The SMMT reported that a whopping 872,000 new vehicle registrations took place in the first quarter of 2015, including over 9,000 ultra low emission vehicles. According to the AA, 60% of drivers are keen on replacing what they’ve got and nearly one-fifth intend to seal the deal within a year. What those statistics don’t tell us, however, is how many prospective purchasers have their plans suspended because they could not get the deal they were looking for, like being turned down for financing because they under estimated the costs of ownership or didn’t understand the intricacies of obtaining credit. While certainly disappointing for buyers, it hurts the bottom line of car manufacturers, dealerships and finance providers.
Taking time to understand the buyer’s journey and offer guidance at crucial junctions can save heartache and lead to better outcomes for everyone involved, especially your customers.
The vital role of vehicle financing
Dealerships, banks and other finance providers furnish the market with a host of options to make one of life’s largest purchase decisions a reality. The Financing and Leasing Association reports that over 75% of us use financing to fund a vehicle, which is not surprising given the ability to convert an expensive item into more manageable monthly payments.
A new car is an exciting prospect, but financing arrangements leave many car buyers bewildered. Understanding how their personal information is used and figuring out whether finance will be available to them should not be a mystery that turns into disappointment at late stages of the process. In many cases they will have an existing vehicle that they plan to use as a trade in or part exchange and this can add to the complexities.
Guiding buyers before setting off
The reason many potential buyers end up frustrated is down to a lack of preparation – usually it amounts to failing to validate themselves or establish a workable budget beforehand.
Dealers and auto finance providers should encourage buyers to be realistic about what they can afford. You could try offering simple tips on the use of online pre-qualification tools or advising on how to create a workable budget before customers set their heart on a car, to avoid wasting negotiation and unrealistic upselling. It’s far better that buyers stick to a budget and a sale is actually made, than it is persuading them to take expensive extras for which they can’t get financing.
A little guidance on research and preparation will offer a clear picture of the car that fits buyers’ finances. They won’t then be dealt the embarrassment of being turned down for a car they thought they could afford, or worse, be forced to drive under a cloud of onerous financing arrangements.
The price is just the beginning
It is worth remembering that the price buyers pay for a vehicle constitutes only the fixed charges of car ownership. Cost estimates of running a vehicle can range upwards from £1,500 a year depending on:
• The size and age of the car
• How much and where it’s driven
• The age and record of the driver
In the long term it is in all parties’ interests that customers have a proper understanding of these costs.
Taking it home
Buying a car can be a minefield, and by helping customers to understand the benefits of preparing a workable budget and validating their finances ahead of time, it will go a long way to securing a smooth ride, both during the process and afterwards.