They’re paying cash.” Boy, how we dread hearing that. The sales department just did its job and sold a vehicle. The deal is made, the customer is satisfied with his or her purchase, the dealership made a profit, and it’s time to send another unit down the road. Everybody’s happy — well, except for you, the F&I manager.

You get to do the paperwork, make sure all the details are taken care of, pretend you’re happy for all involved and make no money for your efforts. Sound familiar?

The past year has brought most F&I managers an unusually high percentage of cash buyers. At the National Auto Finance Association’s conference in June, a J.D. Power and Associates analyst said the number of customers paying cash increased to 30 percent of retail transactions last year.

There are several reasons for this trend, many having to do with the state of the economy. Simply put, buyers who are financially stable enough to pay cash for a vehicle have become wary of financing.

Making Cash Conversions Work

We have spent a lot of time studying the effectiveness of several cash conversion methods commonly taught to F&I managers. While some methods have shown some promise, none seem to work as advertised. When these techniques prove to be only marginally effective, busy F&I managers tend to stop using them and settle for presenting cash customers with a service contract, chemical, etc., and move on. The result is a much lower percentage of product sales penetration to these cash customers.

So, what does work? We have found that, to be consistent, a cash conversion has to be easy to do, non-confrontational and simple enough for the customer to understand quickly. It’s also important that you not confuse your customer by offering financial advice and giving them choices at the same time. We have developed a technique that, if used every time, achieves these goals and is effective in converting one out of four or five cash buyers.


First, fill out your menu or any other type of presentation you use to present products to finance customers. Use the best rate you can. Then, present the financing options to every cash customer, just as though they were going to finance. If there is a rebate or trade, use that as a down payment. If there is no down payment, leave that space blank.

Review the terms of the deal and ask the customer how he or she wants to handle the balance. When they want to pay cash, tell them the total amount of the unpaid balance. Then say, “I’ll need a check for this amount, but before you give me your check, you have some other repayment options. Of course, you can just pay cash; however, my job is to explain those other options and then you can choose. OK?” Then take the customer through the financing options, explain the different products and let him or her choose. That way, you get a chance to present each of your products — including a vehicle service contract — and convert some customers to financing along the way.

The key is discipline. It’s important to present the options to every cash customer. You will never know which ones will convert. Give it a try. You will find that the act of letting customers know what financing is available will be the best conversion technique in your arsenal.

Sidebar: Three Reason for Conversion Aversion

Converting cash customers to a financing or lease alternative used to be a great way to increase F&I product penetration. Now it seems to be a trend in decline. Here are three reasons cash conversions don’t work:

1. They are, frankly, not used: A recent poll showed that less than 15 percent of cash buyers were offered a finance or lease alternative at the time of sale. This is not hard to understand. When time-consuming conversion methods don’t produce immediate results, F&I managers just quit using them.

2. Customer resistance to financial advice: Whether we deserve it or not, our customers have been told that dealers are going to try to deceive them and are not to be trusted. Therefore, they are wary of receiving financial advice from dealership personnel. No matter how sensible our approach, many customers are unwilling to listen.

3. Alternative financing: A poll by our research group showed that 19 percent of customers who say they are paying cash are actually financing somewhere else. They tell us they are paying cash because they think they get a better deal or they just don’t want to discuss their personal finances with a dealer. In many cases, the competing lender has counseled them not to discuss financing at the dealership.

George Angus is with Team One Research and Training, a company that specializes in scientific, research-based program development and training programs. He can be reached at [email protected]

George Angus

George Angus