Customer Financing has been around for many years and seasoned service advisors offer this to motorists very successfully. Join Bill, Uwe to welcome Chris Evans, a financing expert, and Fred Gestwicki, a shop owner using financing in his shop to discuss best practices and potential pitfalls.
Episode Transcript
*This transcript was generated using Artificial Intelligence. Errors may occur. If you notice an error, please contact [email protected].
Bill Connor (00:06):
Good morning, good afternoon. I’m Bill Connor, and you’ve reached the Digital Shop Talk Radio where we gather on Wednesdays at 12 o’clock central with our panelists to discuss all things in the automotive industry. Today I’m here with Chris Evans, a financing expert that has spent a lot of time working with the independent aftermarket shops for sure, and Fred Gestwicki, owner of Fix It with Fred, which has joined us many times for sure. Plus AutoVitals founder Uwe Kleinschmidt. Join us today to learn about consumer finance in our industry. Now, consumer finance has been around for many, many years, and seasoned service advisors have found out how to offer this to Motors very successfully. Join our panelist, Chris Evans, a financial expert, and Fred Gestwicki, a shop owners that’s using financing in his shop to discuss best practices and maybe some potential pitfalls. As always, teamwork is required in the shop to provide great results in anything we do, and you’re going to take away some great tips to put consumer finance in front of your customers to provide them additional choices for their service and repair. So as always, you’ll learn from our guest panelists who operate shops just like yours. So if you wouldn’t mind, how about getting us started on this topic and we’ll continue on from there.
Uwe Kleinschmidt (01:24):
Thank you. Yeah, financing has been a topic for quite a while, and I remember when I heard of it or when I started appreciating the details, the important details, how to present it to the customer was when one of our customer service advisor won a contest, how many customers he could convince to use financing and use the shortest period of time to get them approved. Those were the times when the service advisors were heavily involved in the approval process and it became very clear to me that this needs to be kind of designed properly and presented at the right time. And so it became a topic and we made in the inspection results had some space available so customers could shop, owners could configure it to present financing opportunities to their customers as part of the inspection result. And Fred was one of the first ones taking advantage of it and well, I don’t know how many years later now it has become a best practice and we would love to pick your brain. Fred and Chris, thank you. You come from the financing side and we would love to have you share with our audience how it looked, what are the difficulties and the benefits from a financing angle. So welcome gentlemen. Fred, if I may start with you, could you, although you have been a staple almost on the podcast, if you could introduce yourself very quickly, some data about your shop. Sure. So people in the audience can compare themselves.
Fred Gestwicki (03:42):
Sure. My name is Fred Gestwicki Jr. My shop’s called Fix It with Fred. I’m in Canton, Ohio. If you’re like, that sounds familiar. There’s only one reason you’ve heard of Canton, Ohio. It’s where the Pro Football Hall of Fame is and my shop is about a mile and a half from there. So if you go to the Pro Football Hall of Fame, please just come visit me please. I have four techs ranging from right now. I don’t have an atex, I’m ranging from B to Gs and I have one service advisor volume of around 800 k with those four techs, two of my four techs have been a technician less than a year. So that’s one of the reasons my volume is as low as it is, is I don’t have a super huge pump tech car count 32 cars a week, ARO around 600 to give everybody numbers so they can know if I’m a real person. Does that help me become relatable a bit? Uwe?
Uwe Kleinschmidt (04:43):
I think so. 600 a o is nothing to sneeze at.
Fred Gestwicki (04:47):
We were last month, our ARO was 1100. I was real happy with that, but I’m talking for the year. I don’t want to use an anomaly and we don’t do euro or diesel or tires. That’s all Maintenance. Maintenance and repair, man.
Uwe Kleinschmidt (05:00):
Very cool. Thank you.
Fred Gestwicki (05:02):
Yes, sir.
Uwe Kleinschmidt (05:03):
Chris, if you could talk about your background a little bit.
Chris Evans (05:08):
Sure. So automotive has been good to me. I started back in 2002. I’ve kind of dabbed in a little bit of everything from collision mechanical and spent the last three years in consumer financing.
Uwe Kleinschmidt (05:22):
Very cool. Good. Let’s get right to it. Normally the one hour is not enough, so I bet.
Chris Evans (05:30):
Maybe not for this topic, right? No,
Fred Gestwicki (05:32):
God, no.
Uwe Kleinschmidt (05:35):
So Fred, how did you experience the first steps of financing even before the digital inspection?
Fred Gestwicki (05:43):
Well, I’m an A TI shop and that’s something that they talk about. And they talked about Synchrony and I got Synchrony and I’m like, here, you can get a credit card and fill out all this stuff and I can type it all in and see if you get approved and save your application for 24 months and all that happy business. And it was good. But this is pre Chris, was it 2020 that they changed the rules for credit cards where it got harder to get ’em
(06:11):
Pre that when it was easier. Now it’s like you need to give a blood sample. And then when I started to diversify my financing options, I was at Best Buy buying something. I have a Best Buy card. I very rarely use it. I use it for the 12 months. Same as cash. Oh, I need a new laptop. It’s 1200 bucks, that’s a hundred bucks a month. And I don’t pay interest. Yay. And I’m standing there paying for something. It was something small and I look and there’s a Snap Finance pamphlet thing right on the counter and I’m like, they have their own credit card with their name on it and they’re offering something else. And I looked at it and I was like, it was quick. It was like you text this number and you get approval and you get X month, same as cash.
(06:54):
And I’m like, this is better than a credit card. If I didn’t have a Best Buy card, I would definitely get that. And I was like, I need that. So I looked up Snap and saw they did automotive and was like, and that’s what started my diversification of what I offer. Uwe is a person of the customer perspective. I wasn’t like, man, best Buy, this place is so expensive. They have two different financing options. I’m leaving. That did not happen. I definitely saw it as an opportunity to go into an establishment, buy what I want, even if I don’t have the money right now and give me a way to pay for it. Over time, I saw it as a amenity or convenience.
Uwe Kleinschmidt (07:33):
And in the pre-meeting you shared, do you have a third one?
Fred Gestwicki (07:36):
I do. I have Lendmark. Lendmark is owned by a guy and there’s 400 locations and there’s a local branch. It’s kind of neat. They do an actual, like a transactional relationship with a loan. There’s it same as cash option or you can finance up to four or five years if you want. We just had a customer two weeks ago get a $15,000 landmark loan. They maxed it out without Landmark. This lady would’ve never put $19,000 in one car. She told us that if you didn’t have the financing options you have, I wouldn’t be doing this. So yeah, I sought out Landmark because I’m always looking for more options to have for financing because the worst case is I’ll have so many options that everyone has a way to buy
Uwe Kleinschmidt (08:26):
And you stick with those three. If I’m your customer, how do I get exposed to all 3, 2, 1? How do you manage those?
Fred Gestwicki (08:38):
So what I don’t like to do is have you come in, you give me your keys to your car. Okay, cool. I’ll call you when I know what’s up. Figure out. It’s something with the word computer in it, so it’s got a comma in the price. Something you weren’t ready. Okay, well Mr, it’s $1,400 to put this computer in your car. Oh, that’s expensive. All right, well we have financing that feels like a car dealership to me. So when you drop your car off for an oil change, hey, did you know we have a third financing option now? They’re like, really? We just want to have it just in case you need it. You don’t ever have to use it if you don’t want. It’s just there if you need it. It doesn’t cost us anything. You’re not paying for it. It’s something there if you need it.
(09:22):
And we expose, our service counter has two computers. It has a brake rotor display, a brake pad display that shows kind of like what the green, yellow, red means and then stands one for landmark, one for snap, one for Synchrony, just table tents because if you go, Hey Landmark, can I have some promo stuff? They will fill your waiting room with free, use us stuff. And I like the customer when they call and I tell you, you need a $1,400 computer. I’d rather you go, well, I saw you have financing. Which one of those can I use? I want the customer to say, I saw you have financing so that I don’t have to bring it up. That and Chris, do you have input from the finance angle? When’s the best time? Or you know what I mean? When should we be telling these people about this?
Chris Evans (10:17):
So the way I trained shops when I was doing this is really it’s the earlier the better. And you should mention it frequently. So Fred, you said it dead on earlier, the best time really is when they hand you the keys, whether they’re coming in for an oil change or not, it’s always good to plant the seed there. The last thing you want to do is wait until it’s time to check out because they’ve already made up their minds to do something else. So it really does open the door. If the earlier you mentioned,
Fred Gestwicki (10:43):
What
Bill Connor (10:44):
I’m hearing so far is you saying that really a shop should have more than one finance source arranged and they should go ahead and present it early and often not wait until it is at a point in the process where the customer has to make a decision under pressure,
Fred Gestwicki (10:58):
Put it on your waiting room door, put it on your website, put it on your service counter, put it on your receipts, put it on your inspection header. You could get T-shirts. It don’t matter. Make sure they know that you have financing before they need it so that they don’t have to be embarrassed that you just had to be like, well I know you’re broke, we have financing. You don’t want to put ’em in that situation.
Chris Evans (11:20):
Well, and too, I really don’t think that people understand the need or how much of a need it is to have options like that. Well, the first question I usually ask shops and Fred, you’ll love this one is how many people do you think are actually saving up for the next collar repair
Fred Gestwicki (11:37):
One? And he was just here and he dumped his account. So none now.
Chris Evans (11:41):
Yeah, we save up for Christmas, we save up for vacations, houses, cars, we don’t save for car repair. In fact, 40% of Americans can’t afford anything over $400. And another scary one, 78% of Americans live paycheck to paycheck. So that is the majority of the people that are walking in your doors that need or would benefit from some kind of payment plan.
Fred Gestwicki (12:07):
Well, and let’s be the customer.
(12:11):
You brought your car into this place, whether you’ve been there or not, doesn’t matter. You believe in them because they’re telling you what you need. So you need this thing in your car that’s really expensive. If that business doesn’t have a way for me to do it, I’m not going to take my car back and just deal with it being broke. I’m going to find somebody that can do the fix that I need and offer me a way to get it done. So if you don’t have financing, your customer’s going to find a shop that has financing and they’re going to do the repair with them because they’re not going to be mad at you that you’re giving them a way to do the thing they can’t afford. If that were the case, we wouldn’t have auto loans, we wouldn’t have mortgages, we wouldn’t have business lines of credit, we wouldn’t have all these different credits in our lives. Those are there because we buy stuff we can’t afford on a regular basis. That’s just, you can’t afford to pay cash for it. So that’s where my mind went is I don’t want ’em to leave. They’re here. That’s the whole goal. Get them in the door. They’re already paying you to figure out their car. Let ’em pay you more.
Chris Evans (13:17):
You said
Bill Connor (13:17):
Earlier kind of piqued my interest and that was you said that you’ve got terminals set up where the consumer fills this in themself. So is that something you specifically look for in a finance partner or I know in the past service riders used,
Fred Gestwicki (13:34):
We just lost bill
Bill Connor (13:35):
This out with the customer.
Fred Gestwicki (13:37):
I gotcha. This is one of those thanks COD things because cooties is a thing people are afraid to get near somebody else and plus the personal information. If I’m like, Hey Bill, why don’t you tell me your name, your address, your social security number, your birthday, how much money you make, whether you rent or own, what your payment is. Can I have all the information I need to steal your identity? That’s something we don’t like. So right now Synchrony is still old school paper contract. SNAP is purely a remote and Landmark has been where you have to type it in, you don’t have paper. And they just released a program about two weeks ago where they’re going to give me a link, a QR code, all the stuff where the customer can fill out their own app. And I’d prefer that for so many reasons. I don’t want their information to even pass through my brain. I don’t want to have to hold their information and be liable. And my favorite part is I don’t want to type something in wrong and get somebody declined. I want them to type it in wrong themselves.
Bill Connor (14:49):
And it takes your service writer out of the
Chris Evans (14:50):
Loop. They can focus on other things.
Fred Gestwicki (14:52):
There’s that where you’re paying your service advisor to fill out somebody’s credit app for them to get declined. But I wasn’t going to go that deep into it. But you’re right Bill, you want to get your service advisor doing service advisor things. And like Eva mentioned, we have built into our header, we offer three different kinds of financing. Synchrony, blah blah blah, snap, click here. I put a hyperlink in my header. If people will read their inspection, see it’s bad. They absolutely know that’s not good. Go back to the top, apply for Snap, get approved, then it’ll call in. They’re already approved for financing. We never even gave ’em a price. They just know they ain’t got the money to fix all that. And we’ve had customers say, I got approved for 3,800 bucks. What can you do? They call, did you see the report? I did. I applied for snap. I’m approved for 3,800. What can you do with $3,800?
Chris Evans (15:45):
I have seen to our customers, their bill’s a thousand bucks. They got approved for 3,800 and they ask, what else can we do? Yeah, what else can we do?
Fred Gestwicki (15:57):
What do you think that, I have a question for uva, what do you think the shop owner’s fear is with financing? The reason they don’t offer financing?
Uwe Kleinschmidt (16:06):
We actually ran a,
Fred Gestwicki (16:10):
I knew you did. I knew it, I remember it.
Uwe Kleinschmidt (16:15):
And it basically was fear about rates the shop owner has to pay.
Chris Evans (16:21):
I’m so glad you brought that up.
Uwe Kleinschmidt (16:22):
Right? And also what you already mentioned, right? If the service advisor has to jump to too many hoops through too many hoops, it’s just not helping because they’re busy. And especially old school service advisors who presented at the estimate approval touchpoint. It is just the pressure is just unbearable to the customer. I love what you just said. You can turn that actually into a budget discussion. What is your budget for the repair and let’s check out what you get approved for. And I think that’s brilliant. So it will never, I’m start along here. I have so many thoughts about this because the first one is really there is nobody who doesn’t want to save money. And if it’s no interest, it doesn’t matter whether you’re broke or not. It is simply about can I save money? Yes. And if you combine that with a budget discussion, I think that’s a hit.
Fred Gestwicki (17:45):
And definitely teach your advisor how to math each one of the financing options. So if you’re offering 12 months, same as cash and the people’s bills, 1200 bucks, it’s easy. A hundred bucks a month. What if their bill’s two grand, as stupid as it sounds, teacher, advisor or make a spreadsheet where they put in the dollar amount and it spits out the payment. So you can say, Hey, if you do this, if you make this payment every month, you’ll get it for no interest. There was a question from Jenna. Yeah, I saw
Chris Evans (18:13):
That.
Fred Gestwicki (18:14):
Yeah, SNAP does offer interest free financing, but it’s a lease and it’s a hundred days and if you don’t pay it off, they rip your skull. And with interest like all of the same as cash options do in every company, if it’s same as cash, what they’re saying is you better pay it off by that due date or you’re going to regret it. You know what I mean?
Chris Evans (18:35):
And all of the offers out there have that interest free promotion and they do typically run anywhere between 90 days. I think some of ’em are like a hundred, 101 or if you go with the synchronous of the world, they have the six and 12 month options. They are high rates, those secondary and those tertiaries. But just instruct your customers, Hey, as long as you pay it within that promotional period, you won’t pay the interest. So
Bill Connor (19:02):
There’s four things from a shop owner standpoint that they’re concerned with. One is how much is it going to charge me? Is it going to be different than my rate for my credit cards? How much effort does my service writer have to put into this? When in the process do we go ahead and present this to the customer? And the fourth one that we haven’t mentioned yet is recourse. What recourses or what provisions are there for chargebacks to the shop that I need to worry about differently from a regular credit card?
Fred Gestwicki (19:29):
The first one you mentioned, which is about the rates bill, what if I told you I’m going to give you a thousand bucks? Does it sound okay? I’m just going to hand you a thousand dollars.
Bill Connor (19:39):
I know you so I’m going to be kind of suspicious, but
Fred Gestwicki (19:42):
Only problem is you got to give me 4% of it back.
Bill Connor (19:45):
Right?
Fred Gestwicki (19:46):
You don’t want that a thousand dollars now because 900 and whatever dollars sounds terrible. If you got to give 4%, I don’t think we should be blind to what the percentage and fees are, but there’s going to be fees. Our world’s moving towards where cash isn’t a thing. There’s going to be fees to take in money more often than there was 10 or 20 years ago. So you got to choose, do you want the customer that has a thousand dollars budget that needs $3,000 at the work to use financing and you have to pay a little fee or do you want ’em to decline and go somewhere else and they get the money and they get the fee getting the money. You just pick
Bill Connor (20:26):
It. It’s you. This is like any other tool. You determine your cost over a period of time and you average it out amongst all your other customers, just like any other tool and you don’t worry about
Fred Gestwicki (20:36):
It. It’s like paying for AutoVitals. That’s the tool. Know that all my customers help pay that bill. That’s just how business works and recourse. Chris, that’s all you brother. Because besides Snap offering a virtual discover, I think it’s Discover they put a little fake card on your phone. Landmark and Synchrony are a CH right into my account. So I don’t, there’s no processing, they just pay you. What is the recourse, the Amex chargebacks, what would be the financing equivalent of chargebacks, Chris?
Chris Evans (21:13):
So the credit cards are, it really depends on the credit card. So most of those guys weighed more towards the consumer than the shop, which is unfortunate, but the rest of them typically have no recourse. So there’s the easy pays, the American finance, those guys no recourse. That’s
Bill Connor (21:34):
A deal between the customer and them. We’re out of it. It’s like a no recourse
Chris Evans (21:38):
Flowing. So if the consumer defaults, the shop’s not held accountable for it. And that’s a big thing.
Fred Gestwicki (21:46):
In other words, we are not the bank.
Chris Evans (21:48):
Right.
Fred Gestwicki (21:51):
I like that. I never thought of that one. I’ve never had a problem with getting paid from a financing company. It’s usually pretty, they’re quick to give you the money because them giving you the money triggers the contract they have with the customer and the customer can’t owe them until they pay you. They have to pay the shop in order to collect from their customer. Who is your customer? Am I saying that right?
Chris Evans (22:16):
Yes. Yep.
Fred Gestwicki (22:19):
Okay.
Uwe Kleinschmidt (22:21):
So for the 6-year-old, if I am your customer and I dispute the charge, what happens
Fred Gestwicki (22:32):
On a financing deal?
(22:36):
I would think you would have to dispute the charge with the financing company because I am not part of that transaction. Now Landmark is bizarre how you do their stuff. Like you fill out all the apps and all this and you print it and as the principal of the, they call you the principal, they also do quads and stuff. I have to actually sign the contract out of all three of my financing options. Landmark requires my signature. The reason they require my signature is to prove where the funding is going and to prove who was there to do the app. So it’s not just a customer signing with a person that’s not in the room, it’s more like a witness signature. But it doesn’t tie me to liability. It ties me to being the receiver of the funds. And it’s like your account hasn’t changed, you don’t have different account numbers. But I would think if somebody got Synchrony and they disputed the charges, synchrony goes through their own port. But I wouldn’t think that they could dispute it directly with you. I don’t know if you’ve ever had experience with something like that, Chris or not.
Chris Evans (23:42):
I really haven’t had the experience with the card side of things. But with the financing companies, they usually are pretty good about playing the middleman. So they may bring a shop into it and ask a couple of questions and ask a couple of questions with the consumer and then just work it out. But typically things on that side of the fence lean more towards the shop.
Fred Gestwicki (24:04):
So in this case, they’re more on the shop side from your experience?
Chris Evans (24:10):
Yes. Yep. Unless the consumer can absolutely prove that they promised the shop promised to do something and didn’t provide it, then yes it goes back on the consumer.
Fred Gestwicki (24:21):
And that all boils down to your documentation, having good customer complaints, good tech notes, good pictures of what you did, signatures on everything mileage vin, complete customer contact info with address and phone number if you have your RO is a contract, so you need that customer’s autograph on it or it ain’t real? Ask any judge, they’ll tell you that.
Uwe Kleinschmidt (24:44):
Okay. So there’s no change to any other method if I pay with credit card and dispute it, it’s the exact same process.
Chris Evans (24:58):
Credit cards typically. Yeah, I was going to say yeah, it makes a lean towards you versus the shop. The rest of them kind of play the middle basically. That’s the reason why a lot of them ask you to hold on to the application. The paper application for two years is because they have two years to dispute anything that happens and that will provide or help at least provide proof that things were done as they were supposed to have been done with the shop and
Bill Connor (25:28):
Protected. So for the other finance companies, if they’re filling it out digitally online, what you really have is your regular work order. You already have to have a signature for anyways and maybe their signature that it was done on some type of form requesting payment from the provider and that’s it. So you’re not storing any credit card information or anything
Chris Evans (25:47):
Else? No. With the finance companies, you’re not doing that. A lot of the stuff is filled out on their phones and basically the only shop involvement with these finance companies is just telling ’em how much they’re actually going to finance.
Fred Gestwicki (25:58):
Well in snap I’ve watched a customer do it, they get an email when you’re approved it says it’s time to check out and they hit time to check out. They got to verify a bunch of social security number, income, a bunch of stuff only that customer know then they have to verify the dollar amount to the penny and they hit checkout now and it brings up a card and you cannot charge a penny over what that card is authorized for. It is to the penny accurate. You can charge less but you can’t charge more. So for the customer to go through all of those steps and then go, I didn’t do that. The finance companies kind of have it set up where if you get to the point where you’re getting money, the customer has proved enough intent that they can’t go back and say I didn’t really do that. That’s opinion. The
Chris Evans (26:44):
Only thing that I would add to that though is a lot of those finance companies require the service advisor to double check by looking at their ID to make sure they are who they say they are. That is a very important step there that will help protect the shop as well.
Fred Gestwicki (26:59):
When you look at an id, this is for any shop owner advisor, I just got stung by this the other day. Look at it, read the whole thing. We had somebody get a loaner car, we photocopied their id just looked at it real quick and it was a state id, it was not a driver’s license.
(27:19):
And we know he was putting the paperwork with the RO and was like, that’s not a driver’s license. And we called her and she’s like, oh, I didn’t have my license with me. And then 10 minutes later texted in, I’m just going to drop the loaner off. She didn’t have a license. But I’ve had one scenario where somebody handed me somebody else’s license. You just said Chris, you have to look at the license, look at the picture, look at the information, compare it to what you have, spend two minutes with their driver’s license so you don’t get screwed. Because shady people are shady even when they go into good business.
Bill Connor (27:55):
So after a customer is approved, does this add any additional steps or time at checkout?
Chris Evans (28:02):
No. The only thing in my experience is the shop just has to, okay, so if the customer gets approved for $3,500, the shop just needs to tell ’em the exact number of the invoice or they have other methods in place to take care of that
Fred Gestwicki (28:16):
Lendmark. It does add another step bill at the end because with Lendmark, you actually don’t need a signature get approved because they don’t do computer approval. You put all the info in, hit submit and it’s like 15 minutes an hour before you get approved because an actual person reads the application, it’s not algorithm and they’ll go as far as to call the customer and talk to ’em. So at the end is when they sign. So when you cash out, I got to print your contracts, have you sign them, fax them into Landmark and then they come the next day and pick up the physical originals from you, but they have you fax it for this or email it, whatever it to them so that you can get funding the next day. I saw that.
Bill Connor (29:00):
That’s another advantage to going ahead and getting that information to the customer early in the process. So they’re not standing there when you’re trying to check out at the end of the day.
Fred Gestwicki (29:08):
Yep. But that’s it. Everything else is just like a credit card transaction besides telling ’em the total, which most people will ask how much was it? They won’t just blindly pay.
Bill Connor (29:18):
So when a customer comes in and they’ve got a $3,000 bill, is there any way a shop can go ahead and verify that they’ve got an open to buy on these platforms before they proceed with the work? Because a lot of times we get
Fred Gestwicki (29:31):
Deposit. Yeah, there’s vendor. Oh you brought up deposit. Let me answer your question. There’s a vendor portal or whatever portal for all these. So I can log into Snap and see who applied, see who got denied, see how much Synchrony, same thing. Landmark, same thing. But you said deposit. So the $15,000 loan lady, you think for a second I’m going to work on a car for $18,000 RO without a deposit. That’s exactly
Bill Connor (29:58):
What I was
Fred Gestwicki (29:59):
Getting. Oh my god. Well the car kind of has to be worth the repair because with most of these, with the Synchrony, you can use the card over and over good to go. But with Snap you get to do it once. So if someone has a $3,000 bill and they got SNAP secured, you have to have Faith. They’re going to use the SNAP card or have ’em prepay for the whole thing. The only problem is when they pay you, that starts their timer ticking. So if it’s 90 days, same as cash, they pay you, you order the parts, the parts are on back order because that never happens. And a month later they show up, they’re already getting notices to make a payment and they haven’t got the car done. So develop a policy of how deposits work in a financing scenario. Our policy, as long as the vehicle has a value, Ms. Kelly Blue Book or whatever over what we’re doing, we don’t require deposit because they have financing through me and in the case they don’t pick the car up. I can take the title and sell the car if the car is worth less than what they’re having done, we ask them to prepay for the entire repair on a financing scenario or put the money down between financing and bill because it’s a $5,000 bill and it’s 3,500 finance, I want the other 1500 bucks, bring me the rest of the money, give me some and people won’t mind a deposit. They’ll even ask you, can I give you a deposit?
Bill Connor (31:30):
And I guess knowing what you know about your particular systems is your service writer Michael had recommend the landmark or whatever type of financing because you know can do it in chunks rather than all at once.
Fred Gestwicki (31:42):
Well that’s a good point. How do you tell your customers about all your financing without overwhelming them? How do you know what fits where? I’m going to use R three Synchrony. It’s a credit card. You open it, you have a car care one card that’s now yours. And when you’re done paying your bill, you still have it. You can go buy something else with it. It is yours like having a visa. So we have that with 12 months, same as cash. Six months means same as cash. All these different offers. Then we have Snap. Snap is quick and easy. It’s a hundred days same as cash lease option. If you don’t pay it off, they rip your skull off with interest. They’re good for short term payback. So if you know you’re going to pay within a hundred days for sure use Snap. Landmark is kind of blending the two because it’s transactional where you don’t have a permanent line of credit on your credit.
(32:39):
Once you’re done with Landmark, you can use ’em again, but you got to start over. But you can either use 12 months same as cash or you can go all the way up to four years, five years. You can finance out however long you want. And if somebody comes to you and they have their first time customer, they have a nice car, trans computer went out 1500 bucks, chances are their cars and it’s not a pile, it’s not going to need a thousand dollars. Every time it comes through your door you can tell ’em we do have Synchrony, but that’s a permanent line of credit. Are you interested in opening a credit card? And if they say yes, good, no good, I have two other options. Let’s see which one fits. And we try and take our three and pick two that fit the scenario. And with the three we have, there’s such a diversity that we go these two fit. And in a rare case we’ll tell ’em this one fits. This second one I don’t think fits, but I want you to know about it. We want the customer to feel like they’re picking which financing that we’re not forcing the financing onto. They’re making a decision where the customer says, I want to use Snap. How do I do that?
Chris Evans (33:46):
So
Bill Connor (33:46):
Those are the things that kind of stirred shops away from financing years ago was the approval rate was absolutely horrible.
Fred Gestwicki (33:53):
Snap approves anything,
Chris Evans (33:55):
Right? Anything with a pulse
Fred Gestwicki (33:56):
Unless youve screwed Snap. The only people I’ve had that have been declined have people that have said, Ooh, I’ve used them before. I don’t know if they’ll approve me. And I’m like, what? Oh, I never paid them. They’re not going to approve you.
Chris Evans (34:08):
But this is a good reason why you need more than one offering. So to Fred’s point, synchrony, they only approve roughly 30% of the applications. You’ve got 70% of the rest of the world that still need financing, probably need it more than the first 30. So you got to have at least a secondary option or a tertiary option to help those guys too. And again, it’s just a matter of steering them. So hey, if you pay it off in that promotional period, you’ll be fine. But it is definitely worthwhile to have more than one.
Uwe Kleinschmidt (34:42):
Oh, there’s no doubt. I just think if I go to the first provider and get declined, that’s a fishy experience. I would probably say no to the whole endeavor if I’ve never done it before. So it would really I think be helpful to not only say we have options, but give a little bit of profile. Here’s what fits best for you. If you are in this situations, we recommend X, but check out whatever you like for yourself. Right? Yep.
Chris Evans (35:27):
U you bring up a fantastic point. There are some companies out there currently and some existing working on what’s called a credit. So the consumer fills out one application. If it declines with a primary, it automatically pushes it to the next best option. And at all times they’re given the best option for them. So there’s some options out there like that too.
Fred Gestwicki (35:53):
Very cool. I want to touch on something I’ve seen mentioned several times on social media where I wish there was a financing company that could approve my customers that have bad credit and not charge ’em like 20% interest. I wish my customers that had bad credit would pay their bills or the people they signed and said, I promise I’m going to pay. You would actually pay those people and raise their credit score and then be able to get a loan at a lower interest rate. Shop owners, forget those people you see when they bring their car to you, you don’t see what they do at home. You don’t see if they’re ordering Uber Eats and they’re out there like jumping their electric meter to turn their power back on, you don’t know where their priorities go. That car is one of their top two or three most valuable physical possessions.
(36:41):
Most people, their house is their number one most valuable possession and their car is like number two or three. So when their car’s broke, you’re going to see the top of their priority list. You’re not going to see the things they blow off all their credit cards or their two bankruptcies. So if your customer says, I have bad credit, what they’re saying to you is, I have a habit of telling people I’m going to pay them and not paying them what bad credit means. And I’m not being heartless, I’m not being mean. Most people have seen me on some kind of thing. I’m a nice dude. If you want good credit pay people when you told ’em you were going to pay them, if someone’s going to lend you money, if Chris, if I had lent you money four times and you never paid me back a hundred bucks each time and you asked for a hundred bucks, I’d be like, you’re going to pay me back 300. Dude, I want some of the money from you or other people that didn’t pay me. So these places charge a higher interest rate based off the risk
Chris Evans (37:33):
They’re taking the risk.
Fred Gestwicki (37:35):
Someone that has good credit can apply for something like Synchrony and Synchrony doesn’t approve everybody because their rates are lower because most of the people have Synchrony pay ’em back. So you’re not paying other people’s bills when you pay Synchrony.
Chris Evans (37:48):
Well, and this is how they’re honestly making up for that recourse thing too. So if they don’t pay then fall on the shop, it falls on them.
Fred Gestwicki (37:56):
I just wanted to point out that’s very heartfelt, that people want there to be a way with low credit people to get a lower interest rate. Maybe if they paid everybody they promised they’d have higher credit and that’s just the facts of life.
Chris Evans (38:10):
Well, and I’ve also seen too, Fred, where a customer doesn’t get approved by Synchrony, gets approved by a secondary finance option, pays it off in the 90 days or the a hundred days promotional period, establishes a better credit score the next time they applied. And guess what happened? They did get approved by Synchrony. So even if they’re making bad decisions, or maybe they just had a bad that affected them in a negative way, they can work with some of these companies to build their credit again. And just honestly, some of these people take loans when they don’t necessarily need it to work on their credit. So when a
Bill Connor (38:50):
Customer calls on the phone or is standing at the counter and says, can I make payments on that? The service writer’s only response should be, yes you can. Here’s how we do it.
Fred Gestwicki (38:59):
Yep. Yep.
Uwe Kleinschmidt (39:01):
So how much time do we have?
Fred Gestwicki (39:04):
Eight, 10 minutes.
Uwe Kleinschmidt (39:06):
Can we do another 6-year-old walkthrough here?
Fred Gestwicki (39:10):
Let’s do it.
Uwe Kleinschmidt (39:14):
First time customer, I show up Fred and what happens?
Fred Gestwicki (39:19):
Bob, what’d you come in for?
Uwe Kleinschmidt (39:23):
Rattle underneath the dashboard
Fred Gestwicki (39:24):
When I’ve already quizzed you and I know all about it. I know what’s wrong with your car. You’ve already made an appointment and I quiz. Yeah,
Uwe Kleinschmidt (39:32):
I made an appointment and you have some notes in your point of sale,
Bill Connor (39:35):
You’re just dropping it off.
Fred Gestwicki (39:37):
So we drop, get your car, we walk out to your car, get your van, get your mileage, have you walk with, have you sign the work order, we show you what we call the or we call it we want to show you the OR operating room. And we take ’em out, we show ’em the shop, we show ’em our waiting room as we show here’s our waiting room. And here we do have three different financing options. And then you see where the night pickup box is. I don’t know when you’re picking your car up and we just kind of orient you about that. So we blend the financing into a pile of amenities. We have a warranty, we have a loaner and we go on a full shop tour that’s rehearsed. It’s part of Service advisor training and you review all of those things. So now you know may not know who I have financing through. I don’t really care for you to know that. I just want you to know, you can say who do you have financing through? And I’ll have an answer. That’s all I want.
Uwe Kleinschmidt (40:29):
But back to what I said before, I might have a credit card history of 690 or where that’s fair and I hear financing and then I go to whoever is first and get declined. Would you do anything to avoid that? Because then I’m shut off and I’m overwhelmed by the information anyway.
Fred Gestwicki (40:56):
I’ve had customers get, I had one the other day that I have want to say needed like 2,500 bucks or three grand worth of stuff. Asked about financing. He knew. He’s like, so how’s this financing work? And my advisor told me the whole story. I’m like, ah. But this situation, synchrony doesn’t fit. So Snap or Landmark. Alright, so what do Snap? It’s easy. It doesn’t even pull your credit. So he does it. He gets declined. All right, that’s weird. You must have screwed Snap before, but they declined you. Then he goes to Landmark, fills out the whole thing. Hour later he gets declined. So he calls into the advisor and was like, I just thought it was worth a shot. I have the money. Go ahead and do it. Just don’t. He didn’t have bad credit. He was somewhat of a credit ghost. He didn’t have credit experience. I see. But when the first one happens and they get declined, they’re going to call you all sad. You got to put a positive spin on everything you do every day, all day. And they’re like, oh man, I got declined. I’m sorry to hear that. That’s okay though. Good. We have a different option. There’s lots of options you have out there. We’ve just tried one. So what would you like to do next?
Uwe Kleinschmidt (42:07):
So if I may rephrase that, you’re not just giving them tons of information. You basically present it in a way that it triggers the question. How does that work?
Fred Gestwicki (42:21):
Say it again, I’m sorry.
Uwe Kleinschmidt (42:22):
I said you are not just providing the information in a waterfall manner. You say it in a way that your customer’s asking back, how does this financing work? Right?
Fred Gestwicki (42:35):
Yeah. Right. And it’s in a little bit of exposure. So you stay at a hotel and they have a shuttle service, they don’t have this giant poster, here’s all the places we will take. You have a shuttle service. Alright, I need a ride, what do I do?
Uwe Kleinschmidt (42:50):
Yep, yep, yep. Okay.
Chris Evans (42:54):
I would like to also touch base on, there are a couple of finance options out there by the way, Fred, that look at not only credit behavior but banking behavior. So somebody with no credit history whatsoever can get approved by some of these finance companies as well because they look at, they’re looking for just some kind of behavior. And even if they don’t have credit, they’ll approve them sometimes. Now they may start ’em off at a low loan amount, but they will approve the consumers. I
Bill Connor (43:23):
Was kind of surprised on that stat you shared the other day that one in five Americans have no credit score whatsoever.
Fred Gestwicki (43:28):
What?
Chris Evans (43:29):
Yeah, 35% have subprime credit. Okay. This is another big reason why you should have two options or at least two options and then one in five have no credit score at all.
Fred Gestwicki (43:43):
So
Uwe Kleinschmidt (43:44):
They are the people with the cash in the socks and don’t want to touch it.
Chris Evans (43:49):
That and people who just said maybe they’re not educated enough to know anything about the loans.
Fred Gestwicki (43:55):
So you guys all noticed how we’re going into a recession, right? I know you’ve noticed that.
(44:03):
I noticed it. I see all these nice posts of people talking about they bought gas. It’s weird. I know several people that are panicking and they’re pulling their money out of their investments and out of their retirements and out of their bank accounts because when recession happens, people want to hold onto their cash, their pieces of paper and pieces of metal that feel like money. They want ’em in their hand. And that customer the other day wanted to use financing. They had the money but they don’t want to let go of their money. If you don’t have financing going into a recession, you’re going to need it because they’re going to have faith that the world’s going to heal. You know what? I don’t care if it’s 12 months same as cash. How long can I take because my job slowed down and they cut my hours. But I know by the winter we’re going to be better and people are going to want to postpone these expenses till later during this recession. You’re going to want to have financing before the recession is fully upon us.
Chris Evans (45:01):
Well, and that brings up a great point that I don’t know that we’ve really talked about is the fact that we need to, or we should be offering these finance options to every person who walks in the door. You don’t know their story, you don’t know where their situation is and the ones that are doing it, right? I have seen a half a million dollars a year in financing alone. In fact, I just talked to somebody this morning that did a hundred thousand dollars in financing last month alone.
Fred Gestwicki (45:29):
Well, and you don’t know who they know because they may have money, they may have open lines of credit, they may have everything they need, but their sister doesn’t, but their neighbor doesn’t, but their mom doesn’t, but their kids don’t. And if you can turn each customer into a little advertisement going around in the world being like, Ooh, they have loaners. Ooh, they have financing. Ooh, they have night drop. You can gain customers. It’s a marketing tool. And these finance companies have websites that they will put you on where you answer the phone and the customer goes, you guys take Snap, right? Yep. Alright, cool. I need an appointment. The contingency is that you take the financing that they want to use. They’ve used it before. They know they need it. They just need somebody that will take it. And I gain a couple customers a month just from financing websites.
Bill Connor (46:19):
There’s a whole other subset of people out there we haven’t talked about. And those are the ones that are going to do the six months same as cash or the one year same as cash. Because their goal in life is they use other people’s money at no cost. Absolutely.
Fred Gestwicki (46:31):
That’s me.
Chris Evans (46:33):
I’m guilty of that myself.
Fred Gestwicki (46:35):
Eva, are you on this club? Sir?
Uwe Kleinschmidt (46:38):
I don’t know how this works.
Fred Gestwicki (46:39):
Okay. Okay. It’s pretty neat though that I know using I’m one, I told you Best Buy go in there. Oh cool, I’ll pay this a month. And I didn’t have to shell out all my money at once or use my credit card or whatever. So it’d be like if you’re like, I don’t want loaner cars. Why? Because then I got to maintain them. True. But then you also get people that will not bring you your car unless you have a loaner car. So you got to pick I’m financing. Why? Because there’s fees. Like Synchrony has a monthly fee or SNAP has a fee or whoever has a fee. Okay? But you’re not going to take those customers in that want that. You’re not going to get those sales that require that. So it’s a give and take. You got to pick if you’re going to give a little in order to reap the benefits,
Bill Connor (47:26):
Do you see any way possible that a service writer can be taken out of the loop on the presenting this to the customer and filling out forms and stuff like that?
Fred Gestwicki (47:35):
Snap. We don’t touch anything. Cool. Snap. It’s already that. I built Snap’s application link as a hyperlink into my inspection header. So you can go on your inspection report, apply for snap, get approved everything, call approve the work, not tell me you have snap. You don’t even have to say anything. You can be like, all right, do it 2300 bucks done. Then when you pick up, just pull your phone out and just type in your card on Snap you can do the whole thing. And I’m not, all I did was have it in my inspection header and if
Bill Connor (48:10):
You don’t want, but in that case they’ve had to wait for the inspection, which is late in the process. Is there some way we can automate it earlier in the process, like on a workflow step message or something else?
Fred Gestwicki (48:20):
Let me get a post-it note bill. Yes, we can do that. Say
Uwe Kleinschmidt (48:24):
Exactly the same thing. The drop off workflow message should contain that link
Bill Connor (48:30):
Or can message in the communication center. There’s always a way to do it. It’s just a matter of thinking about it’s late to the customer at the inspection result. And it can be there also, but it needs to come somewhere else. Besides that,
Chris Evans (48:43):
What about the email that you sent out that says, Hey, you turned down all this stuff last time you were here, by the way, we got finance options for
Fred Gestwicki (48:50):
That, right? The CRM messages. Yeah,
Uwe Kleinschmidt (48:52):
You can put it in the appointment reminder, but I have to tell you, bill, I would not take the service advisor completely out of it. Not that they have to help entering the data, but like Fred said, the presenting of the options is the service advisor’s job. Nobody else should do it.
Fred Gestwicki (49:11):
Well, and if you have three or four or five options, customers will look and be like, ah, too much. I’m out. They overwhelm and back out because overwhelm is more common nowadays. What
Bill Connor (49:20):
I like about what Uwe just said is you’re actually putting the service writer into a service consultant type position rather than an order tanker. Yes.
Fred Gestwicki (49:29):
Yes. Advising what is best or giving them options.
Chris Evans (49:34):
I do want to touch base on one other best practice that we, we’ve forgot to mention so far that is very important when you’re dealing with these secondary and tertiary finance options. It’s extremely important not to deliver the car to those particular consumers until they’ve agreed to pay the finance company. In other words, they have to sign the agreement agreeing to pay the finance company so the finance company can pay you. I’ve seen this mistake made that, oh, the customer was approved and then let the car go and guess what happened?
Uwe Kleinschmidt (50:10):
Oh
Fred Gestwicki (50:10):
Man. Donation.
Chris Evans (50:11):
Nobody. Yes, it was of a
Bill Connor (50:13):
Similar process we use with a regular warranty company.
Chris Evans (50:15):
Have a nice day and they never, it’s enough
Bill Connor (50:17):
To get released until payments made.
Chris Evans (50:19):
And unfortunately most customers won’t come back and do the right thing. So be sure, be sure to make sure that they’ve signed the agreement with the finance company before releasing that car.
Bill Connor (50:33):
Are the rates these finance companies charge a shop? Are they negotiable?
Chris Evans (50:38):
Yes, they are actually in most cases. So I know it is a very competitive market in the secondary and tertiary worlds. So a lot of these companies will absolutely not charge the shop a thing and just focus on making what they do off the interest rates.
Fred Gestwicki (50:53):
The secondary and especially tertiary. I’ve noticed if there’s fees, they generally charge the customers because tertiary financing people are more used to having to pay fees for everything. I think Snap, there’s an app fee that’s like 40 bucks. I’ve never had somebody complain about it. They’re just used to having to pay fees. You know what I mean?
Chris Evans (51:16):
And that’s one of the important things to ask when you’re looking for finance companies to work with is what kind of fees do you charge us? What kind of fees do you charge the consumer? What do your interest rates look like? How many or what kind of customers do you approve? Et cetera, et cetera. In order to make the best decision for your shop
Fred Gestwicki (51:34):
And look around, talk to other shops, go to other businesses. I mean it’s to find what works. Either go on Facebook and go on Facebook groups and go to other shops and visit ’em. You should be visiting other local shops anyways. You got to know what they’re doing and just do what? Just go look at other businesses. Just ask, look it up. Ask around how many is there Chris? How many financing companies you think for automotive?
Chris Evans (51:58):
There’s probably a dozen.
Fred Gestwicki (51:59):
We’ll say enough. Enough that you can find something that fits right
Bill Connor (52:05):
For the service advisor that’s afraid to go and offer this to customer. If they think they’re going to offend it is the best practice to tell them to go to Home Depot and stand there and listen to what goes on at the counter head of them and see how many customers get up there.
Fred Gestwicki (52:16):
How many people have you heard say, I’m going to go use my Home Depot card or my Lowe’s card. They’re proud of it. And if you do Synchrony, you can have your customer have a card with your shop’s name printed right on it. I mean it’s a real thing, man. I don’t know where the misconception that people are going to be mad you have financing comes from. It doesn’t come from the rest of the world. I don’t know any company that’s lost customers by having a financing option.
Chris Evans (52:41):
And it is proven that if they use finance options, the ARO is going to be higher. Do you know what the average ARO is with financing?
Fred Gestwicki (52:49):
What
Chris Evans (52:49):
You’re at? $1,800.
Fred Gestwicki (52:51):
There you go.
Chris Evans (52:52):
Just saying.
Bill Connor (52:56):
Awesome. So we’re getting down toward the end here. So what I’d like to do is go ahead and get the top three things from each of you that a shop should be thinking about or considering when they’re going into this particular field. And what I’d like to do is start with Chris and then have Fred go ahead and wrap us up.
Chris Evans (53:11):
So the top three things when they’re looking for a finance company
Bill Connor (53:15):
Or when they’re bringing finance options into their shop,
Fred Gestwicki (53:19):
They’re implementing it. Is that what you’re saying Bill? When a shop’s thinking of implementing financing, so
Chris Evans (53:24):
For me it’s really the three things would be offer it as early as possible. Don’t prejudge customers offer it every time and make it a standard operating procedure in your shop to offer it just like everything else you do when you talk to customers.
Fred Gestwicki (53:45):
Do I like it? I like it. Mine would be my top one. Tell ’em as soon as you possibly can. I literally have a post-it note because I’m going to be adding it to my introduction workflow step. Like, Hey, we have financing. Because the sooner if I could tell ’em when they make an appointment, I’d do it. I want to tell ’em as soon as I can. So that’s top one. Tell ’em soon. Second one, diversify. Don’t just get one financing option and call it good. Have enough variety because there’s not one financing option that fits all people in all scenarios. And then the third one, do like Nike man, just do it. Do not hesitate. Do it, do it. Do it. Do it. If you’re scared, those top 10 percenters your customers that help you be around, ask ’em the ones you can call and then they don’t go like, Hey, what’s going on? And say, Hey, I’m thinking about adding financing. What do you think? And then that’s it. And listen to what they say because they will talk you into it. Talk yourself into getting financing. You will not regret it.
Bill Connor (54:50):
So with a good conversation for a service writer b ma’am, sir Mr. Customer, we’ve had a lot of customers ask you, it’s about finance and now we have it and it’s available for you if you need it.
Fred Gestwicki (54:59):
Just want you to know we have it that we are always looking for ways to help you and we’ve added another great thing just to help you. And if you never use it, that’s great. That’s actually what I prefer is you to never need to finance auto repair. But if your back’s against the wall, we want to help you. We don’t want to tell you go find a bank
Bill Connor (55:15):
Or if they want to use free money.
Chris Evans (55:17):
Exactly.
Fred Gestwicki (55:19):
Yeah. The best time of year to finance is November and December and January. Oh my gosh. Because nobody wants to fix their car in November, December and January and we just, Hey, do you want to pay for this tax time next year? Yeah. Good. I have an option just for that.
Bill Connor (55:36):
Well, right now with as expensive as used cars are and people not being able to get new ones, we see lot more people getting larger repairs now anyways. So this is probably a perfect time to be talking about this particular topic.
Fred Gestwicki (55:48):
Yep, yep. Good stuff.
Bill Connor (55:51):
So we’re at the end here. Uwe, you have anything to go ahead and add before we wrap?
Uwe Kleinschmidt (55:56):
I would just repeat what Chris and Fred already said. So thanks gentlemen for being on. It was great. Learned a lot, and waiting for Fred to put this in the first workflow message.
Bill Connor (56:15):
Awesome. So I’d like to thank both of you for joining us here today. A lot of great information was shared. I’d also like to go ahead and make sure that you’re comfortable being on our list for a future episode. I’m sure there’ll be plenty more topics that come up to go ahead and improve the life of those in the shop environment. I’d like to encourage those of you that are listening today or maybe later on to share these podcasts from shop owners just like you by going to, you can register and join us live by going to autovitals.com/radio. Ask your questions live, or you can go ahead and listen to us on your favorite podcast platform by going to the digital shop talk radio and signing up and listening. I think this is, well this is episode 173, so there’s plenty of wisdom that’s stored up in the bank. All you got to do is go in there and make your own withdrawal. So once again, go out there and make some money while your customer is in the process. Thank you guys. We sure appreciate it. Thanks guys. Thank you.