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Loan arrangers: Shops capturing customers by offering financing |
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Monday, 02 July 2007 |
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Page 2 of 2
Let’s talk fees
So what will a collision repair shop have to spend to offer 90-days-same-as-cash or other financing to customers? Fee structures vary, even based on the type of financing you want to offer, so it can pay to shop around. (We found shops paying different fees for the same program through the same provider.)
LeVasseur said Keenan pays a percentage fee on each transaction financed; the longer the financing, the higher the fee. For the 90-days interest-free financing, the fee is 3 percent, so $15 on a $500 deductible. It’s a bit more than if the customer paid by credit card, but the program is designed to help the shop capture jobs for which customers may not have an alternative way to pay.
“We’re also seeing more customers who always look for ways to keep their money longer,” he said. “Anytime I buy an appliance, I always do the 90-days same-as-cash and just pay it off before it comes time. I have the use of the money during that time. So we’re marketing it to those types of customers as well.”
ASA’s Lambert said that for ASA members, the CarCareOne program has a $35 monthly access fee that includes the use of the computer terminal and all training and point-of-sale materials. There is also a monthly minimum usage fee of $25 to which the percentage-fee on each transaction applies. She declined to provide the percentage fees for each transaction – which again vary based on the length of the loan – but said a shop will have to process about $2,000 in loans per month to reach the $25 minimum usage fee.
Boesel said his company pays a flat fee each month in order to offer the financing program, a fee that doesn’t change whether the shop uses the service a lot or a little.
The bottom line
So are such expenses a good investment for collision repair shops? Shop owner Boesel thinks so. He’s seen an up tick in the market for customer-pay work as well as more customers carrying $500 and $1,000 deductibles. Being able to offer financing for these customers, he believes, will get him work that other shops won’t be able to capture.
“If there’s a customer who comes in and says, ‘I probably won’t get it fixed because I don’t have $500,’ or, ‘I didn’t realize I’d changed to a $1,000 deductible a couple years ago,” then we can tell them we have some options,” Boesel said. “It’s another selling tool, and it works.”
John Yoswick is a freelance writer based in Portland, Oregon, who has been writing about the automotive industry since 1988. He can be contacted by email at
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