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Jeremy Sutter

Jeremy Sutter Freelancer

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Obvious Clues That Your Customer Can’t Afford That Car

There are times when a customer really wants to buy a car, but the deal just won't work. This often happens when the buyer lacks the resources. It is frustrating and discouraging for everyone involved.


As the sales professional, it is your job to help your customers find the best fit for their circumstances. If you knew they didn't have the money, you would have steered them towards a better solution. Here are a few things to look out for in the future.


Shopping New or Used


Find out right away if the buyer is looking for a new or a used car. The answer tells you important information about the customer's needs and financial capabilities. Used car shoppers tend to be more budget conscientious. They want value at a lower price. Ask a few follow-up questions to find out more:


  • Why are you shopping for a used car instead of a new one?

  • Have you considered the value of the warranty or the cost of maintenance?

  • Would rebates on a new car interest you?

A used car buyer interested in the lowest priced vehicles on the lot probably has some financial issues. A new car buyer agreeable to every suggestion you make about options and features isn't worried about the money.


Evaluate the Customer's Budget


Serious buyers have a budget in mind from the beginning. A few probing questions should give you a better idea of your customer's true budget:


  • How much money can you use for a down payment?

  • What is the most you can afford to pay in a month?

  • How is your credit?


Experts suggest a 20% down payment for new cars. This takes care of the taxes, initial registration, licensing fees, and most of the upfront depreciation. A buyer that struggles to obtain this amount likely has little in savings and cash flow problems.


The term of the loan is also important. A three-year loan used to be the industry standard, but it is now common to find terms twice that long or more. Responsible buyers keep the term to four years or less. Customers that cannot afford a car will often stretch the term out longer to bring the payments down.


The monthly loan payment should also be 10% of the household budget or less. Although lenders will approve loans that exceed this amount, your buyers could end up in trouble later. Capping spending for loan payments leaves room in a budget for other ownership costs like maintenance and fuel.


Ask About Your Buyer's Current Policy Provider


Customers may initially hide poor income and down payment information, but they inevitably give themselves away when discussing auto insurance options. This seemingly benign topic reveals important information.


Much of the financial detective work has already been performed for you by insurance providers. Insurance companies set policy rates after considering critical factors like the type of vehicle, driving history, and financial stability. Policy rates vary, but most drivers pay between $80 and $200 a month.


In theory, an expensive car should have a higher insurance rate. Policies are higher on cars that cost more to repair or replace. The same is true if the vehicle is more likely to incur additional costs. For this reason, sports cars and SUVs typically have higher rates.


With some experience, you should be able to tell if your customer is paying too much for insurance. An unusually high policy premium is an indication of financial difficulties. It also suggests that your customer does not have the resources available for a higher car payment.


Work A Long-Term Strategy


Happy customers come back to buy more cars from helpful salesmen. Avoid frustrating your customers. Find them the right fit by directing them to cars they can afford without creating financial hardships.

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