The Car Buyer's Experience: TIADA Members Weigh In On FTC Report
With a wealth of information to sift through and understand, the car buying process can be a daunting task for customers.
With a wealth of information to sift through and understand, the car buying process can be a daunting task for customers. A recent press release published by the Federal Trade Commission (FTC), outlines some of the challenges from two new FTC staff reports that customers face when shopping for a vehicle.
In this week's blog, we take a look at a few of the key challenges outlined by the FTC and hear from a few Texas dealers about practical ways they are helping to enhance the car buying experience for their customers.
Challenges for Customers
According to the FTC staff reports, the following are among a few areas that can be points of confusion for car shoppers:
- Understanding key terms in sales and financing contracts. During the negotiations process, while the focus may be on the monthly payment, there is less emphasis on down payments, length of financing, total sales price, and APR
- Defining “price” – distinguishing between terms like sticker price vs. out-the-door price vs. total sales price
- Add-ons –e.g., extended warranties, service plans, credit insurance, GAP policies—limitations and conditions for each, and how each impacts cost
Enhancing the Car Buyer's Experience
With that, TIADA invited a few dealers, John Kamal of John Kamal Cars (Houston), G.R. Moore of The Car Shack (Corpus Christi) and Bill Mokry of W G Mokry Auto Sales (Cedar Park) to share what they're doing at their dealerships to not only address these challenges, but enhance the customer experience:
- Steer clear of responses like “That's the way it is.” Whether the question is about the finance charge, APR, or how a total charge was calculated—finding the answer for the customer is key.
- Accurately explain numbers in the retail installment contract. For example, a customer may take into account the sales price only, and not consider the finance charge. Pinpoint each charge and clarify things like the balance after the finance charge, and exact amount after down payment.
- Disclose maintenance needed—Even if maintenance is not needed at the time the vehicle is purchased, disclosing future repairs that may be needed and inviting the customer to return vehicle so it can be serviced, could help build trust with customer
- Set expectations —As an example, alert customers to any potential delays. During COVID-19, for example, disclosing to customer the title transfer process could be delayed
- Focus on the benefits to the customer— "We're asking them to trust us, especially in a world of congested highways and COVID-19." Sell the value and purpose of the product; for this, educating the customer on industry terms and products, including add-ons, is key
- Help Customers Visualize and Track Payments – Customers have questions at the dealership, sure, but one dealer says he tends to hear from his customers after they leave the dealership. Providing copies of the information discussed (e.g., work order) and a payment schedule can help customers easily track their progress and charges after the sale, helping minimize confusion and instill confidence in the customer.
- A Nice Gesture Can Go A Long Way —An old tradition, one dealer shared he likes to surprise his customers by buying them a tank of gas for their newly purchased vehicle; twenty bucks can go a long way, he added.
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