How to Help Your Customers Pay for Auto Repairs

Auto repair shops, like all businesses, always need new customers. One way for shops to gain loyal customers is to offer an option to finance auto repairs.

About a third of American consumers do not qualify for traditional financing based on their FICO scores, according to Ryan Slobodian, vice president of Snap Finance LLC.

“In order for repair shops to effectively serve 35% of people in their stores, shops need a tertiary or additional finance option that serves people with credit challenges,” says Slobodian.

An installment loan option engages a whole new consumer market, bringing them into a shop where they have a good experience. “Their loyalty is going to stay with that shop because it offers a finance product that works for them. We focus on treating them with trust, respect and dignity whereas a lot of times the credit-challenged consumer may not have that experience,” says Slobodian.

In addition, a payment option that breaks the cost of a repair into smaller amounts may lead to higher tickets as the consumer has more cash to move from crisis management to proactively servicing their vehicle.

Window or street signage with no-credit-needed messaging draws credit-challenged consumers into a shop. “These are payment buyers. They are focused on the payment and how much it will cost them per paycheck,” says Slobodian.

Snap offers a 12-month term installment loan with an early buyout option. The goal is to set the consumer up for success, according to Slobodian. “We approve an amount that is enough to complete the transaction but gets them into a payment that will allow them to succeed.”

Snap’s installment loan products are no recourse, meaning Snap takes all the risk, not the shop. “It works a lot like a credit card transaction in that we settle in two business days, and a shop has the money in its account. The risk to a repair shop is not offering a product like this and allowing a consumer to go to a competitor who may have it.”

Questions and Answers on Auto Financing Options

Car repair financing enables shops to close more sales with customers who may not have upfront cash or access to traditional forms of credit. Auto Service Professional asked companies for details on products designed to help consumers pay for auto repairs. Six responded: American First Finance Inc. (AFF); Confident Financial Solutions Inc., which goes to market as DigniFi; FlexShopper LLC; EasyPay Inc.; Snap Finance LLC; and West Creek Financial Inc.

ASP: What services and products do you offer to providers of auto repair services?

AFF: We help auto repair shops meet the needs of more customers with payment plans they can afford through loans or financing plans that approve more customers, including those without a FICO score. By including a nonprime financing solution, your shop can provide an alternative payment option to a credit-challenged customer who would otherwise go to a competitor or simply never walk in your door. It’s like providing instant buying power for your customers to pay for parts, service, warranties, tax and labor.

DigniFi: We offer closed-end installment loans to consumers for the primary purpose of financing auto-repair related expenses. Loans range from 12 to 36 months with APRs from 9.99% to 36%. Customers will have their interest waived if they make all their scheduled payments on time and pay off their loan in full within 60 days. There are no prepayment fees. DigniFi also offers cash advance loans deposited directly into the consumer’s bank account, vehicle protection plans, and roadside assistance programs.

EasyPay: We provide a non-lease credit solution at the point of sale, with a unique approach that offers customized approvals for customers with good credit to no credit. Unlike leasing options, EasyPay Finance doesn’t give every customer the same rate: they get the rate that is right for them. Our program features an interest rebate if customers pay off the balance in 90 days; financing up to $5,000; $0 down required; the ability to prequalify customers in as little as two minutes without affecting their credit score; electronic signatures and mobile applications; fully transparent contracts and fees; and the shop is paid the same day if the transaction is received by 4 p.m. EST.

FlexShopper: When consumers are short on cash and do not qualify for credit, FlexShopper offers the flexibility of lease-to-own to consumers, allowing them to get the repairs they need while saving the sale for providers of auto repair services. Our product requires zero integration with the retailer and, like any other customer transaction, the retailer is immediately paid at the point of sale.

Snap: Snap provides rent-to-own and installment products depending upon the need of the shop and their consumers.

West Creek: We offer easy-to-use no-credit-needed financing for your customers. We approve over 80% of customers, with an average approval of $1,850 and a max approval of $5,000.

ASP: What sets you apart from other finance companies?

AFF: We are rated an A+ with the BBB, have a 4.5-star Google rating and always want to do the right thing and then do even more. Approvals are available up to $5,000, offering up to 24-months terms. We have text-to-apply solutions that streamline the application process for customers, so shops don’t become application takers. And because we use a loan solution, all products, services, labor, warranties and taxes are included, making this financing highly compliant.

DigniFi: DigniFi is not a finance company. We are a tech platform that provides our customers access to financing options through our financing partners. We designed our consumer experience from the ground up, so it’s easy to use, paperless, and delivers quick credit decisions.

EasyPay: EasyPay is not a lease, but a traditional installment finance contract. Unlike leases, EasyPay has no restrictions on financing repair services: customers can finance any ratio of parts and labor, assuring the repair shop stays compliant with local and national regulations. EasyPay gives customers the rate that’s best for them based on their credit history and other determining factors. EasyPay transactions are completely transparent, with fully disclosed APRs. Leasing companies do not disclose an APR rate, leading to customer confusion and after-the-sale customer service issues. EasyPay reports consumer transactions to credit bureaus, giving customers a chance to build positive credit.

FlexShopper: Our product requires zero integration with the retailer and like any other customer transaction, the retailer is immediately paid at the point-of-sale, not days later; there is no reconciliation of invoices needed. In addition, FlexShopper provides a mobile application experience that is user friendly and keeps the customer engaged during the sales process. We understand that when stores are busy, store associates may not have time to babysit the customer. We also promote repeat sales with open to buy spending limits and require no money down. We can be operating in a store within 24 hours.

Snap: Snap’s high approval rates and amounts result in industry leading take rates, our Snap Edge program drives additional customer’s to our retail partners. This means customers are approved and ready to spend. Finally, Snap will treat their customers well. Our internal metrics reveal that 82% of Snap’s customers would recommend Snap to a close friend or family member. In addition we have 4.8/5 stars for our Google Reviews with over 1,000 reviews to date.

West Creek: Our focus on superior underwriting technology allows us to approve more customers for higher amounts. Our technology outperforms our competitors, and maximizes our impact on our dealers’ business.

ASP: How do your offerings benefit a shop?

AFF: First and foremost, more sales! By approving more customers who need payments to get their repairs done. Second, more assurance and compliance for shops. With American First Finance, the loan solutions you’re offering to customers are legal and can be used for everything you sell. And third, higher tickets with higher approvals and terms up to 24 months so payments are affordable, and your customer can get everything they need.

DigniFi: DigniFi helps drive sales. According to our latest case study with Pasport Auto, DigniFi drove three times average growth in same-store sales and a 20% increase in average sales year over year. The case study also found overal sales increased while average discounts were lower.

EasyPay: EasyPay will help approve up to 80% of a shop’s customers. We have shops that have increased their revenue up to $30,000 per month when used as their all-in-one customer payment plan solution. Unlike leases, EasyPay has no restrictions on financing repair services – customers can finance any ratio of parts and labor. EasyPay is also a helpful marketing tool. EasyPay will get shops more loyal customers with EasyLead and EasyRepeat. EasyLead is a new national consumer direct marketing strategy designed to deliver new customers with pre-approved credit to the EasyPay shop. EasyPay finds the customer online, pre-approves them, and sends them directly to the shop. EasyRepeat is designed to drive additional traffic to shops by pre-approving customers that have successfully paid off their EasyPay contract at that location.

FlexShopper: FlexShopper helps turn a significant portion of credit card declines into incremental sales with an easy to use mobile app and the option to cascade from the shop’s primary credit provider. There are zero startup or upfront costs and FlexShopper provides training and covers the cost of all marketing materials.

Snap: 35% of consumers do not qualify for traditional financing. Our offering is an opportunity for auto repair shops to serve these customers, creating a new clientele and revenue stream.

West Creek: Offering West Creek to your customers means a higher conversion rate, and more customers driving home happily and safely. We give your customers the financial flexibility to get what they need without compromising on quality.

ASP: How do you evaluate customers beyond FICO scores?

AFF: The majority of Americans are actually non-prime according to research done by the Corporation for Economic Development. And because consumers who have subpar or nonexistent credit histories have more limited access to financial solutions, American First Finance doesn’t fully rely on FICO credit scores as the determining factor of creditworthiness. Our proprietary underwriting process of using both conventional and alternative data sources allows us to calculate an internal risk score for those applicants with little to no traditional credit history.

DigniFi: Our underwriting covers the credit spectrum. Proprietary scoring algorithms utilize machine learning techniques along with credit and alternative data sources to produce a custom credit risk score that we believe significantly outperforms standard models like FICO.

EasyPay: EasyPay understands that there are a number of reasons a customer may not have a favorable credit score, and goes well beyond this when evaluating a consumer’s creditworthiness. EasyPay’s proprietary algorithm evaluates how a customer handles their bank accounts, as well as several behavioral patterns that are not credit related. Many customers are also approved with a zero credit score.

FlexShopper: We use various sources of data that do not impact a customer's FICO score. Unlike our competitors, we inform denied applicants the reasons for their denial.

Snap: We do not use FICO in our decisioning. Snap uses over 9,000 data points that are more predictive than FICO, especially for the underbanked or thin file consumer.

West Creek: We use over 6,000 data points to paint a more accurate picture of your customers. This allows us to approve more customers for higher amounts.

9 Questions to Ask a Potential Customer Financing Provider

Secondary finance programs enable automotive repair shops to offer payment options for customers who may not qualify for or want traditional financing to pay for auto repairs. Here are 9 questions to ask when choosing a secondary finance program along with responses from six companies: American First Finance, DigniFi, EasyPay, FlexShopper, Snap Finance and West Creek Financial.

	AFF	DigniFi	EasyPay	FlexShopper	Snap	West Creek
How long for a shop to qualify for your program?	In as little as 24 to 48 hours.	For many shops, just a few hours.	Usually within 24 hours of submitting the enrollment form.	1-2 business days. Rollout is dependent on the number of stores.	About 5 minutes with instant approvals.	Typically takes less than 24 hours.
In what states are your services and products available?	All 50 states.	All states except Massachusetts, North Dakota, South Carolina, Vermont, and West Virginia.	In 49 states.	All states except New Jersey, Wyoming, Minnesota, and Wisconsin.	All 50 states	All states excluding New Hampshire, New Jersey, Minnesota, and Wyoming.
What are the shop transaction fees?	We offer a no-recourse solution with no setup costs. A small merchant discount is charged on the bank loan product which includes 101-day early payoff discount options.	Transaction fees are competitive with the market and in some cases lower. We use the transaction fee to offset our higher approval rates and the risk we take on behalf of the shop.	2.99%.	No shop fee and no transactions fees.	Transactions fees are dependent on several variables. We work with the shops to ensure they are set up for success.	We build a program around dealer needs.
What is your approval rate?	Typically approval rates range between 70% and 90%	Approval rates range from 60% to 65%.	Up to 80%.	Approximately 80%.	Up to 80%; varies by geography and other factors.	We approve an average of 82% of customers.
What are your approval amounts?	Up to $5,000.	Loans start at $350 and go to $7,500. Average loan is $1,400.	Up to $5,000.	Up to $2,500.	From $250 - $3,000.	We approve up to $5,000, with an average approval of $1,850.
What is your close rate?	75% plus.	About 70% to 75%.	80% to 90%.	Approximately 85%.	Typically 75% to 85%	85% plus.
What technology is required by the shop?	Internet access.	None. We encourage consumers to complete the application process on their personal device.	Internet access and a computer or tablet	None. We provide all the technology through our mobile application.	Options include tablet, laptop or desktop computer. Customers can apply on their own devices.	Internet connection and web browser.
How long for a shop to be paid the full amount of the sale?	We fund our merchant partners the next business day after services are delivered to your customer.	Funds are received via ACH deposit within 48 hours (often the same day) once the customer signs the loan documents.	Funds are sent the same day if the transaction is received by 4 p.m. ET.	We pay immediately at the point of sale.	Snap funds within two business days, similar to a credit card settlement.	Funding is transferred directly to your bank account within 24-48 business hours of a completed order.
How long for consumers to qualify?	Start to finish is 3 to 5 minutes on a mobile phone using our text-to-apply feature.	Customers apply online on their own device; decision in minutes.	Customers can be prequalified without affecting their credit score in as little as 2 minutes.	5 minutes or less with our easy mobile application.	Application takes 3-5 minutes and approvals are given in under 5 seconds.	Our application takes less than 3 minutes.