How to Overcome: To help justify the cost of a VSC to a customer, be prepared with statistics. Always have on hand the costs of some of the most common and expensive vehicle repairs to illustrate VSC value. Keep vehicle depreciation rates in your head and cite them to show the importance of regular maintenance.

Myth 3: Vehicle-service contracts are unaffordable.

Busted: In most cases, the cost is rolled into customers’ monthly car payments, so they don’t pay a lump sum upfront. In special situations where this isn’t possible, either because they’re financing on their own, capped on their financing or paying in cash, separate installment payment plans are available.

How to Overcome: When the cost discussion comes up, the most important thing is to be open and honest. Never try to trick your customers into buying something they really can’t afford. If rolling the VSC into the financing isn’t an option, consider offering an installment payment plan to help seal the deal.

Mark Pierret is the Director of Sales & Marketing at Budco Financial, an F&I service provider. He is at [email protected]

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