The most common mistake F&I managers make when it comes to cash buyers is attempting to convert them to dealership financing as soon as they discover the customer intends to pay cash for his or her vehicle. This is absolutely the WORST thing you can do with a cash buyer!

Cash customers are the bane of virtually every F&I manager. The typical cash buyer is in their 50's or 60's, has plenty of cash, and doesn't need to finance their new vehicle. They've experienced every sales pitch ever invented, and can smell commission breath a mile away. That tired old word-track that might work on an 18 year old first-time buyer doesn't work at all on that 65 year old last-time buyer. They've heard it before, and they don't want to listen to it again. They just want to write a check and take their new car home.

The problem with "pitching" financing or any product to a cash buyer is they immediately recognize you are trying to sell them, not help them. So they turn off, tune out, and your left without a sale!

Don't Try And Convert First!
The most common mistake F&I managers make when it comes to cash buyers is that they try to convert them to dealership financing as soon as they discover they're planning to pay cash for their vehicle. That is the absolutely worst thing you can do with a cash buyer!

Of all the products we have available in the F&I office (and financing is a product; that's what the F stands for in F&I!), financing is the one product a cash buyer doesn't want, and doesn't think he needs. Financing should be the last product we try to sell a cash buyer, not the first!

That doesn't mean we won't discuss the benefits of dealership financing. We will. But asking a cash customer, "Why do you want to pay cash?" immediately puts them on the defensive, and virtually guarantees we won't finance them or sell them any products. The option of financing should be presented on the menu, just like every other option. Otherwise, we kill our credibility. Once you try to sell a cash buyer the one product they don't want and don't think they need, their defenses come up, and now you won't sell them anything.

Good Needs Discovery
Needs discovery is the foundation upon which we must build the sale of every product, including financing. Whether or not you're able to convince a cash buyer to finance their new car depends on discovering why they need to finance. We discover customer needs by examining the buyer's order, the credit application, the credit bureau, and by asking open-ended questions. It's important to compliment the customer on his/her financial acumen prior to asking any open-ended questions -

• "How long has it been since you financed a major purchase?"
• "How long has it been since you reviewed your credit bureau report?"
• "What do you like about paying cash?"
• "What type of return are you getting on your investments?"
• "How long will it take you to replace the money you're taking from savings?"
• "What type of credit do you have established in your spouse's name?"
• "What impact will this have on your retirement income and cash reserves?"

Keep in mind, cash customers won't finance through the dealership just because we want them to. In fact, sometimes they won't finance even when they can borrow money for less than they're earning on their investments. We have to discover a need that financing will fill, or a problem it will solve, so there is basis for our discussion of financing with the customer. In order to do that, you have to utilize open-ended questions that will enable you and the customer to answer that all important question; ""How will financing help this customer?"

Offer Financing On The Menu
Presenting a menu to cash buyers that includes the availability of dealership financing allows every customer to make a well-informed decision about the various products (including financing!) available in connection with their purchase. Like any other form presented to the customer, a proper introduction and explanation is critical. "Nancy, before we finish up the paperwork, I do need to go through this disclosure form with you. I'm required to review your repayment, risk management, and vehicle protection options, and answer any questions you may have. Would that be okay with you?"

Now instead of "pitching" financing or any product, we're simply reviewing the options available in connection with their purchase. "Mr. Johnson, I know you're planning on paying cash, and you're welcome to do so. However, I did take the liberty of working up some repayment options to let you see what is available, just in case you're interested." Customers want to know what their options are. They just don't want to feel like somebody is trying to "sell" them something they don't want and don't think they need.

Follow The Customer's Lead
After presenting the customer's options on the menu, it's important that we follow their lead by first discussing those products they're interested in. If they indicate they are not interested in any product, always start with the product they need the most, not the product you make the most money on. Financing may be the third or fourth product you talk about.

After your initial needs discovery, you should have several good reasons why the customer needs all your products, including financing. The key is to make the customer want to know more about the benefits of financing versus paying cash, so we're responding to their request for information vs. making a sales pitch. We do that by making a statement that piques the customer's curiosity and makes them thirsty to know more. That way, we're helping the customer, not selling the customer.

Create Customer Interest In Financing
Creating interest in dealership financing is the key to converting a cash customer. It's critical the customer want to hear what you have to say, as opposed to forcing them to listen to what you have to say. Whenever you have a middle-aged couple paying cash, you have the perfect scenario for a cash conversion

After you have discussed any other F&I products they have an interest in, it's time to help them see the benefits of dealership financing. Pique their curiosity with a statement such as, "Obviously, if you want to pay cash for the car, you're welcome to do so. We've never turned down a check that I'm aware of. And if you write us a check, you'll leave here today with a car that's paid for. I know that's a good feeling. That's one asset. You could also leave here today with three assets. And should anything happen to either of you, your spouse would inherit five assets." When the customer wants to know what those assets are, it's time to demonstrate how financing their car through you… will benefit them.

One of the best tools you have for a cash conversion is the credit bureau report. Obtaining a credit bureau report on every customer is just a good policy. It helps ensure the person is who they say they are, and allows us to check them against the OFAC list. Identity theft is a huge problem today, so reviewing their credit bureau with a cash customer also allows them to confirm all the information in the bureau is correct. Even people who have always paid cash still like to know what their credit score is.

When they learn their FICO score is "only" 763, while the top score is 850, they're disappointed. They thought for sure their score would be at least 849. This helps them "see" the need to finance this purchase. It's easy to create interest in financing after reviewing their credit bureau when you make a statement like "I'm glad to hear all the information in your credit bureau appears to be correct, because identity theft is such a huge problem today. That's why I wanted to review it with you. Just to make sure you recognized all the credit being reported. Although after reviewing your credit bureau, I do have a couple of serious concerns." Believe me, those cash customers will want to know… what you know. They need to check their credit bureau on a more frequent basis, and they also need to establish some installment credit in addition to their revolving credit.

The Benefits of Financing
Every customer has unique needs. The challenge with cash customers, as with any customer and any product, is to demonstrate how financing through the dealership will benefit them.

If this couple pays cash for this car, they leave with one asset; a car that's paid for. However, if they finance their purchase, they leave with three assets; the car, the cash, and current credit established in both names. More importantly, should either of them pass away, their spouse will inherit five assets: the car , now paid in full with credit life insurance. The cash , since they didn't spend it, is still in their investments. The interest earned on that cash , because they left it in their investments. With credit life insurance on the loan, the unearned finance charge is also returned to the estate (with gross indebtedness coverage.) And probably the most valuable asset of all, current credit through a nationwide lender should they ever need a loan at some point in the future. If they elect to finance the entire purchase price, GAP protection they can even shift the risk of excessive depreciation from themselves to the GAP provider.

To convert a cash customer, you must help them see how they might benefit from financing. "After today, your credit score will either go up or go down. Which would you prefer that it do?" (Even cash customers recognize the importance of a good credit score!) "The best way to ensure a good score is through the responsible use of credit. This might be the perfect time to establish or re-establish some installment credit by financing a portion of the cost for two or three years. That credit will remain in your bureau for seven years after the loan is paid off. Right now you don't need to borrow money. Who's to say ten years from now you won't need to borrow money? There could be some serious financial reversals with your investments, a long term illness, hospice care, a problem with the kids or grandkids. The best time to borrow is when you don't need to, so if you ever do need to, you can… at the lowest possible cost."

As a Financial Services Professional, your responsibility is to use the customer's past to help them make informed decisions about their future. Whether it's leaving additional assets to a surviving spouse, establishing or re-establishing credit, or keeping their cash available for a future business opportunity, you must be able to demonstrate how financing through the dealership will help them. If there is no benefit to the customer, there is no reason for them to finance their purchase.

Cash buyers will see the benefit of dealership financing if you don't try and convert them first, discover their needs, and offer financing as an option on the menu. If you then follow the customer's lead, create interest in financing versus paying cash, and remember to communicate end-results benefits, they will finance. As with any product, it still comes down to "How will financing help this customer?" Once you communicate how financing will help them, they will finance!