Why Preloaded Ancillaries Can Help Buyers Dealing with Higher Payments

In light of the latest moves from the FTC regarding F&I products and what is or is not looked at as a ‘beneficial’ product to sell, dealerships may have to polish their sales skills a bit to make sure customers see the value in every ancillary product you offer.

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Outside of the standard high margin products like VSC and GAP, the ancillaries sometimes get overlooked or they are rushed on the menu presentation. But with the car industry in a bit of a tailspin from factors like interest rates rising and a nagging inventory issue, these products may be exactly what many customers need right now.

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Higher Car Payments Mean Less Money to Fix Issues

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Car buyers are being pushed to the highest new and used car payments in history at over $600 dollars on the former. Much of that is caused by the higher rates in lending but also the prices have risen YOY (though now finally leveling off as some inventory is making it to the lots). 

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With higher payments and potentially higher downpayment to make the deal work, customers won’t have as much disposable income to handle the kinds of issues that ancillary products can take care of.

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If your buyer is rolling out with a $550 payment with razor-thin payment-to-income, highlighting Tire & Wheel and Interior/Exterior protection can save them hundreds in reconditioning and replacement. 

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And that’s how you spin it…and maybe your F&I staff already has the cost-benefit pitch ready but now more than ever it’s critical to look at the financial position of the buyer with a different set of eyes. Help them see how your products can protect them while they are taking on a higher payment than they wanted to.

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Preloading the Right Way

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Also another target of the proposed FTC regulations, preloading any ancillaries can be viewed poorly if not fully disclosed and explained upfront. There is nothing wrong with making it easy for the buyer to enjoy the protection packages you offer as part of the price and a value-add. Just be sure to fully disclose exactly what they are getting with the breakdown of cost.

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Preloading products to Line 1 on the buyers order is a simple, time-saving solution that more dealers are beginning to embrace. 

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But the question is...if you do preload, which ones are the best and give your customer the best cost benefit in this expensive buying climate?

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Here are 5 F&I products that would be a good fit for preloading:

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1. Appearance Bundle - Giving every customer an easy and cost effective way to keep their car looking amazing inside and out becomes easy with an appearance bundle included with every vehicle. It covers interior/exterior, alloys, windshield, PDR, and 24/7 added. Small back-end margin and easy to white label.

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This becomes important if they are looking to trade in their car within a couple of years or less. A better looking car gets a higher ACV for the trade and that helps them easily go to the next car.

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2. Tire & Wheel - Nearly every vehicle sold has high-cost alloys and we all know the cost of tires has done nothing but go up over the last decade. Offering this as a preload is easy when customers are reminded of the high cost to repair and replace. And chances are a customer who barely got the approval won’t have the money laying around to replace those black upgraded alloys.

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3. Identity Protection - This may seem odd to include but in a world where we all have to worry about hackers getting our information from our local stores or online marketplaces, your dealership will show customers that their financial safety is important to you, too. 

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And it’s just unusual enough of a product that your customer may be grateful to have that added protection in an easily hacked world. Prime, Near Prime, and SubPrime can ALL benefit from having an eye on their identity.

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4. Key Replacement - Most customers have no clue how much their cool new key fob is to replace. Most run well over $300 on the newest models and with higher car payments, no one will want to part with that if they have to replace a lost remote fob. The likelihood of everyone needing to replace a key fob at some point is pretty high but during the life of the loan, customers will appreciate this being handled if bad luck strikes them.

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5. PPM - Prepaid maintenance should not be something for only the most expensive vehicles in the market. Increase your service lane profits by making sure every customer has to come back to your store for their scheduled maintenance.

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When taking on a higher cost to purchase, even a few years of maintenance that is not hitting them out of pocket will be a win for your buyer. Take that worry away and highlight that taking good care of their vehicle makes it worth more on trade. 

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truWarranty can help with all of these strategies. Let’s talk today about how we can help you create or strengthen your current preload program and help your stressed buyers save when it matters the most.