Overcoming Customer Objections

Handling Objections

By the time the customer has reached the Finance Department, he has agreed to purchase a vehicle for a substantial amount of money that, in most cases, he doesn’t have. Now the finance manager is going to spend more of the customer’s time in an effort to get him to spend even more money. Can you expect there to be resistance under these circumstances? Definitely.

Some objections have to do with cost, others with specific products, and yet others with the process itself. Objections are very important, and they should be treated as such. There are methods of dealing with each of these objections, and tools that can assist the finance manager in making his case.

One tool is an evidence manual, which can contain such compelling supporting documents as customer testimonial letters, copies of extremely costly repair bills, newspaper articles that extol a product’s benefits or draw attention to such issues as auto theft, paid insurance or theft benefits, etc. While the finance manager has presented himself as the customer’s advisor and advocate, having an evidence manual at his disposal brings added credibility.

“I’M NOT INTERESTED IN HEARING ABOUT ANY PRODUCTS”

Customers anxious to leave the dealership in their new vehicles often want to skip this stage of a finance manager’s presentation. They just want to sign the paperwork and leave.

CUSTOMER: “I’m not interested in hearing about any products.”

F&I MANAGER: “As your finance manager, it is my duty to inform you of the options available to protect your vehicle and your substantial investment in it. In fact, I will need your signature as proof that I explained these options to you, and you either accepted or rejected them. This won’t take long, and it’s in your best interests to consider them. You just spent $_____ on your new vehicle, and I know you want to ensure that it remains in excellent working condition. The bottom line is that these products may actually save you money.”

The finance manager then continues his presentation.

“I CAN’T AFFORD ADDITIONAL PROTECTION”

CUSTOMER: “I can’t afford anything else. The monthly payment is already too high.”

F&I MANAGER: “I know you budgeted $425 a month, and we are discussing a payment of $460 a month. In reality, this is actually a choice between a fixed monthly payment and a variable payment. If something happens to your vehicle, and it costs you $1,500 to repair it, your payment for that month will either be $425 plus $1,500, which amounts to $1,925, or $460 plus a $25 deductible, which comes to $485.

“Wouldn’t you feel more secure knowing what your payment will be every month, without having to worry about unexpected — and expensive — surprises?”

Putting the Cost in Perspective

CUSTOMER: “I can’t afford it. I’m already over my budget.”

F&I MANAGER: “You know, you’re probably spending more than we’re talking about in your non-budgeted daily activities. Let me explain. If you buy a cup of coffee at Starbucks, and maybe a newspaper or magazine, or a lottery ticket, those things add up. You probably don’t have a set budget for those expenses, but they can be considerable. And when all is said and done, you don’t get a lot of value in return.

“For a couple of dollars a day, you can protect your vehicle — and your investment — from large, unexpected expenses. Doesn’t that make more sense?”

Extended Service Contract versus Manufacturer’s Warranty

CUSTOMER: “The car comes with the Manufacturer’s Warranty. That’s all I need.”

F&I MANAGER: “The Manufacturer’s Warranty is excellent coverage, but it is limited. Most people will reach the mileage limitation – in this case 36,000 miles – before the three years are up. So you may be looking at about two years of coverage.

“I’m sure you’ll agree that the more miles you put on your car, and the older it gets, the more problems you may encounter. By extending your coverage for up to five years or 100,000 miles, you won’t have to worry about paying for most expensive repairs. Wouldn’t you feel better knowing that your vehicle coverage won’t run out when you need it most?”

Extended Service Contract Value versus Insurance Coverage

CUSTOMER: “I don’t think a service contract is worthwhile.”

F&I MANAGER: “Let me take a minute to explain the benefits of an Extended Service Contract, and see if you still feel that way. We’re talking about a protection plan that costs $300 a year. The deductible is just $25, and there are no limits placed on repair claims. This coverage also includes roadside assistance, towing, trip interruption and car rental. Unlike your car insurance, which probably costs $1,000 a year and is limited to comprehensive, collision and liability, your rates cannot go up after filing a claim.

“There’s a much greater chance your car will need a mechanical repair in the next five years than you’ll have an accident requiring collision repairs. When comparing the cost of a service contract with collision insurance, I’m sure you’ll agree the service contract is a bargain.”

Extended Service Contract versus Personal Mechanic

CUSTOMER: “I have a friend who is a mechanic.”

F&I MANAGER: “Let me ask you a question: if you paid your friend $6 a week for five years, would he be happy if you were to call him 24 hours a day, anytime your car broke down? In addition, would he provide you with a rental car, towing expenses, trip interruption coverage that includes the cost of a hotel and food if your car needs to be in the shop overnight while you’re out of town? Will he also provide you with roadside assistance if you run out of gas, and take care of your problems anywhere in the country – and accept collect calls from you? If he did, there’s probably a good chance he wouldn’t be your friend any more!

“Considering the benefits you receive, don’t you think a service contract is a good value?”

Extended Service Contract: A No-Lose Option

CUSTOMER: “I don’t think I need a service contract.”

F&I MANAGER: “You’re right, you don’t need the benefits of an Extended Service Contract now. But when your three-year/36,000-mile Manufacturer’s Warranty runs out – and it will likely run out well before the three years are up – you’ll need it then.

“If you were to buy a used-car service contract then, the coverage will be limited and you’ll pay a lot more for it than the one you can purchase right now and finance along with your vehicle. And if you decide to sell your car before the service contract expires, you can command a higher price for it because the service contract is transferable. Or, if you decide to cancel the contract at that time, you can get a pro-rate refund on the unused portion.

“Really, it’s a no-lose situation. You’ll have full protection when you will need it most, and you can capitalize on the unused portion later if you sell or trade your car.”

Extended Service Contract: Cost versus Coverage

CUSTOMER: “I like the coverage, but it costs too much. Is there anything you can do on the price?”

F&I MANAGER: “Let’s see where we are. We’re looking at a five-year/100,000-mile service contract for $1,595. That offers you the most protection for your vehicle. We can reduce the coverage to four years and 75,000 miles. At $1,195, that will save you $400.

“But $400 over the course of five years is only 22 cents a day. We can do whichever you like, but I think that’s a small price to pay for an extra year and 25,000 miles of coverage.”

NOTE: Never discount the price of this or any other product. Doing so could jeopardize the finance manager’s credibility with the customer.

“I ALREADY HAVE LIFE INSURANCE”

CUSTOMER: “I already have life insurance.”

F&I MANAGER: “Has it been awhile since you’ve updated your life insurance policy? That’s the case for most people. I know it’s not an easy subject to talk about, but by financing a life insurance policy along with your vehicle, your family won’t have to worry about making car payments in the event you’re not around to do so. At a time when there will be a lot of grief, it has to make you feel better knowing that you’ll be leaving your family in a much better financial position.”

“I AM NOT INTERESTED IN DISABILITY INSURANCE”

CUSTOMER: “I’m not interested in disability insurance.”

F&I MANAGER: “I know becoming disabled isn’t an easy subject to talk about, but it’s important to know that most job-related disability coverage only pays a 60 to 80 percent of your regular income. If you are sick or injured and are unable to work, your expenses will increase, not decrease. This policy will cover your monthly car payment while you’re not working, and that’s a time when you’ll really need that extra money.”

GAP versus Vehicle Replacement Costs

CUSTOMER: “I can’t afford it – it costs too much.”

F&I MANAGER: “You are responsible for your unpaid car loan balance as well as your insurance deductible if your vehicle is stolen or totaled. That can amount to thousands of dollars because of depreciation. Remember, you’re buying a new car, but after you drive off the lot, it will be considered a used car.

“GAP covers the difference between what your car is worth and what you owe, and it also covers the insurance deductible. This will let you deal with your loss without having any out-of-pocket expenses, and at a time when you don’t need any more aggravation.”

GPS Security Systems versus Alarms

CUSTOMER: “My car has an alarm. I don’t need another security system.”

F&I MANAGER: “An alarm is good, but most professional thieves can bypass them in a matter of seconds. AGPS tracking system provides added protection. It’s monitored 24/7, so if your vehicle is stolen, authorities can track it – even across the borders in Mexico and Canada.”

Anti-Theft System versus Vehicle Replacement Costs

CUSTOMER: “I’ll pass on the anti-theft system. It’s too expensive.”

F&I MANAGER: “Keep in mind that if your car is stolen and not recovered, you’re responsible for paying off the loan deficiency – what you owe vs. what the car is worth – as well as the insurance deductible and the tax and license fees for your replacement vehicle. This can add up to $2,000 or more. This anti-theft device works as a deterrent by making your vehicle undesirable for the thief. But if it is stolen, you’ll receive a $2,500 benefit. That could cover your out-of-pocket expenses plus give you another $500 to boot. Such a payment will help take the sting out of losing your vehicle.”

Appearance Package versus Vehicle Trade-In Value

CUSTOMER: “I don’t want the appearance package.”

F&I MANAGER: “I know you plan on keeping your vehicle looking good, but having the appearance package can make sure it looks good. That’s important if you ever plan to sell or trade your vehicle. When a dealership appraises a trade-in, you know they’ll be looking at the paint job, the condition of the interior – whether the vinyl is cracked or if the fabric is stained – as well the vehicle’s mechanical condition.

“Consider that a paint job can run you $1,500 to $2,000, and replacing the vinyl parts could cost $500 or so. Trying to restore the fabric is also costly. All this is deducted from the value of your vehicle before any mechanical repairs are even considered.

“This appearance package will help keep your car looking new for five years, and that could actually save you money.”