Converting cash customer to financing

By Brian Gallmeier

A salesperson drops a deal folder onto your desk with no explanation or turnover and walks out to grab the next customer.

The finance manager quickly looks at the folder, and on the front you see: “CASH DEAL.”

What should the finance manager do now?

A. Check over the deal, go find the customer, and quickly sign them out so they, too, can work on the next deal

B. Check over the deal, verify the information, prepare a menu and sign out the customer

C. Throw the deal in the trash, and wait for the salesperson to come back in the office

D. None of the above

I would personally choose C, though most dealer principals may not agree with me.

To teach the rogue salesperson, who does not follow, or maybe does not understand the sales and finance process, C may be the best answer. Do it once or twice, and the salesperson will know that he/she needs to complete all steps in the process. The intent is not to hurt any customers, if the time gets too long. Obviously the customer needs to be taken care of, and it’s already most likely too late for anyone to have a decent chance at selling any optional products or gaining financing for the customer.

The true answer is D, “None of the above.”

Let’s go back to the sales and finance process itself. In the situation above, the salesperson either accepted the customer’s request to pay cash, possibly did not even mention that the dealership has the capability to finance, did not do a proper introduction of finance, did not turnover to finance, or for whatever reason he/she eliminated the finance manager’s customer interview and the ability to double the dealerships profits on the deal.

For some dealers, that salesperson is paid a ZERO commission for the deal. For those who allow salespeople to “dump and run,” C may be the best answer for the finance manager — throw the deal in the trash and wait for the salesperson to come back.

Here is the average profit per vehicle retail for cash deals versus finance deals, based on some dealers I have worked with over the last year:

Clearly, creating a finance deal at least doubles profits on the entire deal.

Possible reasons for cash deals:

  - Buyer actually has cash in checking account that is not tied to a home or any other loan (not that likely).

 -  Buyer is using a flexible Home Equity Line of Credit to fund his/her checking account (very likely).

  - Buyer has a strong relationship with his/her credit union or a bank relied on every time for a loan (25 percent of the time).

  - Vehicles are rarely ready when the buyer signs the purchase agreement, so customers have time to shop the best rate.

 -  Salespeople are incentivized to get the deal written and move on to the next deal.

  - Salespeople are not incentivized to help create a finance deal.

  - Salespeople don’t want to jeopardize their deal by turning it over to finance.

  - Finance staff is not aggressive enough in interviewing every single person before he or she walks into finance or out of the dealership.

What makes a finance deal:

  - Buyer approved: Strong individual, strong couple, or strong co-buyer

  - Strong bank relationship, ability to rehash a turned down deal or counter

  - Proper terms and appropriate rates

  - Money down

  - NADA accurate values

  - Accurate income and buyer history

How to convert a “cash” deal into a finance deal:

1) Salespeople mention the ability to finance at ABC Powersports with very competitive rates.

2) Salespeople introduce finance staff before buyers leave the building and before turning them over to accessories.

3) Finance staff interview: Question, question, question before showing the menu on the sales floor.

4) Find an appropriate place on the show floor for privacy, otherwise interview in the office.

5) Know as much about the buyers as possible before the interview, pull credit before the interview … with a signed credit app.

6) With proper questioning, buyers will be willing to trust them for a finance deal.

For 11 conversion questions to ask,

Brian Gallmeier, founder of Income Development Partners, uses his powersports experience at the retail level to train F&I departments. He can be reached at or 612/616-8611.

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