Tag Archive | "VSC Payment Plan"

Payment Plans Mean More Options for Selling Service Contracts


In today’s dealership, F&I products are a big part of the revenue stream. And in the F&I department, vehicle service contracts (VSCs) contribute a large amount to that bottom line. But while there will always be customers who decline to invest in a VSC, what about those who are interested, but, for one reason or another, can’t purchase — they don’t qualify for the additional amount as part of their loan; they were pre-approved and cannot deviate from that total; or they are a cash customer, with no loan at all? In those types of scenarios, does the dealership forego selling a service contract?

In many cases, the dealership looses the potential sale, but there is another option — VSC payment plans. Paylink, Service Payment Plan and Omnisure Group all sat down with AE Magazine to talk about what the product is, and why agents should care — and they all agree on the same reason.

“One of the most important things is that with just a little bit of effort, the agent and dealer can really add some significant revenue to the bottom line,” noted Rebecca Howard, CEO, PayLink. “From the agent’s perspective, there is very little effort to introduce it to the dealership.”

Robert Hymen, president of Service Payment Plan, agreed, noting, “Every dealership has a number of opportunities to use a payment every month. It is easier to increase a dealer’s business than to conquest a new dealer. If every dealer an agent works with sold just five more contracts a month, they would add considerable volume to their business. Every time a payment plan is used it is an incremental contract that otherwise would not have been made.”

“This product will increase their sales and income by allowing a customer, that wasn’t able to pay in full, an option to make payments over time for a product they benefit from in the future,” agreed Ed Walder, president, Omnisure Group

All three work in similar ways — they work with the providers and administrators to set up agreements, allowing the customer to pay for the service contract in no-interest monthly amounts; the average time to pay off the contract was 18 months. In all three companies, electronic debiting of the customer’s account each month is the preferred form of payment, although PayLink and Omnisure both noted that they want to work with the dealership to set up the best plan for them, which can include alternatives like a mailed check every month.

Beyond F&I
One of the key benefits for agents is that VSCs can be sold more easily outside of the F&I office, leading to more contracts and more sales overall. While all three companies noted that there are multiple ways a dealership can take advantage of that flexibility, the most common place outside of F&I they see the VSCs being sold is the service drive.

“The service drive is an excellent place to sell service contracts,” said Hymen. “This will be a growing area. It is when the customer is in service that they realize things can and do go wrong with their car. What better time to tell a customer, ‘today’s repairs are covered by your manufacturers warranty. It is a good thing this was still under your warranty because otherwise it would cost X dollars but in x number of months or miles you will be responsible. You are still eligible to purchase a service contract for as long as you plan to own your car and can pay for it monthly, interest free over 18 payments.’”

Walder agreed, noting, “The key is selling a good VSC matched with consumer-friendly payment plans that properly compensate the dealership at all levels. A service department should be able to share in the sale, as well as receive the long term benefit of performing service under the contract.”

PayLink’s Howard agreed, but noted that the service drive isn’t the only place a dealership can take advantage of added sales. One example she pointed out is in dealership newsletters to customers who purchased a car — with a payment plan, the dealership can offer the VSC as an after-sale product at any point, providing a potential revenue stream that, for most dealerships, is completely untapped right now.

Hymen added that he believes the F&I manager should always be the first one offering a service contract, and should always try, at least, to sell it the traditional way. For him, offering payment plan options should be the second line of defense in F&I, and from there should be a tool used to increase sales at other customer touch points.

Overall, one thing is clear — payment plan options are easy for agents to add to their portfolio, and are an easy way to increase revenue for everyone involved. They allow dealerships to makes sales that they otherwise would have lost, or, alternatively, capture sales that today they aren’t even going after. And even a few more contracts sold per month can make an impact on the bottom line.

VSC Payment Plan Roundup

Omnisure Group

Omnisure Group
Ed Walder, President

In your opinion, what do most agents need to know about this type of payment plan in general that they don’t already?

It is a ZERO/NO interest payment plan to the consumer and increases dealer revenue.

Read More »

Paylink

Paylink
Rebecca Howard, CEO

In your opinion, what do most agents need to know about this type of payment plan in general that they don’t already?

One of the most important things is that with just a little bit of effort, the agent and dealer can really add some significant revenue to the bottom line. It allows them to sell service contracts they might not have been able to sell, such as times when they weren’t able to qualify the customer, or incorporate it into the loan, or it was a cash buyer, etc.

Read More »

Service Payment Plan

Service Payment Plan
Robert Hymen, President

In your opinion, what do most agents need to know about this type of payment plan in general that they don’t already?

Every dealership has a number of opportunities to use a payment every month. It is easier to increase a dealers business than to conquest a new dealer. If every dealer an agent works with sold just five more contracts a month, they would add considerable volume to their business.

Read More »

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Service Payment Plan


Robert Hymen, President

In your opinion, what do most agents need to know about this type of payment plan in general that they don’t already?

Every dealership has a number of opportunities to use a payment every month. It is easier to increase a dealers business than to conquest a new dealer. If every dealer an agent works with sold just five more contracts a month, they would add considerable volume to their business. Every time a payment plan is used, it is an incremental contract that otherwise would not have been made.

A payment plan will be used in the following situations in the F&I office. 1. Cash buyers. Everyone loves a deal. Cash buyers will often say yes to 0% interest versus writing a check for thousands of dollars. 2. Customers who want a lower car payment and don’t want to be paying for a service contract and paying interest for 72 months or more. 3. Customers where the advance from the bank will not allow the service contract to be added into the car payment. 4. Credit Union customers who have been pre- approved for an amount, or have been offered a service contract at the credit union. 5. After market sales of service contracts.

Why should an agent add this to their product mix, if they don’t already offer it?

If they don’t, their competition will.

Do you see this as being exclusively an F&I product, or something that could be sold in the service department as well? Why?

The service drive is an excellent place to sell service contracts. This will be a growing area. It is when the customer is in service that they realize things can and do go wrong with their car. What better time to tell a customer, “today’s repairs are covered by your manufacturers warranty. It is a good thing this was still under your warranty because otherwise it would cost x dollars but in x number of months or miles you will be responsible. You are still eligible to purchase a service contract for as long as you plan to own your car and can pay for it monthly, interest free over 18 payments.”

Can you walk me through how it works, from the time the agent places it as an option in a dealership, through the end-customer using it?

F&I managers will always attempt to sell the service contract, and have the cost added to the car payment. It is when the customer says no, or when he cannot get enough money from the car lender that the F&I manager will present the ability to pay for the contract monthly, interest free over 12 or 18 payments. The dealer will then complete our forms either electronically or by hand, and submit the paperwork to SPP and their service contract company. SPP will then notify the customer of their payments and will debit their credit account or checking/savings account accordingly.

What are the biggest pros to the service payment plan product? What, if any, are the negatives? How can an agent overcome those?

It will result in incremental sales, more revenue up front and more satisfied customers returning to the dealership. There are no negatives to using SPP.

What makes your product, specifically, unique from your competition?

Professional training of agents and dealers, as well as outstanding service to the dealers, customers, agents and administrators sets us apart.

Do you see any changes to the product going forward? If so, what are they? If not, why not? What, if any, trends might affect it?

No. However I do believe more and more dealers will automate the way they do business with SPP.

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Paylink


Rebecca Howard, CEO

In your opinion, what do most agents need to know about this type of payment plan in general that they don’t already?

One of the most important things is that with just a little bit of effort, the agent and dealer can really add some significant revenue to the bottom line. It allows them to sell service contracts they might not have been able to sell, such as times when they weren’t able to qualify the customer, or incorporate it into the loan, or it was a cash buyer, etc. Many dealers won’t continue down the sales path, but this allows them to find financing for that consumer through the interest-free payment option. From the agent’s perspective, there is very little effort to introduce it to the dealership

Why should an agent add this to their product mix, if they don’t already offer it?

It’s an easy product for the agent to carry. We don’t require any type of training or contractual relationship with the agent to introduce this to their dealerships. It is also easy for the dealership to use — it is a few easy steps for the agent to explain how to use the program. At the end of the day, we’re all about giving the dealer the opportunity to sell more service contracts, which the agents benefit from as well. So, from an agent’s perspective, why not sell it?

Do you see this as being exclusively an F&I product, or something that could be sold in the service department as well? Why?

These payment plans are not exclusive to F&I. They can be used for service contract sales at any point in time, in different sales opportunities at the dealership. Many dealers are pushing service contracts in the service drive, or working on sending out other information, such as newsletters, introducing the service contract later in the relationship with the customer. Outside of bundling into the auto loan, this allows the dealer the opportunity to sell the service contract and provide an installment plan since most consumers aren’t in a position to pay cash for the product.

Can you walk me through how it works, from the time the agent places it as an option in a dealership, through the end-customer using it?

It is a simple sign up plan that the agent would introduce to the dealership. Information on how to use the program and how to sign up with Paylink is part of that process. The dealer can then use it for any sale of the service contract they would like. We ask dealership to fill out payment plan agreement, which can be done electronically, mailed or faxed. They select coverage terms, number of installments they’re going to offer, collect a down payment from the consumer and then send out the information. From that point on, that’s really all the dealership is responsible for doing — we take it from there.

Paylink does need to know which service contracts they’re selling to make sure they’re eligible for our program. There are a number of service contract providers, and we have requirements — we don’t want to be collecting payments if it’s not a product that provides the necessary coverage. An agent or dealer would need to let us know which service contract companies they’re selling; they would fill that out on enrollment forms. We are always adding new providers, so there’s not really a set number to choose from. We’re always interested in working with as many administrators as there are out there with qualifying programs.

What are the biggest pros to the service payment plan product? What, if any, are the negatives? How can an agent overcome those?

I don’t really see many negatives in terms of the use of this product. Over the years we’ve heard dealers complain about doing paperwork; one of the areas we’ve worked really hard on is to minimize the need to duplicate entries or paperwork.
We’ve created a Web-based contracting solution, to connect their technology to ours. We work with as many providers as we can to avoid duplication of data or additional paperwork. The agent can be helpful in working with the dealer and us to make sure we have the technology that can benefit their dealerships.

What makes your product, specifically, unique from your competition?

Our flexibility is really our differentiator between our competitors and us. We want to create a program that works for our clients — the dealerships and administrators — and gives them the best possible outcome of selling more contracts. We take a really individualized approach.

Do you see any changes to the product going forward? If so, what are they? If not, why not? What, if any, trends might affect it?

Technology is going to continue to advance. Real-time connectivity will make it easier to use, and easier process between different businesses will make it faster and more effortless to contract. PayLink will continue to evolve to streamline the process and eliminate paper.

Overall we really follow the lead of the auto dealership in terms of what types of programs they’re looking to sell to their clients. What keeps the consumer tied into that relationship with the dealer; we want to enhance that relationship and have a product that supports their needs.

Is there anything else you would like to add?

Overall, in terms of the dealerships having the ability to enhance revenue streams, and in terms of what they can derive in the sale of the vehicle, the service contract becomes a big key. To have ways to sell additional contracts, and then have ways to enhance that relationship, we see a huge win for everyone involved.

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Omnisure Group


Ed Walder, President

In your opinion, what do most agents need to know about this type of payment plan in general that they don’t already?

It is a ZERO/NO interest payment plan to the consumer and increases dealer revenue.

Why should an agent add this to their product mix, if they don’t already offer it?

This product will increase their sales and income by allowing a customer, that wasn’t able to pay in full, an option to make payments over time for a product they benefit from in the future.

Do you see this as being exclusively an F&I product, or something that could be sold in the service department as well? Why?

This product can and should be offered in the service department. The key is selling a good vehicle service contract (i.e., good claim history and ease of use) matched with consumer friendly payment plans that properly compensate the dealership at all levels. A service department should be able to share in the sale as well as receive the long term benefit of performing service under the contract.

Can you walk me through how it works, from the time the agent places it as an option in a dealership, through the end-customer using it?

Customer signs our contract. Information is transmitted to Omnisure. Contract is booked immediately and notice of acceptance is sent to the customer and dealer. The notice of acceptance includes instructions to log in to our Web site, which allows the customer to access our 24/7, real-time system to check their account or make a payment. If the customer elects for monthly invoicing, they will be sent an invoice after booking. Other billing methods such as automatic ACH from their checking or credit card are available as well.

What are the biggest pros to the service payment plan product? What, if any, are the negatives? How can an agent overcome those?

Pros — It allows the customer economical means to obtain products they need while preventing major cash shortage in the event a repair is needed.

Cons — Unless a dealership rewards the Sales/F&I departments sufficiently, they will not take on the extra work of explaining the products available and the payment options to the customers so they are able to afford them.

What makes your product, specifically, unique from your competition?

Omnisure is flexible to fit each dealership’s needs. If a dealership has an idea of how they want our product to work in their company, we try our best to customize so they can be successful. Omnisure looks at the relationship between the dealership and our company as a partnership.

Do you see any changes to the product going forward? If so, what are they? If not, why not? What, if any, trends might affect it?

Changes to the product happen daily, monthly and yearly as needed. Omnisure strives to make the process as efficient as possible while at the same time maintaining flexibility in the programs to meet the various needs of our partner companies, be it the dealers, service departments, F&I management or administrators. While our society has become more interconnected, we see every participant, including ourselves, in the vehicle service contract and the payment plan demanding more and more information and more and more access. This is a trend that Omnisure is devoting resources to in order to meet these demands.

Is there anything else you would like to add?

We all have many products to offer but the true ability to partner with a company and work together through situations and changes that occur along the way is what we do best. We are looking for partners.

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