NetForum - Message Replies

Forum: Idea Exchange

Topic: Dealing With Prospect's Negative Trade Equity

Posted by: Michael Hargrove (mhargrove@bluinc.com )
Organization:Bottom Line Underwriters, Inc.
Date posted: Sat Apr 24 15:11:21 EDT 1999
Subject: "Upside Down" Customers (part 1)
Message:
Thanks for the new topic, R.K.

First, let me point out the obvious. Our customer's payoff is not OUR responsibility. Unless we sold them their last vehicle, we don't control their unpaid balance. (And if we did sell them their last vehicle, perhaps now would be a good time to revisit out extended term financing strategy!) Unfortunately, most salesreps act as if they ARE responsible for the payoff and their customer is usually more than willing to relinquish the burden of it onto them.

Here are some subtle ways to remind our clients who's burden it really is. First, we can stop referring to their present vehicle as the "trade-in". If we call it a trade, then we imply that we're responsible for the dollar amount offered. Instead we can ask, "Are you going to keep your present vehicle or are we going to try and sell it to the dealership?" Now the customer is reminded that, just like we are the seller of the new one, they are the seller of the old one. It's a minor point at best, I know, but any advantage can help.

Next, stop asking for the payoff amount up-front. Again, this implies responsibility. We'll have plenty of time to find this out later in the transaction. My friend, Grant Cardone, says that whenever his friends ask him how to get a "good deal", he simply tells them to double their payoff amount when the salesrep asks what it is. Then you can just watch them chase their tails getting you "unburied".

Now when we present "hit figures", "ACV" or whatever the initial amount is for the customer's present vehicle (let's say...$4000), and the customer screams, "That's it! I knew it! I can't do business with you guys. Hell, my PAYOFF is $7000!" DO NOT respond, "Okay Mr. Jones, if I could get $7000 for your trade, would you buy today?" Because if we do, we are now taking responsibility for the $3000 difference. When we come back with $5000, who dropped the ball to the tune of $2K? We did!

Instead, we can respond this way, "Mr. Jones, what you owe on your car has no bearing whatsoever on what your car is actually worth. I mean, if you only owed $600 you wouldn't sell it for $600, would you? Of course not, you'd want $4000...because that's what your car is worth." Not only did we NOT take responsibility for their payoff amount but we also got a chance to restate the first offer of $4000. When our customer then says, "Well if I don't get $7000, then I can't buy the car." We can respond, "Okay, let me go see if my manager can be a little flexible to try and help us out." Now when we come back with $5000, we are being flexible to the tune of $1K to help out our customer with THEIR payoff.

Subject: Negative Equity
Reply Posted by: Art Spath (nationrcs@aol )
Organization: Nationwide RCS
Date Posted: Mon Oct 4 20:45:52 EDT 1999
Message:
R.K. This is without a doubt a growing problem as cars depriciate faster than the customer can pay them down.Sure if we could get the customer to put cash down this would be easier but this is not the perfect world.being presistant and creative is the only way using all your resources.finding customers or co-signers to meet max advances,having your desk be persistant in knowing and booking out inventory that holds neg equity(trucks usually work best),having a few cars in your used car inventory that you can take in under book to gain a customer,being aggresive on trades that are retail re sale able,encouraging a two car deal,and any combination of the above!PERSISTANCE NOT RESISTANCE!!!(leasing also helps dodge taxes as well).If all else fails kick the trade or drive slow and pay fast.

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