#220 - How To Get More Down - BHPH United 2022

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Podcast with hosts Luke Godwin and Jeff Watson. So the problem that we all have is we don't get enough money down, right? Does everybody have that problem? Shake your head yes, Yell out yes, say no if you don't. Who in here gets more than enough down and doesn't need any more money down? Anybody, raise your hand no. Okay, so we have been a company that's always gotten a lot of money down, and a lot of money I say is compared to the average. Now, there's some things that go into that I do not like defaults. So I am going to try to do anything I can to get that customer to pay. Now, you'll listen to a lot of people say, down payment doesn't matter, and that might be the case for y'. All. It doesn't matter if their customer is going to default. But I believe that down payment matters because it puts more skin in the game for the customer and also it lowers that pti. Pti, in my opinion, payment to income ratio net is the most important thing when it comes to whether a customer is going to be able to afford that account, that car. So our opinion is get more money down, lower that pti, the loan will perform better. Last year, our default rate was only about 8%. Normally it's around 12 to 13%. So it works for us. It may not work for all of you, but more money down is better in the long run, in my opinion. We have three tests and improvement strategies we're going to go over. First thing I want to do, who has a $1 bill in their pocket? Pull it out and hold it over your head. Cesar is on it. I like it. He's got a lot. All right, there's $1. Okay, first tested and proven strategy. You got to demonstrate the reward to the customer for putting more money down. Who in here does that? Who in here talks to the customer and says, hey, Mr. Customer, Mrs. Customer, the more money you put down, the what? The less your payments are going to be. The quicker you can trade all these things, right? So anybody in here talk to a customer about the advantages of more money? Now, raise your hand if you do. Kevin does. We got two or three back here. We got a couple people. Okay, very good. First thing, less interest to pay, right? You got to build value with the customer. Mister, Mr. Or Mrs. Customer. If you put more money down, you're going to pay less interest. Now, some of them may not know what interest is. Does anybody have a customer that doesn't know what Interest is everybody right after they make that fifth payment, they go, why has my balance not come down? Anybody get that? All the time, right? So not only do you have to build value, you have to educate your customer. Customer, this is what interest is. This is how it works. This is how it's going to save you money. Okay. The second thing, lower monthly payments. Again, I started with pti, payment to income ratio. My opinion is if you can get that under 20%, you're going to have a good performing loan. Okay, so if Your customer nets 400 a week, right. $80 a week or so would make sense. Now, $400 a week net is very low in today's time. Right? Okay. Lower payments. Customers understand that, correct? Last, quicker trade time. Who out here talks to customers, say, hey, this may not be the car you want today, but if you get in this car and you pay it properly within 18 months, 30 months, we're going to be able to trade you up. Is that part of your selling program? Anybody raise your hand? A lot of you, because it works, right? So if you can tell the customer, the better your credit gets with us, the faster we're going to trade. And the way we're going to do that is with you putting a little more money down. This first time, you may not even have to put money down on your next car. Right? So these are the ways you can educate your customers. More education, more ways you demonstrate to your customer that you can help them. The more opportunity they're going to have to put more money down, the more they're going to want to put more money down. Alright, second improvement strategy. This one's a little different. We're going to have to discuss this a bit. But before we do that, who out here has a five dollar bill in their pocket? Caesar's not participating because he's already given me a dollar. Somebody's got a $5 bill. Oh, I already got one there. Thank you. You may or may not get these back. Alright, we got a one and we got a five. All right. Everybody in their dealership has expectations for their, for their salespeople and their collectors and everything, right? So what we have done is we've set an expectation to our salespeople that we're going to get a certain amount of money down. It's, it's intrinsic in our dealership. That's what we do. Now if you talk to Chuck Bonanno, he may say, I'm one buck Chuck. So what expectation did he set? Everybody at once, $1 down. And that's what he lived on. Okay. So if I set an expectation at my dealership that I'm going to try with every customer to get $3,500 down. You think we're going to get $3,500 down from every customer? No, we're not. But do you think I'm going to get a dollar down from every customer? No, I'm not. So the expectation has to come from you as dealers, you as owners to make that decision that you're going to get more than 5, $500 down or 1,000 down. So we did a poll. Who in here participated in the poll? Raise your hand. Everybody, raise your hand. A lot of people did. Got to find my notes here, of course. Okay. The average down payments in here went from $800 to 3,500. There was a couple five hundreds, but we'll leave those out. Who in here gets more than $1,500 down on their current accounts? So maybe a few. Just a few. Okay. Who in here gets less than $1,500 down on their accounts? Maybe a majority. Right? So is it 500 or is it a thousand? Raise your hand if you're 500. Okay. A few thousand more. So that's probably. Let's say that's the group average. 1,000, $1,200 down. Some of there. Okay, who in here gets $3,500 down? Every. Nobody. Right. I don't either. So looking at some data from last year and super interesting, and I just did this this morning because I wanted real time numbers in Q1, our average car payment and we do monthly payments was 432. Our average term was 46 months. Our average down payment was 2180. Our average ACV was $9,600, almost $9,700. And our average price was 13,800. Okay, 2022. Our average monthly payment is up 17%. It's 504. Our average term has gone out two more months. So 48 months. Our average down payment has gone down 5%. And you go, well, what happened? We'll get to that. Our average ACV has gone up 41%. 13, 7. That's indicative with what used car prices has done. Right? Hasn't everybody seen inflation of 40% used car prices? That's even what the government tells us it's at. So that makes sense. Our average price has only gone up 32% at 18. 1. Our average grosses have gone up 8. 8%, which is good. But what's concerning to me is that we got 5% less down, and we had 40% higher ACV. So we're going way more money out of pocket in each deal. Do y' all feel that's the way it's been happening to y'? All? Yes. No. Yes. Yeah, I think so. We gotta fix that problem, and the only way to fix that problem is to make the decision internally. As a dealer, I'm going to expect more out of my sales staff. I'm going to expect more out of my customers. But it's got to start at the top. If I'm okay to accept $500 down, okay. But if I think that I can get more money down, I've got to make that decision. Where did I put the clicker. Before we get to the third one? Anybody have a $20 bill? I know somebody's got a $20 bill. We in Vegas. Look there, we got one right there. Ariata, I'll take your money later. Look at there. I didn't even tell y' all what I was going to do with these. I did not plant these either. Did I plant any of these money? No, I didn't. I don't even know these guys. They gave me money. You got to ask for it, guys. You have to ask for down payments. If you don't ask for it, you will not get it. I asked this beautiful woman to go out on a date with me, and I got lucky. She went out on a date with me. But if I never would have asked. Well, actually, a buddy of mine asked, I think. Is that the way it went? My bad. But then I asked her later. Anyway, you gotta ask for it if you want to get it. So how do we go about asking for it? Which I did. I should put this in my hand. I thought this meme was kind of, you know, just ask, guys. Just ask. We gotta train to ask key questions at our dealership. We've decided there's three ways to go about this. Does anybody. A quick poll in here. If you're negotiating and we negotiate, every day we negotiate to buy cars from wholesalers. Do you let the wholesaler tell you how much it is, or do you make him an offer first? Which way? So it might be 50, 50 in here. Everybody who makes an offer to the wholesaler first, raise your hand. 2. Uh oh. Who tells? Who lets a wholesaler tell you how much this car is? A vast majority. You're negotiating wrong. Okay. If you tell that wholesaler that the car is worth $5,000 and he's got 7,000 in his mind, you think he's going to come down? Yes. No. Yes. He's going to have to lower his expectation. If I go, Mr. Wholesaler, how much is that car? And I'm thinking it's a $5,000 car in my head. And he tells me, 7,000 immediately, what are you going to do? You're going to probably go up, right? So down payments are negotiations. Most of y' all in here do not negotiate your price, Correct? Anybody negotiate pricing here? I'm probably one of the few. And that's just something we do. So you've got to develop a process to ask for it. Oops, let's go back. So what we have developed, our first question is how close to $3,500 can you get today for a down payment? So immediately? That customer who thought they were going to get out of my dealership with $500, they had to think differently, Right? How many of your sales staff today, if we called in on the phone, if we walked on the lot, would ask the customer, how much money you got to put down? How many of your sales staff would do that today? That'd be their first thing. Raise your hand because I know you're out there. It's a bunch of you. I used to do it that way as well. So before we even get there, who has set down payments? Okay, we used to have set down payments. I can answer questions on why we don't do that, but let's wait a few minutes that. So $3,500 may not be your number. Right? We've all figured out, listen to all these different dealers. There's way different ways to skin this. Buy here, pay here, cat. And if you've got a ACV of $8,000, $3,500 probably is not going to work. If you have an ACV of 13, $14,000, that ask up front of $3,500 down is not a big deal because they're buying a $20,000 car in most aspects. So if you go, hey, I need $3,500 down, they kind of know that. Not everybody. Some people still think they're going to buy that car for $500 down and $300 a month. But it's just not going to happen. So first thing, you set a number. Whatever that number is, it may not be $3,500. And I would say most of you, it won't be. It'd probably be 2 grand. $2,200. If you're currently getting $1,000 down and you want to move that needle by 3 or $400, I would say what you should train your staff is, hey, Mr. Customer, how close can you get to $2,500 down today? Okay. That gets their mind going up. We never ask how much the customer has down. Absolutely not. Never. When a customer asks us, how much is that car down? Very simple. We tailor our down payment to meet your monthly payment budget. See what I did there? We didn't deflect. We asked the customer a question. Because not ask the customer a question. We told the customer how we were going to come up with the down payment. Down payment and monthly payment is math. That's it. It's simple math. And customers don't necessarily understand that. So if they want a $20,000 car financed at 48 months, they've got to be willing to put down at least $2,500 and pay at least $500 a month. So if they don't make $2,800 a month, we're probably not deals. Probably not going to work. Okay, second question. They're going to give you an answer there. Okay. They're going to say, okay, how close? Well, you know, actually, I can come up with 1800. I'd be willing to bet you that customer walked in and think they were going to come out with $1,000 down. So we moved the needle up already. The next question is this. We always ask three questions. Every time when a customer turns down f and I, we ask again, and then in the last time, we demonstrate and ask one more time. So that's where I'm getting with this. Our next question. If you had to borrow a couple hundred dollars from your mom, from your sister, from your brother, from your baby cousin, from that person that owes you $300 that you loaned to them last month, do you think you could come up with any more money? Typically, that second ask will move the needle 100 to $200. Okay. Do you all believe that? Okay. You should believe it because it works. Third ask. Now, you can come up with anything you want here. Okay. And you come up with anything you want on the second one. The second one, we just figured it kind of works. The third one is, if I had to go home and dig in the couch cushions and dig up the jars in the back. You know, back when you might be rural, people might be burying money in the backyard. I have to go dig up money in the backyard. What is the maximum you could get today? That question typically will move them 100, $200 as well. So we've gone from first approaching with A high number. Asking again and again. We've probably moved that customer if they had the money. Now, some customers are going to tell you up front all they got, right? But about seven out of 10 times, we move that another two to $400. And it's simply by asking, how did I get this $26? I asked. Asked three times. First from Cesar, who I met just a day or two ago. Second from Jonathan. He's trying to take your money. Chad. And then the 20 from Chad. And they did not know me. They just gave me $26 for the heck of it. It's because I asked, why does down payment matter to y'? All? Must matter because y' all were in here. Cash flow. Jack Carter with the win. Cash flow. Cash flow is the number one reason it matters to most of y'. All. Cash flow, deal structure, better loans, everything. What is the possibility that if you got more money down tomorrow, you'll sell less cars? What do y' all think the probability is if you made it a conscious effort to move it from $1,000 to $1,500? How many deals a month do you think you're gonna lose? We got a none. Anybody thinks it's one. Anybody thinks it's three. I think it's gonna move it a little bit, Jack. It's going to slow your sales. So again, getting more money down may not be the answer for some of y' all who are trying to outrun something. Okay. If you want to balance your portfolio and cut down your loan to different companies, it might work for you. But beware that you may sell less cars if you make the adjustment from going. I'm getting. Right Now, I'm getting 500 down. I'm selling 100 cars a month to going to 1,000 or $1,200 down. It's going to probably move it a little bit. Might be a good thing, though. So you may have to adjust this. Hey, Luke, how much do you believe in a pickup note? I do not believe in pickup notes. How many in here do pick up payments? A lot. 50%. And I'm not saying they're wrong. What we had. What we had was they never paid them. That was our problem with them. And what ended up happening? Got to the end of the note, and this might be a collector problem, not a customer problem. We got to the end of the note and the customer said, well, I'm paid for. Remember that pickup payment you didn't make of $1,000? You still got to pay that. And they have amnesia. They never Remembered that pickup payment. I'm not saying pickup payments are bad. I'm saying we could not collect them. What it did was lower the customer's payment, got them delinquent pretty quick and we were just not good at collecting them. I would rather take a little bit less money down and collect a higher payment. Good question though because we do it every once in a while. I think our average dip last month was 20 something dollars out of, you know, 30 finance deals. So it wasn't much. Okay, I did write down some questions that who in here believes that higher down payment probably will result in fewer repos?

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We have a disagree. You don't? No.

I think it'll help on cloud recovery, but I don't think it's going to help that long before two weeks that if they're not approved at 5, if they're approved at 500, we're not approved at 500,000 not going to make the difference.

Gotcha. They're just getting 500 left less headache. Yeah. Yeah. And I think that's the biggest thing. I think your charge off amount is going to be a lot less. So Chuck will argue this. There was the big data guys were talking about this earlier. That down payment probably doesn't matter when it comes to loan performance, but what it does matter is your collateral recovery rate and your charge offs. So before we move on. Okay. I didn't want to miss something because I. You got wrote down some good stuff.

I think it does to some degree.

That 500 to 1,000 I don't think.

Makes the most difference, but 500 to 3 grand.

3,500.

I think there's a cash commitment there. From their standpoint, they're working that individual.

If it's a significant amount, I agree with you. Does anybody in here have a number that if a customer walks in I'm going to do the deal like let's say it's let's say it's $5,000 if a customer walked in with $5,000 cash. Is that somebody's number? Raise your hand. Don't be afraid. We got a couple in here. How about a $10,000 down payment? If they have $10,000, I'm going to do the deal. Yeah, that's my number. $10,000 if they're the worst customer I've ever seen in my life. You know how many of those $10,000 down payments I've repossessed? A couple, but not many. Yes, very low. Because of the commitment. Actually, I repossessed the car and she came and got it back. She only owed a thousand bucks. It was a Tahoe. So, you know, I think there's a number that the commitment overweighs everything else. No, it's not a business model because you can't get enough of those 10,000 down payments, right? Yeah. So that's evident on how if you go up too much on your down payment, it's going to hurt sales. So be careful with that. Somebody said it, I think. Jack, did you say, why does it matter? Dollar dollar bills, y'. All. Pretty simple cash flow. Alright, three examples. If today your average down payment is $500, and for some reason you just went home and you said, I'm not going to sell another car unless your sales staff produces a $600 down payment. This is a $6,500 ACV. 20 car a month. 30 car a month. 40 car a month. Look at this. Okay, $500 down is a negative $120,000 cash flow a month. The $600 down will put you at negative 118,000amonth. The difference is 2,000. The difference in a year is 24,000. Difference in five years is $120,000 in cash flow. Would that cash flow mean anything to y'? All? Another $120,000? Anybody? Yeah. All right, so if you go down to the 40 car month in five years, that's $240,000. By moving your down payment $100, who in here believes they can move their down payment $100 when they get back? Probably most. Okay, so if we decided to move the down payment 700, $250 instead of $100 for 20 car a month store, the difference in five years is $300,000. How would your credit line look if you could borrow $300,000 less? Pretty good, right? You probably slap a warranty on every car, start building your reinsurance company, and next thing you know you're you Got just two or three million dollars sitting in a reinsurance company. Would that work for y'?

All?

If you did 40 cars a month, that's $600,000 in five years. That is by moving your down payment average $250, y'. All. This one right here is a big deal. If you moved it from $500 to $1,000 and you're a 20 car store, you're at 600,000. But if you're a 40 car store, it's $1.2 million in positive cash in five years. Could you start paying off that credit line? Yes. No. Yeah, you could. It's all about no debt if you can get there. Unless you just like debt and you can just keep adding accounts. But interest rates are going to go up. So if some of you all are paying 6% now, you're going to be paying, you know, probably in two years, you're going to probably be paying 8 to 9%. That number starts to compound quickly. Well, my last slide. Let's talk about training. Who in here trains their collectors once a week? Or not collectors, salesmen. Once a week. Come on. Somebody got to three people, four people. Who in here has salesmen? Maybe I should ask that. Everybody has salesmen, right? Okay. How do you figure they're going to learn how to get more money down if you're not training them, how do they know how to sell cars? You're not training them. Anybody? Yes, sir. I've only been in business for five years. I got in here. It seems like everybody's still stuck on.

These down payments back in the 90s.

And you know, when the fast food.

Restaurants start throwing up 70 bucks an.

Hour and signing produce, life's changed. Very good point. Somebody can get a thousand bucks in two pay periods. Pretty easy. So what's funny is I wrote this down when I was preparing for this. Goes right along those lines. For as long as I've, I've been around buy here, pay here since my dad opened our store in 85. I've probably been working in the summer starting in the early 90s. Full time since 96. Full. Full time since 01. Every time I come to a convention or anytime I talk to anybody else, it's, man, these cars sure are costing more money. And I'm not getting any more money down. Who in here has that philosophy? Somebody does, because I've heard it way too many times. Inflation is real, just like we're talking about in our market. You can go to McDonald's right now and get $15 an hour. And they. I've got a friend that owns 10 of them. He will hire you on the spot if you can sign your name for $15 an hour. So you gotta get more money now. This isn't. You can't stay. And the reason most of y', all, and the reason most of us as car dealers are staying where we are is because we're not asking and we're not training our salespeople. We've always got $500 an hour. So that's just what we do. And that's fine. If the business model works and you have plenty of cash, that is totally fine. But if you make a conscious effort at your dealership to change that, to move, could change your whole business plan, your business outlook. But, you know, that's a big deal if you're staying up at night right now because you don't know how you're going to. You're going to get your, you know, your principal under that 60% mark that that one of these capital places tell you you gotta be at. This is the way to do it. The way to do it is to get more money down. Because next month, if you make this decision this month, you're gonna be at least 2,000 to $4,000 ahead. Next month, it just compounds. And before long, you're not gonna worry about sleeping. You're gonna be able to go on vacation, you're gonna be able to buy a nicer house, all these things. Yes, sir. Real quick. I don't think it takes a Salesman to get 500 bucks down. It takes a salesperson to get $2,500 for sure. Exactly right. And the only way to get salespeople is to train them. So I challenge everybody in this room to go home this week. And you got to put it on your calendar. We do ours 8:30 Friday morning. Okay, we're going to do role playing. What we talked about in this slide right here. I have way too much animation. I see. That's going to be the first question we talk about. We're going to do that every day. I challenge. Y' all set one time a week. It's 30 minutes. Train your sales staff. It's not hard. Come up with some good one liners. Customers walk on our lot. We approach our customers, they know exactly what to say it is. You're out looking and shopping today, aren't you? And we nod our head like this because we are wanting them to say yes, I am. We're not wanting them to say no, just looking. Every time you get a yes. From the customer, the more chances you have at closing the deal. I think it's something like seven yeses in a row equals a closed deal. So come up with your own questions. Customers like questions. They want to build rapport with you. Beautiful day out, isn't it? Yes. Always want a yes. Put the customer in the path of what you want them to say. How close to $3,500 can you get on that down payment today? Well, they can't tell me zero because they're not going to get a car. It gets their thinking up. Train it, train it, train it. Role play it. Get your sales staff to role play it together. Get them to throw some outlandish answers out to them, because you got to keep them on their toes. So what we would do is how close to $3,500 can you get today? I'm asking you about $1,500. That's great. Wonderful. So we're gonna, we're gonna see what we can do. But if I had to. If you had to. If you had to go home and you had to collect from your brother who owes you that $500 you lent him last month, you think, come up with a little bit more money. So now we're at 1700. Okay, last question. I promise you I will not ask this again, Mr. Customer. Is that the most you can do? Do you think you got any spare change laying around the house? Because we might need a little bit more. Couple hundred, maybe. Couple hundred. So he was easy, right? Most of them aren't that easy, but I appreciate that. But if the customer says, and what we try to role play in is if we say, how close to $3,500 can you get today? And they go, 500, and you say, wow, you can get almost $500 close to that. That's great. You gotta change the narrative. So that means you can come up with $3,000 a day, right? Oh, no, 500. Oh, come on. Well, let's go. Pull your credit. Your credit is really good, right? You got a 7 80. You know, that's. You have to play it. You have to come up with outlandish things to say back to them when they say outlandish things to you. But you gotta be cordial. You gotta build rapport. You gotta do all this. You got to, got to, got to train. I cannot tell you that anymore. What you should do is listen to the independent dealer podcast and then you can get some training. Just kidding. Just shameless plug there, really do. You should listen to it. All right. So do we have any questions here? We've got, we've got plenty of time.

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I left plenty of time because I knew there'd be a bunch of questions. Yes, I normally ask everybody. Recently, most customers come on a lot and they're asking the question, how much down do I need to get to a 200 buy with link? So I've changed the way I ask for people, especially if they ask that question. I'll just go, you need five grand down to get that two and a half. Hundred percent. That's exactly how to do it. So if a customer wants a $200 bi weekly or a $200 monthly payment, you pencil them first at what it takes to get there. And if you don't think that will change their outlook on their payment or change that outlook on their down payment, you're kidding yourself. You know what happens sometimes when a customer says they want a $200 BI weekly payment and you tell them $5,000, you know what happens? Sometimes they give you $5,000 because the payment matters that much to them. And they just got a $10,000 check from Uncle Sam. So it's really not their money, it's our money. So that is a great way to do it. That's the way we, that's the way we build our model first time in, if they, you know, we tailor your monthly payment to meet your, your down payment and meet your monthly payment budget, we look at 20% of PTI and we hit them at that number first. But first we ask for 3500. Jim, They do not test drive a car on our lot until they are fully qualified. So most of our customers before they get to the lot are qualified and approved. So we would find out a down payment before. This is probably a phone call that we do this two years ago it was on the lot. Now this is the phone call or text message or email. So our process is lead application, approval, appointment, set, test drive. And I mean, not everybody test drives. You know, deal's done. Yes, Sir. Yeah. So, yeah, because you can broom a lot of people, but if a customer is willing to fill out an application they need, they want to buy a car. So we, what we found, and we did this during COVID we locked our doors for six months. Who else in here locked their doors for six months during COVID Anybody. We locked the door the only time a customer came in when they were fully approved and they decided the car they want and they were ready to buy, they had the cash in hand. We sold more cars in 2020 than we've ever sold ever. Then we open the doors and it's all gone to shit. How many sales do you think you lose by telling them they're pre qualified? Because what we're seeing is if I tell them yes, then they think they got options. How do you combat that?

Conditioned approval.

It's conditioned. What we spend a lot of time on is verification. And so if the customer, if the customer is a good customer, we will probably take less money down. If everything works, if they've got great job time, if they have great resident time and they have a huge income, you know, if they have five, six thousand dollars a month or four to six thousand dollars a month, we're going to say, yes, you're approved. Come in, we'll work on it then. There's a fine line between brooming somebody that's not approved. But the way we got around that is everybody submits virtually into a form and they're graded immediately. So we know kind of where their grade is immediately. If they're a D, we're probably not going to deal with them. If they're an A, of course, we work them very hard. If they're a C, if we see a way to get them to a B, we will. Okay. But the pre qualifying now is way different. You don't broom people because what your sales staff used to do is when they walk on the lot and they'd say, hey, Mr. Customer, I know you're out looking today, but I want to say your car. And the customer go. And the customer goes, well, I've been working at McDonald's for two weeks. And your salesperson would be like, get out of here. What they didn't find out was they had left Burger King as a general manager and they went to McDonald's two weeks ago as a general manager and they're making $80,000 a year. That's what your sales staff don't get to. Or it's this, well, I only got $300 down. Well, the sales Staff rooms them. But they also didn't tell you they had a $3,000 trade in. So that's where you got to worry about that. But if you're using a software that virtually approves somebody quickly or gives you a grade, you don't have that problem anymore, I think. Yes, sir.

Points of logic. Okay, so as far as the dynamic between dealer and wholesaler, you mentioned, you know, you asked a question about who gives the first price quote.

Yep. Right.

And you said whoever gives the first price quote has more power in negotiation. Well, a lot of dealers may put the foot in their mouth, you know, or buy over, you know. Well, I guess as a wholesaler, to explain to me I have a number in my head. When they bounce it off me, I'll tell them, you know, kind of fall apart. So it's going for two grand or what, you know, and then they'll hit me with whatever realistic number it is. I don't make a definite offer.

So I got. So I used to be on the same wavelength you were. And I've read some things and watched how if you strike a number first in negotiation, how it works. Would you be concerned if you paid two grand for a car you knew was worth that you could retail for six and the wholesaler only wanted 1,500. Would that concern you?

Yeah.

Why?

Because what I've done over the years, I've tried to start with a negotiation, and I was easier. Mentor of mine had told me, let them figure you out instead of you trying to figure them out. And he says it may cost you some cars to say, hey, we're not in the same zip code. Thank you. And give them a metric still that we work on. And then I still get the ability to check the car out.

Sure.

Based on that metric. But it did save me a lot of time. And listen, it got rid of some wholesalers.

Yeah.

But it brought me good ones because they were able to figure out that they could move it quick.

Yeah.

And I would pay quick. That would hold them up if that car was as described venture.

And I don't think there's a wrong. I don't think there's. When it comes to dealing with wholesalers, I don't think there's a right or wrong. But what I do think, when you're talking to your customer and wholesaler, may not have been the best way to look at this. But. But when you're talking to a customer, you need to make the first.

So the whole point where I was going with all.

Yeah.

The logic when it comes to getting money down now, you guys, I mean, you shared that maybe it's not best to reveal the down hand. Well, I would argue that, yeah, go ahead and quote your exactly what you want down or quote. And then if you do want more money down, what stops you from going to that One of them first lives about how to sell more money down. You know, you have more power in a negotiation, get the first number out. Why not advertise a flat, you know, formula of 20% down?

I think you'll get. People won't show up and you'll miss some good deals is what I think, because you may have someone who is perfect for your program that only has 800, but if they know it's $1,500 down, they will not even show up at your lot. So I think not having a down payment listed for every car now, you may have it mentally, but if you had it listed and the customer knew up front, I think that you're going to lose some deals. That's, that's my opinion.

I actually tend to agree with that because, you know, we can some pretty hefty down payments on our lot. And we at one point had put our down payments on the windows of the cars and we stopped doing that because, you know, we don't want to scare anybody off. Somebody may be able to, you know, if you have a $3,000 down payment, they may have 2,500 and then hey, next week they may have the other 500. So we can make it work. But yeah, I'm a higher down payment. So we just can get pretty creative.

With how we work with them.

So we just don't want to scare off that business.

And it's again, it's all about, in my opinion, and if you look at big data people, it's really about PTI in the whole grand scheme of things. If you can get that car payment less than 20%, that's my number. If you get it where it needs to be, they can pay for that car typically. Or they go pay longer for the car. And that's really what we're looking for. Yes, sir. You have an A that comes in with 3500 and a C that comes in with 3500. But the A wants the car. You really want to sell the seat. How do you switch them into something? I think we were in a, in a 20 group meeting that and that came up. I don't know is the answer to that. I know some people say, well, no, this is the car you're you're going to, you're going to have to take this car because if it's a. If the customer was that good for a $3,500 down payment and could buy a nicer car, I think you have to build value in why they should buy the nicer car compared to buying that lesser car. I think is, is the way you do that and that comes from training your salespeople. Hey, we have an a here with $3,500 down. But they want that seven or eight thousand dollar car. What do I do? I think you need to go through some role playing there and say what you need to do is go to that customer and build value. But you also might find out that the reason they want to put $3,500 down on that other car is because they're buying it for their kid or something. And in that case it might, might make sense investigate, investigate, investigate because that's how you're going to find. There was a question that came through. What are some resources of continued training for our sales team? I think NIADA is going to have some portals up. I'm pretty sure DPG is going to have some portals up here in the future to do the sales training. Jim may do sales training. I'm not sure there are people out there that do it. The best thing you can do for sales training is join a DPG group, join a 20 group, whatever it is. Because typically if you have three meetings a year, one of them's gonna be on sales and you should train. Joe Verde has tons of books out there, y'. All. I mean it's old school car lingo but it works. You can take what somebody has and start building your own plan. We have a manual that we've built that goes over these questions and how to respond. You can read other sales plans and build your own because that's really. It's about what. It's about how you talk to your customers, not about how everybody talks to a customer. So you're going to have to take something and mold it to you. Yes sir. We use Neo. There's other companies out there. They're all good. It depends on what works for you. Yeah.

Other than the link. Good podcast.

Yes.

Is there any other like any idea with Chuck and then they used to do the boot camps.

Yeah. Yeah. I've seen some schedules come out in the last little bit from Niada4Boot Camps. So I would. And I. And I. Yeah, I think. Your state and one other thing you can do is you can get Your state association to do a sales training or a collector's training for your state. We've done that before for collectors. It's easier and more cost effective for the state to go to Chuck or David, bring them to your headquarters, and then everybody pays $400 instead of $4,000 to bring them in to do it. It's a really good option. You should talk to your executive directors of your states to do that. Luckily, we have one of the greatest executive directors in the country, John Brown in the Carolinas, and he's done that. And your conventions, your state conventions should be a big resource for you. State conventions are really good. Great networking in your state and great education as usual. We got maybe time for one more. Yes, sir.

About attending. How close can you get to that number? We actually use it.

Yeah, it works really well. We do ask a question before.

If I want $3,500 down, I will ask for five.

Exactly. So I asked Mr.

Customer, I want to leave $5,000 down. Oh, I don't have that much. How close can you get to that?

35. That's exactly how we do it mentally. Again, we don't have set down payments, but mentally I know if it's a $12 to $13,000 car, we typically get $1,500 down. That's really where I want to be. Right. So we will go to that customer. How close to $2,500 can you get? That's how we work that. We've got a lot of cars that. I mean, I've got cars that are seven, $8,000 down. So we would go to 12,000 or something like that. Because we know that we can pull that customer if they do have a reasonable down payment, we can probably pull them from where they were thinking to what we hit them at probably halfway. That's kind of where we go. That's a good point. Mention on the vehicles that you're on.

Your mind, you have $7,000 down.

Is it a relative percentage of the.

Sales price that you're trying to get at?

Yeah. So yes, we sell some $40,000 Tahoes and Suburbans. Okay. And I know payment wise, where we gotta be. You know, most people can't afford $1,000 a month payment, but people wanting that type of vehicle probably can afford six or seven hundred dollars. So we'll run the figures and back it up into that. And that's what all y' all should do. If, you know, I want to target, I want my average monthly payment to be X and I'm selling an X price car. That's how you're going to get to where your average down payment needs to be. Any more questions? Thank you all so much. It was a joy.

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