How to Build the Perfect Lease Protection Package (and Why Now is the Perfect Time to Offer It)
Lease deals coming through F&I are not exactly the deals that inspire much excitement when it comes to selling products. While it may not be as cringe-worthy as a cash deal, leases have a bad reputation as being tough to sell anything on.
But there is a strategy that more dealers are starting to embrace and it requires viewing the lease deal from a different and more creative perspective.
Creating a bundle specifically to prevent the unique issues a customer could have when turning in their lease is where the real opportunity lies.
Turning a Negative into a Positive for F&I
Since lease customers are payment buyers and only drive the car for a short period of time, they don’t look at F&I products the same way.
‘If I’m only driving it for a few years while it’s got factory warranty, why do I need an extended warranty or tire & wheel protection?’ Fair point.
But they often miss the point of how and where those protections can benefit them. This is where the creativity comes in for F&I staff.
Customers are paying more than ever for a lease and many are choosing this option as a ‘placeholder’ for the car they may really want but is not available due to low inventory or prices that are too high.
So….is it really possible to increase PVR on a lease?
We believe it is. Let’s take a look at an easy way to leverage ancillary products to lease customers that will make your F&I managers look forward to the deal and be the hero to the customer by making sure they don’t get hit with recon charges when they turn the car in…
Who is the Perfect ‘Lease Protection Package’ Buyer?
Who is the elusive lease customer who would gladly pay for a bundled protection package designed to make sure they are not paying recon fees at turn-in?
- They are leasing for a longer term (36-48 months)...
- They are leasing a luxury vehicle…
- They are not putting much money down…
Whether or not a customer fits this criteria, a well-built bundled protection package with a creative white-labeled name tied to your dealership brand is a perfect addition to the lease. And one anyone would be happy to pay for if the picture is painted well by your F&I team.
Given that in 2022, the average lease payment was $528 per month, offering a package to protect them for excess wear-and-tear charges at the end will be invaluable.
What Protections Are Best for Your Lease Customers?
If your store offers a bundle that helps address all the issues that usually crop up within those first 3 years anyway, the customer benefits from a worry-free driving experience.
The bundle would include coverage for -
- PDR: In the course of 3-4 years of driving, dents and minor cosmetic chips are bound to pop up even with the most careful of drivers. SUVs that could be taken off-road or in other more rural settings could have as many dings as the car driven around town and through construction zones. Appraisers will hone in on this first when looking at potential recon charges.
- Tire & Wheel: Scuffs and scrapes on already expensive alloy wheels will be the next most obvious issue for the appraiser. One alloy can be $400-600 each for replacement if the damage is bad enough. With tens of thousands of miles of driving, everyone risks a damage wheel.
- Windshield: The honest truth here is that many don’t want to report a cracked or chipped windshield to their insurance under the assumption that it will raise their premium. It likely has no real effect on that with most carriers but the potential cost to not fixing it before the lease is turned in can be just as costly.
- Key Replacement: No one wants to pay $250 or more to replace a key fob for today’s vehicles. If the turn-in specifies that two fobs must be accounted for, replacing one will be costly. But this helps your customer even if it’s lost during their lease term…this is a no-brainer for a bundle and low cost for your dealership to offer to everyone.
- Interior/Exterior Protection: Having the vehicle look good inside and out is just as important to a quick and easy appraisal. Rips in the seats, paint issues….all can be handled easily to keep it from being an issue down the road.
Lease customers already have to worry about exceeding their mileage allowances which can cost hundreds if they’re not careful, so why not alleviate some of their turn-in anxiety by making sure they can handle all of these cosmetic issues during the lease to ensure a smooth turn-in process?
And if the package is reasonably priced, it could be something paid for outside of the deal anyway and would not impact their payment.
A win for customer retention, your CSI, and your F&I profits. What’s not to like about that?
Give us a call here at truWarranty…we’d love to show your store how easy it is to create and deliver a powerful lease protection package that keeps your customers coming back for every lease they need in the future.
F&I managers have one of the hardest, if not THE hardest, job in today’s dealership. Ask anyone who has ever been in ‘the box’ what the one word is that can describe their job and they will likely say ‘pressure.
Your buyer's identity can be stolen from mishandling of documents during the course of a deal. Dealerships can also fall victim to one of the most common forms of fraud, fake identification scams.