I love it when a plan comes together

Payment plans may have found their moment; What are the options for garages looking to help their customers spread repair costs?

Published:  06 April, 2021

Payment plans are not a new idea. Washing machine? Boiler? There’s a service plan for that. If you buy a new car, or even a used car, from a franchised dealer, many will have a plan set up to keep the customers costs down, and keep them coming into the service department. The one area where it has not really gained traction in a major way is within the garage sector.     
    
Will the unique circumstances of 2020 and 2021, change that though? With many people still on furlough on 80% of their usual income, and many more wracked by seemingly endless financial uncertainty, looking to control spending on vehicle repairs could look like an attractive option.
    
A number of established organisations in the sector have already set up schemes that you could take up, effectively an off-the-peg solution. We spoke to some of them to see what is on offer.

Footing the bill
“35% of consumers say their income has taken a hit as a result of the Coronavirus outbreak,” said Colin Cottrell, Marketing and Central Operations Director at LKQ Euro Car Parts. “Many might find it difficult to cover the cost of repairs to their vehicles as a result, but when access to a car is vital to the livelihoods of a lot of people, they need to find a way of footing the bill.
    
“Giving customers the option to take advantage of short-term financial support is critical to ensuring business continues to come through the workshop doors – and so that cost doesn’t become a barrier to drivers accessing the services they need to stay safe and mobile.
    
“That’s why we’ve partnered with Payment Assist, which provides plans for drivers to spread the cost of a one-off bill or purchase over four equal instalments, with no fees attached. This is something we proactively promote to garages, so they can offer interest-free loans and help to relieve the financial burden their customers may be under, while ensuring they can still get the job done. There’s no credit check required for any jobs under £1,000, and only 25% of the total bill needs to be paid upfront.”
    
Explaining how if works, Colin added: “Garages just need to visit www.payment-assist.co.uk and enter their unique business details, before setting up their agreement with the customer. If the application is successful, the garage will receive confirmation that the customer has been billed for their first payment, as well as confirmation of future payment dates, helping them to carefully manage their own cashflow.”

Three ways
According to Andy Robson, Parts Operations Director at PSA Group, Eurorepar Car Service is committed to offering customers three ways to pay: “It’s good to see that the motor trade is moving with the times and keeping up with the consumer trends that are shaping other sectors. A good example is the growth of flexible payment options to meet the growing expectation that a customer should have a choice of payment methods to suit their financial situation.
    
“Our national network of Eurorepar Car Service (ERCS) centres, for instance, is offering customers the ability to pay the old-fashioned way when the work is completed, or pay in more manageable, regular instalments as part of the Drive Now Pay Later initiative. Later in 2021, we will also be giving customers a third way to pay: by signing up to a service plan. Having three ways to pay means that customers will not be left battling an unaffordable one-off payment, even if the work itself has been carried out to a high standard.
    
“ERCS centres have so far reported an overwhelmingly positive reaction to the Drive Now Pay Later initiative. Essentially, the idea is that customers can spread service and repair bills of more than £50 across four equal payments. This flexibility means that vital repair work, which might otherwise have been delayed or cancelled, can be carried out at the right time.”
    
Andy added: “What it boils down to is adopting a customer-centric approach to the way you do business and taking pride in offering customers something that is truly of value to them. With Drive Now Pay Later, we are giving people the peace of mind that their vehicle is in a safe state of repair, while affording them the flexibility to pay their bill over a manageable period. That’s exactly what people need in these uncertain times.”

Preferred
Commenting on their experience with Drive Now Pay Later, Craig Williamson, a Director at Cheshire-based ERCS centre Ignition Autos said: “The initiative has proved very popular with our customers so far. It’s been essential for many this year, but we have also seen a lot of people use it as their preferred method of payment regardless of whether they could afford the up-front cost. It makes a lot of sense really. It’s interest-free and people are used to paying things like credit card bills and subscriptions on a monthly basis. It’s been a great addition to our offering.”
    
ERCS has partnered with EMaC to deliver the Drive Now Pay Later initiative.
    
Liam Finney, Director of Commercial Partnerships at EMaC, said: “Our Drive Now, Pay Later+ product is a flexible, interest-free monthly payment option that allows consumers to spread the cost of unexpected vehicle repairs. It not only enhances business revenue and profitability, but also builds lasting relationships and increases consumer satisfaction.  
    
“As the UK’s leading Service Plan provider, we immediately noticed the similarities with our core Service Plan product and welcomed the opportunity to add a complimentary solution to our portfolio.”
    
Liam added: “Our network love being able to offer consumers the option to spread the cost of vehicle repair work – so much so that many now use DNPL+ as their primary payment option for red/amber work, service, accessory and value-added product purchases.”

Timely
There is more than one shape for plans. For example, Servicesure offers its 554-strong network of member garages the option to sign up to Auto Service Finance (ASF), an interest-free credit payment facility.
    
The nationwide garage programme, run by The Parts Alliance, launched its partnership with ASF in 2018 and since then has financed more than £1.2m in repair costs.
    
ASF enables customers to cover the expense of vehicle repairs by spreading payments over six months and is available to customers making transactions between £60 and £3,000.
    
Commenting on the offering, Servicesure Head of Garage Programmes Paul Dineen said: “We know many people in the UK are suffering financial hardship after being impacted by the pandemic, so 2020 was a very timely and significant year for us to have the partnership with ASF in place.
    
“It allows our garage members to offer what could be a crucial lifeline to customers who may struggle to pay for essential repairs in one go. Safety is the most important aspect of any vehicle and we don’t want people putting off necessary work because of inflexible payment options.
    
“Offering people the opportunity to spread the cost of repairs through interest-free credit could be the difference between keeping their vehicle on or off the road, so it’s a tremendously beneficial scheme for our Servicesure members to able to offer customers.”
    
Paul continued: “Those whose economic situation has been negatively impacted by the pandemic are most likely to benefit from this option of interest-free credit in the short term. In addition, it represents an important step forward in the industry.
    
“With most transactions in our lives, we’re now accustomed to having the flexibility to choose how we pay for them. Furniture, cars, holidays, mobile phones, boiler servicing; these are all common outgoings that we associate more with flexible instalments than rigid lump-sum payments.
    
“This level of flexibility isn’t currently part of the culture in the automotive aftermarket. However, we expect these kinds of payment solutions and interest-free credit to become far more common in our industry in the years ahead. Why would people shell out big payments for vehicle repairs in one go when they could approach the transaction the same way they’re used to in every other element of life?”

Tremendous
The average invoice value of an ASF transaction with a Servicesure garage is currently £639 and 62% of its transactions are for vehicles over nine years old.
    
“From a garage’s point of view,” observed Paul, “there’s no disruption to cash flow because ASF pays them in full within seven days. The main challenge for a garage comes in a customer not necessarily expecting to have this option of flexibility, but reservations around trust are typically easy to overcome in conversation.
  
“Any customer driving away from a garage is doing so with total faith that their vehicle is safe to drive. That’s a tremendous amount of trust placed in the professionals in our industry and it’s a strong foundation for a garage to build on when it comes to the payment options they offer.”
    
Paul concluded: “The number of new vehicle registrations dropped significantly in 2020 and we know the UK car parc is only getting older, so the automotive aftermarket has a strong future. What’s important is for independent garage owners to put themselves in the best possible position to win this work, so offering flexible payment solutions can only benefit them in that respect.”



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