Saturday, April 11, 2009
Cash Conversions - the New Way
The media have made a great fuss in the last few months, that now is a great time to buy a car, but they’ve done F&I no favours at all.
The message that is going out is, ‘If you have the cash, now is the time to buy’
A great way to generate footfall, but it is also sweating out of suburbian semis those conservative types that have saved up.
Yes, Savers, those poor unfortunates that have adjusted their lifestyles to below that of their earnings, those that have sacrificed family holidays to Disney and replaced it with a trip to the caravan in North Wales, those that have a wedge of cash that is now sitting in Panic Stricken Bank PLC earning fourpence ha’penny a month.
So, here we are with our customers, they have a lump saved, and they are in the showroom ready to spend – I can guarantee you they really don’t want to spend it, but the time has come to replace their “Old Faithful” ( read: rusty old smoker worth nowt ) with a new, bright and shiny, gleaming model with more than four forward gears and an integral CD thingummy.
The ONLY reason they’re here is they believe the time is right for them to get the BEST deal out of you, and they believe that entails them spending their chunk. It is down to you to persuade them otherwise – but the traditional methods based on rate for rate just don’t work any more.
We used to do comparisons on a cash conversion, compounded interest on savings – against simple flat annualised interest over the life of the loan – and don’t mention the F word, Finance, it brings savers out in a rash !
Thing is, we can’t do that calculation right now, as savings rates are on the floor – we need to look at an alternative, and to do that we need to understand why customers save.
Security. There, I said it.
The essence of a cash conversion to dealer funding is no longer about the hidden cost of the lost interest on their money, nor is it about the aspects of the CCA that many dealers have exploited over the last few years ( halves and thirds anyone?) no, its about the significance of that lump of money sat in the Bank.
Your customer needs to replace their old smoker with a new(er) one, check.
They know that now is the best time to buy, check
They still don’t want to spend that lump, considering all the compromise and sacrifice putting it there in the first place, check.
Affirm that now is a great time to buy metal, but reassure them that its also a great time to buy money too; The rates are fixed for the life of the lend, they have the protection of the CCA / DPA / FSA et al., and they get to protect some of their investment too, just in case.
We don’t know what’s around the corner financially for them or for us, but we do know the ride hasn’t finished just yet.
DATED: 11.04.09
FEED: PTL
The message that is going out is, ‘If you have the cash, now is the time to buy’
A great way to generate footfall, but it is also sweating out of suburbian semis those conservative types that have saved up.
Yes, Savers, those poor unfortunates that have adjusted their lifestyles to below that of their earnings, those that have sacrificed family holidays to Disney and replaced it with a trip to the caravan in North Wales, those that have a wedge of cash that is now sitting in Panic Stricken Bank PLC earning fourpence ha’penny a month.
So, here we are with our customers, they have a lump saved, and they are in the showroom ready to spend – I can guarantee you they really don’t want to spend it, but the time has come to replace their “Old Faithful” ( read: rusty old smoker worth nowt ) with a new, bright and shiny, gleaming model with more than four forward gears and an integral CD thingummy.
The ONLY reason they’re here is they believe the time is right for them to get the BEST deal out of you, and they believe that entails them spending their chunk. It is down to you to persuade them otherwise – but the traditional methods based on rate for rate just don’t work any more.
We used to do comparisons on a cash conversion, compounded interest on savings – against simple flat annualised interest over the life of the loan – and don’t mention the F word, Finance, it brings savers out in a rash !
Thing is, we can’t do that calculation right now, as savings rates are on the floor – we need to look at an alternative, and to do that we need to understand why customers save.
Security. There, I said it.
The essence of a cash conversion to dealer funding is no longer about the hidden cost of the lost interest on their money, nor is it about the aspects of the CCA that many dealers have exploited over the last few years ( halves and thirds anyone?) no, its about the significance of that lump of money sat in the Bank.
Your customer needs to replace their old smoker with a new(er) one, check.
They know that now is the best time to buy, check
They still don’t want to spend that lump, considering all the compromise and sacrifice putting it there in the first place, check.
Affirm that now is a great time to buy metal, but reassure them that its also a great time to buy money too; The rates are fixed for the life of the lend, they have the protection of the CCA / DPA / FSA et al., and they get to protect some of their investment too, just in case.
We don’t know what’s around the corner financially for them or for us, but we do know the ride hasn’t finished just yet.
DATED: 11.04.09
FEED: PTL
