How to deal with customers who want to "pay cash."
One of the most popular topics in the F&I seminars I conduct  throughout North America is the art of "Cash Conversions" - selling financing to those who want to "pay cash."

Most people, when buying a high-ticket item like a vehicle, require financial assistance from a third party, usually a professional lender (rather than a relative or friend). Some folks have other ideas, however. They prefer to "pay cash" when making the purchase; for a variety of reasons that may include:

a) They have ready cash available;
b) They hate paying interest;
c) They hate making payments;
d) They don’t like owing money;
e) They believe they’ll get a better deal;
f) Pure ego.

But here’s where things get interesting: simply because someone states they wish to use "their own cash" doesn’t necessarily mean they can or will do so. Odds are the client will borrow the funds elsewhere, simply bypassing your F&I office’s service.

Obviously, the consequences of them doing so are costly to you. By simply accepting their money you will lose finance reserve (when applicable), lose the chance of selling creditor insurance products (because there will be no loan), and finally, lose the chance of earning the increased finance reserve you would have enjoyed had you added the creditor insurance onto their contract in the first place. Ouch!

Don’t just acquiesce
Many business managers simply accept their clients’ statement that they wish to pay cash without argument. That tendency to acquiesce should be re-examined and corrected. 

Certainly there will be some customers who can afford to pay cash and have the money available. But how large is that portion? Some say in the 15-percent range. Fine! If that is the case, that leaves a whopping 85 percent needing our money.

That means our business offices should be enjoying an 85-percent finance penetration level virtually every month. I have rarely if ever seen that level anywhere, which confirms the fact that our clients are buying their money elsewhere.

What is our problem?
If we accept as fact that only 15 percent actually use their own money to buy, why don’t we get an 85-percent finance penetration rate?   

Here are some possible reasons:
a) The business manager has no time for the cash conversion (I have heard this claim);
b) Some personnel simply believe that the clients have the money;
c) Some may be intimidated by a seemingly powerful individual;
d) Some may require training;
e) Some may accept that paying cash is the ‘better thing’ for the client to do;
f) Some may just be happy to ‘get the deal’;
g) Some may not care; they get paid regardless.

Although the suggestion that some ‘may require training’ was placed in the middle of this list, in reality it is the most important point of all. As with many things, training will cure most ills and it most certainly can when it comes to learning, mastering and performing cash conversions.

Some solutions
Should buyers tell you they wish to pay cash, treat that statement as you would any objection. Try to first find out why they feel as they do. It is always easier to sell something to someone when you know what they think.

Assuming they tell you, try to delve a bit deeper to discover if there are any other hidden reasons supporting their point of view. Once they are uncovered, try asking them: "

Assuming for a moment you would benefit from financing rather than paying cash, would you finance?"    

Some may simply be curious, asking for more details. And some might dismiss your suggestion completely. So what! Chances are good the majority will respond with a resounding "yes." Then, you’re on!

Do you have your arguments/facts in place? Do you know why the client might benefit from using your lender’s money rather than theirs? If not, wouldn’t it make sense to learn these things?

Regardless, don’t just say "OK" when they say they wish to pay cash; dig in your heels and show them why doing so could cost them money and then watch how your finance penetration will increase.

This is a huge topic to cover and there are solutions to each and every item I listed, so please don’t let this money-making opportunity slip through your fingers. If you require some tips, contact your trainers and ask. If we’ve never chatted before, now might be a good time to say call and say hello.

Harvey Cohen is the author of four books and principal of Harvey Cohen Learning Systems, Inc., a Canadian company dedicated to automotive F&I and sales training and support. He can be seen as the sales and business coach on the TV show, Style by Jury. You can email Harvey at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

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