Transmission Repair Financing Options

In my last article I talked about using Google AdWords and Bing Ads pay-per-click to drive customers to your website. One of the biggest complaints I get about Internet leads: Customers not having the money to fix their car.

A recent “call shops as a customer” study found:

- Around 65% of transmission shops are quoting at least a ballpark price for rebuilds on the phone.

- Around 80% of general repair shops are quoting ballpark prices for a reman or used unit installation.

- Around 40% of transmission repair shops offer no form of financing options.

The price range for a transmission rebuild or replacement is not a mystery to the Internet shopper. There are websites that give approximate cost information for used, rebuild and reman pricing online. Simply search “transmission repair cost” for an example. $1,800 to $3,500 is what shows up immediately.

An estimated 60K-80K visitors or more in the U.S. see this pricing on a monthly basis, based on search engine estimates. So the Internet shopper already knows, before they call around, what it is going to take to fix or replace a transmission.

When a customer knows up-front they cannot afford repairs using cash or a credit card, and you do not offer financing options on that initial phone call or on your website, they more than likely are going to keep shopping until they find someone who does. A customer without cash or available credit is going to consider used transmissions options or trade-ins if there are no transmission shops available to finance them.

Consider a $2,400 transmission repair: That amount can be tough for many to come up with (cash or available credit). They may call you, they may even set an appointment, but they may not show up for that appointment if a competitor offers financing.

In 2015 there are multiple options for financing, each with their own advantages and disadvantages. In our 2015 Marketing Survey that went out in January, we asked you who you were using for financing. These are the main financing companies used by transmission repair shops today in 2015:

- Synchrony Financial/CarCareOne

- Springleaf

- Cross-Check

- Easypay

- Globalcheck / ARC90

- Secure Payment Systems

- Local Title Loan

- In-House

Any financing program will have its various approval rates and details–but by having at least one or two financing options to mention on the initial phone call will result in more appointment show-ups and more completed vehicles.

As a manager, you should be familiar with the financing options, mention them to every customer, and make it as easy as possible for customers to get financed. If a customer mentions money troubles, you should get them processed and approved right away-before that customer starts thinking about other options.

The bottom line: Financing can help solve our customer’s wants and your wants at the same time. Having the right financing program for your customer type can make a big difference on YOUR bottom line!

Cash Buyer – The Good and Bad for Equipment Financing

“I pay for everything in cash, I never finance anything” or “I’ve never had to take out a loan, I don’t believe in it”. Every so often, I encounter this type of feedback from a business owner. The attitude usually goes along with a strong, hands-on work ethic for an owner which has built their business from the ground up. They have worked long hours, suffered through the ups and downs and sacrificed family time and vacations to make their business survive. Their belief is, if they cannot pay for something with cash then they do not need it.

I respect the energy and devotion but I also take note that the strategy seems to apply to small, family owned businesses with a small number of employees which have remained flat in their growth and have stopped expanding years ago. Expansion and reaching new markets are not typically part of their business plan and they are happy with a fixed income often servicing the same clientele they have for years.

The downside of never financing anything is the limited amount of expansion which can occur. In essence, they cannot grow beyond what is in their bank account at any moment in time. For example, a small business with $100,000 of capital desires to purchase a new $40,000 machine which will speed up production or bring them into a new market or simply replace an old machine; if they decide to pay cash that will leave them with $60,000 in cash reserves. If they encounter an emergency which requires $30,000 then that will leave them with little cash cushion in their account. They have also limited themselves in the case if another opportunity should surface at the same time they would not be able to take advantage of it like paying early for inventory to get a good discount.

The other negative of never borrowing is that your business will not have any established comparable credit so in the case when you do decide to finance anything, the likelihood of getting approved is marginal. A lender will not be able to assess your ability to pay back debt since you have never had any. Some business owners feel it should be viewed positively that you have never had to borrow but in the finance world it is not a positive. No credit history equals no loan.

The mantra in financing is ‘it is easier to finance equipment than it is money’ which is primarily true. Yes, you can get low cost capital from your bank if you have an established credit line but that line will have a limit. It is not a good move to use your credit line to finance an asset or equipment because that line should be used as either a last emergency resort or for short term borrowing. Finance rates are now in the 4-6% which can be stretched out to 5 years and sometimes longer. Many times, when expanding in a careful and planned manner, the finance payment will be less than the added revenue of your new equipment. This is true of energy and cost efficient industrial machines, solar systems and LED lighting.

Financing equipment for your business offers you the opportunity to expand, create more profit and reach new markets and clients. For those that want to know the benefits of never financing anything it is this; you will never owe anybody anything, no monthly payments, no interest and no chance of borrowing more than you can pay back but in that perceived safety there is also some risk and missed opportunity.