0% down is great for dealerships who hate repeat customers. I know that it sounds perfect for those people on the sales floor and makes things easy for your employees, but it’s still a bad idea.
Even when the lender approves you for 0% down, you should still push the customer to put some money down. It’s not only good for you, it’s good for the customer. Why?
– Places the customer in an equity position. They won’t be upside down after a couple of years of payments, and if something happens to the vehicle and they don’t have GAP then they won’t owe a big lump sum payment.
– Leaves additional room for the customer to purchase an ESC and other F&I goodies.
– Lenders not hung out if they have to repo the vehicle, and the customer is more vested in taking care of the purchase. You don’t want your lenders to lose money on your book of business (lesson learned the hard way).
– It’s another negotiating point and can help dealers to maintain margin on the vehicle sale.
If you play the short game and are just focused on selling that next vehicle, then 0% down is for you. I play the long game, I want customers for life.
How does your dealership handle 0% down approvals?
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