Converting the Cash Buyer in F&I – It Could Be Easier Than You Think


There has never been an F&I manager in the history of the car business that has ever been excited to work a ‘cash deal’. Ever. It is the most dreaded scenario that almost always deflates even the most successful F&I manager with years in the business. In fact, I have seen some in F&I literally disappear from their offices when a cash deal is coming from the sales tower. Not a pretty sight.

Is there an effective strategy to convert those buyers to dealership financing? Are there ways to still hold a profit on these deals? Yes…but you have to be careful and persistent.

Is it REALLY a cash deal?

Cash deals generally happen when a buyer has either secured financing on their own with an outside lender (bank, usually a credit union) or they really do have the cash for their car. Some other may use a HELOC (home equity line of credit) essentially taking out the cost of the car from equity in their home.

If they are using a credit union draft or HELOC funds that were transferred, it is technically still a payback scenario. They either make a monthly payment for a loan term for a standard loan or they are paying back a smaller payment over time drawn from their home equity. Either way it’s still being paid back. This represents the vast majority of cash deals in the market today.

So no, it’s not really just cash but rather a window of opportunity for a skilled F&I manager to illustrate to the buyer that they are still paying SOMEONE back for the car so why not take a closer look at ALL options before making that final decision?cash

Ask the Right Questions

It goes without saying that you need to know before the deal comes into your office if they are a cash buyer or finance. If they have their own money, immediately meet them on the sales floor if possible and ask a couple of quick questions as a ‘matter of procedure’. The customer should have no problem when it’s phrased this way.

Ask if they have a draft from a financial institution to be signed over. If they do, you can assume a credit union is involved and the second question that follows would be to ask if the dealership will be responsible for assigning the lien for the title. If they say yes (and they probably will), then you know before they walk in exactly how you need to approach them.

If they say they are writing a personal check, ask the same about lien assignment. If they say no, they either really do have cash sitting around or they are using funds from a HELOC. One way to figure that out may be to ask if they have a mortgage holder that needs any paperwork from the sale of the car. This may sound like a strange question to ask because HELOC funds are usually a simple cash transfer but asking this can tip you off that they are still paying it back in some way albeit in a longer term and for low interest.

Now You Know…How to Convert Them?

Cash buyers either want to guarantee a lower rate without haggling or prevent the dealership  from adding points on the rate. But unless they are truly paying cash, they still have to be shown their options for financing and doing some research is critical for the F&I manager to be effective here.

Make sure you know what local credit unions are offering for rates/terms. Check HELOC rates, too. It’s important to have a process or platform program in place that you can quickly and easily plug in the number and rates to illustrate how your finance options compare to what the buyer already has worked out. It doesn’t always work but being able to show them that your financing options may only be $10 or $20 difference but may allow for the addition of a valuable maintenance plan or extended warranty that they won’t have to pay upfront for all at once.

Make the point that they are still paying someone for the car ultimately. And it’s ok to gently remind a buyer that if they are using a HELOC to purchase their car to benefit from a tax break, that may not work as the tax laws have dramatically changed that write off for HELOC’s and second trusts. Make the helpful suggestion to check with their tax professional.

Also, why tie up valuable equity? I converted many buyers by telling them to save their equity because they may need it to move or for something more urgent like home repairs. Cars are depreciating assets; most houses are not.

Real Cash Buyer…A Lost Cause?

Not at all. If they have THAT much cash, they can still afford products like warranties, tire & wheel, and maintenance plans. They can afford it. Don’t shy away from executing your strongest menu presentation just like you would any financing buyer. If you are consistent and confident, you could see a 10-15% bump in cash deal product penetration.

Your last-ditch effort with this buyer can be simply offering up financing that is short term (24-36 months) that allows them to keep their cash in the bank or other account where it will earn interest and do more good NOW. It’s a long shot strategy but you may be surprised that a few may think twice about writing the check. Always worth a try.

Look at the next cash deal as a challenge, not a worthless effort. Every buyer deserves your best effort and presentation and you deserve every opportunity to make a solid PRU regardless of how they buy the car.