Have You Lost Interest in the Cash Deal?

After a recent F&I Master’s class, I came back to the dealership better, stronger, and faster than before. That class taught me about having a conversation with purpose. Since we are having a conversation anyway, let’s make it count? This is the biggest opportunity on cash deals to move the needle, especially if you are working in a high-line store catering to affluent customers with higher credit scores. 

Many business managers forget the least used tool available — 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. Nobody talks about this and even fewer people are proficient at this technique. This is what separates the average managers from professional-grade F&I pros. Explain the advantages for a customer to consider a single-payment lease as opposed to simply writing us a check. It costs far less because there is less interest and lower rates. This makes it less expensive than a traditional lease and paying cash for people who enjoy driving the newest cars. Lastly, the credit approval is easier since they get all the payments upfront. 

The cash deal has evolved and sometimes is a “finance deal in disguise.” People actually walk in with a shoebox filled with dirty 20s and 100s that they have been hoarding during the pandemic. Now that the world isn’t ending, they want to get rid of it and come into our dealerships in droves with cold hard cash. It’s a great reminder, if you collect $10,000 or more in cash, report it by properly filling out the FinCen8300 form. 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 the cash buyer who is really just using an outside lienholder. You will still need to present your options menu, however. Most F&I managers, will print up a cash menu and start their presentations. After reviewing how much each product is in terms of overall total cost, they are forgetting that if the customer is using an outside lender, the customer is ultimately going to 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 then what impact adding these protection items can have on that monthly payment. Ultimately, they’re closing the sale on a payment, even though it’s “cash.”

Present these as finance deals with different payments, and you’ll be surprised how much more product you will successfully enroll your customer in. Show it to them in terms that makes sense to their budget. On true-cash deals, sell the value in the product — that’s all you can really do. When they use outside financing, appeal to their budget and explain how much this will benefit them.

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.

Having an attitude of gratitude is important — 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 Jim Rohn once said: “If you stoke the fires of their desires, you’ll not fail to make the sale.” Remember, if a person can sit down at your desk and stroke a reader for $85,000, they can certainly add $5,000-10,000 more for whatever protection options they want. Don’t be afraid of the cash deal or the cash buyer. They are usually 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 the outside finance deals like regular finance deals, and on true-cash, put on your selling shoes and tap in. 

Justin B Gasman is financial services director, MPFS at McCaddon Cadillac Buick GMC, Inc. in Boulder, Colorado.