Pre-owned dealers offer financing option to boost sales
When most shoppers think of layaway, they probably think of holiday gifts and department stores, but layaway plans aren’t just for big box stores. Dealers have been using them for years.
The system helps customers make small payments with the goal of reaching a larger down payment for financing or paying off the unit completely before pick up, and it saves a lot of dealers from losing sales.
Jennifer Wheeler, who is in sales at Motorcycles of Manchester (MOM’s) in Manchester, N.H., and Foxboro, Mass., says her dealerships have had a layaway plan in place so long that no one can remember when it started.
“It’s one of our customers’ favorite programs,” she said, adding that customers will often attend powersports shows with cash in hand, ready to put a unit on layaway.
The MOM’s plan requires customers to put 10 percent down on a bike and make payments weekly or monthly until they pick it up in April. The program starts each September at the MOM’s open house and ends April 1.
“It allows us to still sell bikes over the wintertime,” Wheeler explained. “We’re a used bike dealership, and it allows people to shop, and it allows people to get a nice large down payment for financing or whatever.”
The goal of layaway at MotoMax, a pre-owned dealership with locations in Raleigh and Henderson, N.C., is to get customers to a better down payment. When a customer chooses a bike, the dealership fills out a finance application, finds out how much the down payment should be, takes a $100 deposit and collects $100 per week until the customer reaches that down payment.
“It’s been fairly successful. I would say that out of all of the contracts we do, probably 25-30 percent of them make use of it,” said Brett Haselden, sales manager of MotoMax. “The reason why it’s so ideal for us is because we are an independent dealership, so we don’t have control over our inventory. If there’s a specific unit that they’re looking for, it’s important that they get it, even if they don’t have the money today.”
On average, customers are able to pick up their bike and start financing within four to six weeks.
The layaway plan at Thornton’s Motorcycle Sales in Versailles, Ind., isn’t as uniform. The dealership doesn’t advertise any set layaway terms, and down payments and payment plans are different for each unit.
“As far as terms, it varies from individual to individual. We kind of make the terms match the individual,” dealership owner John Thornton explained.
Thornton’s usually only puts vehicles on layaway, but other items, such as PG&A, can be put on a layaway plan.
“We’ll do whatever we need to in order to make a deal,” Thornton said.
Any product at Schiets Motorsports in Fremont, Ohio, is available for the new holiday layaway plan general manager Alysan Azman started in early November. The dealership requires a 20 percent deposit on any layaway item, from new or used units to generators to parts and accessories. Everything needs to be picked up by 3 p.m. on Saturday, Dec. 22.
“We’re going to leave it up to customer if they want to make payments in between,” Azman said.
She developed the plan this holiday season as a strategy to try to get more customers to buy their gifts at Schiets.
“To me, it’s about making it easier to buy from Schiets Motors and do your Christmas shopping here,” she said.
As each plan is different, each dealer also handles late payments or non-returning customers differently. Azman said the down payment for items at her dealership will be used to pay for restocking any items left at the store.
Wheeler allows customers to move their deposits to a different bike if they change their minds.
“As long as they spend the money they kept with us by Dec. 31 of the same year, we don’t keep their money,” she said.
Thornton and Haselden report that they rarely find customers who don’t commit to closing their layaway and picking up their bikes.
“The deposits that are put on bikes are bike specific, which means that it can’t be transferred to another bike, and it’s non-refundable,” Haselden explained about his dealership’s plan. “We have the conversation before they put it on hold about the policy, so generally it’s a given that they have a plan to pick it up before they sign the contract.”
More common than not closing the layaway at Thornton’s is not picking the unit up at the scheduled time, but Thornton said he’s OK with that as long as the pick up isn’t more than a few months late. If someone does leave a bike and doesn’t close out their layaway for too long of a period without solid reasoning, Thornton said he would keep some of their deposit.
“Unless there’s a really good reason, that’s going to cost them a little bit of money for them to back out,” he said.
Storage facilities make it easy for these dealership to handle layaway, compared to dealerships that don’t have the available space. Thornton has a warehouse in the back of his dealership; MotoMax has a reconditioning facility about a half a mile from the store, and MOM’s stores its layaway units in a heated garage at its Foxboro facility. Wheeler said waiting for payments also prevents many dealers from trying layaway.
But for those who do, the program seems to pay off in saving sales.
“If you indeed work with them and treat them fairly in the first place, they’re going to come visit you the next time,” Thornton said. “There’s an awful lot of people nowadays that, frankly, they don’t have a lot of credit, so this is the only way they can buy a bike. It makes you a hero every now and then because it’s the only way they can get it.”