Auto repair

BNPL reduces the stress of paying for an auto repair

When service personnel at automotive retailer Momentum BMW found that customers were refusing auto repairs at an excessive rate, they asked each customer why: price, convenience, value?

“Often it had a lot to do with financing options – they didn’t have the money at the time,” Shawn Sharpdirector of fixed operations at BMW momentum in Houston, Texas, PYMNTS said.

To give these customers another option, the company added buy now, pay later (BNPL) for parts, service and collision repairs in November 2019. Since then, the decline rate which was 21 % or 22% dropped to 13%.

“One of my favorite things is the tyres,” said Tommy Kuranoff, Managing Director at Momentum BMW. “For customers, it’s always complicated to buy tires — it’s a big investment. You can offer them 0% for 90 days on tires.

Executives said the ease, flexibility and speed of the BNPL option is what helps close the sale. With the Sunbit BNPL option offered by car dealership service department, approval process takes 30-45 seconds. The customer then has access to financing that offers him 90 days as in cash.

Facilitate additional sales

In the case of collision repairs, customers often use BNPL to pay the deductible for work that is paid for by insurance.

Beyond the main repair, customers who have heard of BNPL sometimes take the opportunity to have other repairs carried out at the same time. For example, in addition to a collision repair, they can take the opportunity to use the BNPL to have the shop repair door knocks that were there before the collision.

From the merchants perspective, they get paid within a day and are guaranteed to receive their money. Sunbit handles post-transaction financing, including any customer service or collections that may be required.

This proved invaluable for Momentum BMW. The company recently stopped taking personal checks after experiencing a rash of insufficient funds, fraud and headaches around collections.

“When the economy takes a dip like right now, that’s when all the fraudsters come out, that’s when all the people with bounced checks – that’s when- where you see it more and more is when the economy looks like it does today,” Kuranoff said.

Increase awareness of BNPL

Beyond BNPL, Momentum BMW accepts credit cards, cash, money orders, insurance and extended warranties.

The company promotes the availability of BNPL in several ways, including point-of-sale decals and signs, electronic signatures, and advertisements. Service advisors also offer it to each customer when drafting the repair.

“We usually do this on every write-up, even if the car is originally going to be written under warranty,” Sharp said.

Even if the primary repair is covered by warranty, customers who are aware of the BNPL option are more likely to choose to have other repairs performed, such as those door knocks or anything else found during a vehicle inspection.

“That ultimately means more repairs being approved,” Sharp said, “with customers being approved for higher dollar amounts and then turning one-line repair orders into two-line repair orders — rather than just fix one thing, now we often have the ability to fix two things.

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NEW PYMNTS DATA: THE CUSTOM PURCHASING EXPERIENCE STUDY – MAY 2022

About: PYMNTS’ survey of 2,094 consumers for The Tailored Shopping Experience report, a collaboration with Elastic Path, shows where merchants are succeeding and where they need to up their game to deliver a personalized shopping experience.