In the car business, we talk about “Switch Vehicles” all the time, they are less expensive and often less equipped versions of new units. The idea is that when a customer cannot afford the payment on the new unit, we switch them to the less expensive and often more profitable used unit. Dealers have vehicle inventory strategies built around the concept of switching customers to “Switch units.”
This technique is also very effective in payment negotiations. Having an alternative payment that is completely different than the original quotes, is disarming and is quite frankly a kinder way to show your customer that they have alternatives.
The classic example of this is showing three normal payment choices, then a large down payment short term loan or lease. Very disarming and a great choice for both the customer and the dealer. The customer benefits because it is affordable and the dealer benefits because the customer will be back in a shorter period of time.
Another approach to the “Switch Payment” is to show a much longer term. Example: show a payment with three different down payments and finally with no down but longer term. I am not always a fan of this one because longer term is not always better for the customer because they end up paying more interest. But I have learned over the years that it is not always my choice, its the customers preference, and quite frankly if I don’t show that alternative, my competitors most certainly will.
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