Why do auto dealerships balk at cash transactions, but real estate companies prefer them?
In: Economics
They sell finance and insurance products.
Income from the loan is typically less than 10-15% of their F&I income, which usually represents 30-50% of variable operations income.
The real reason they don’t want cash transactions, is that most of the F and I Managers are we sales people, and can’t close a customer to buy other products on a cash transaction. It is typically easier to convince someone to buy a two or $3000 insurance product when it is broken up into just an extra 5 or 10% of your payment cost.
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