Are payment plans the future for independent garages?

Could the 'pay monthly' trend be a new route to attract, retain and keep business

Are payment plans the future for independent garages?

As the phrase ‘The cost of living crisis’ seems to have slipped from everyone’s lips, the struggle of car owners remains real.

Rising costs all around are putting pressure on drivers to put off and delay work, coupled with increasingly complex vehicles and independent garages are facing the challenge of keeping customers while remaining financially viable.

One potential solution gaining traction is the adoption of payment plans. With many main dealers already offering monthly plans for servicing, could this be the new way to attract, retain and keep business?

With car repairs normally being a one-off expense, payment plans could well offer a more manageable approach, given the current economic climate. After all, everything is a monthly payment these days, from Netflix and Spotify to your mobile phone and even insurance.

It could be particularly beneficial for those expensive, unforeseen repairs that people just don’t have the savings to rely on in the current climate.

The case for payment plans

A recent report by The Motor Ombudsman highlights rising costs as the biggest challenge facing vehicle repairers in 2024. Parts, labour, and energy costs have all risen significantly, leading to higher repair bills. This further strains the already stretched budgets of customers, potentially leading them to delay repairs or seek alternative ‘bodge job’ fixes.

This is where payment plans could be an ideal solution. By offering customers the option to spread the cost, independent garages can make essential repairs more accessible. Which can lead to several benefits:

  • Increased customer satisfaction: Spreading the cost can alleviate the financial burden for customers, increasing the likelihood that the driver will be happier with the overall service – rather than looking at an empty wallet, they still have money for the rest of the month.
  • Improved customer retention: By making repairs easier to manage financially, garages can encourage customers to return for future servicing and repairs – or even let word of mouth kick in as they mention this ‘new way to pay’ to friends or family.
  • Reduced risk of delayed repairs: As we all know, prompt repairs are crucial for maintaining vehicle safety and roadworthiness. Payment plans can incentivise customers to address issues sooner rather than later, preventing problems from getting worse or even causing a breakdown and leaving them stranded – they’re looking after their car, which in turn keeps them on the road. And could even extend the life of their vehicle.

A look at early implementations

Some independent garages in the UK are already experimenting with payment plans. D&G Autocare in Edinburgh, for instance, offers a “Finance Assist” scheme allowing customers to pay for repairs in four interest-free instalments. This initiative has so far proven popular, demonstrating customer interest in alternative payment options.  

Pete Wood, Operations Director at D&G Autocare, said: “We are pleased to be able to introduce this scheme which will make it easier for customers to spread the cost of paying for vital car maintenance and servicing.

“Customers can easily apply for payment assist online on our website. If they have any queries in doing so, simply ask one of our helpful branch managers, and they will chat you through on how to apply.

“With many other business sectors offering similar schemes to consumers, we wanted to be able to help. Rising costs everywhere are of huge concern to senior citizens, to young motorists, families, and many sectors of society.

Implementing a payment plan scheme

While payment plans offer several advantages, there are challenges involved when it comes to setting up and implementing. These include:

  • Cash flow: Any garage thinking of setting up a payment plan scheme needs to have a healthy cash flow, just in case customer payments are missed. If you don’t want to take on the full burden, then partnering with a finance provider can help mitigate the risk.
  • Admin time: Implementing and managing payment plans can become an admin nightmare. There are several different payment plan management providers out there, one such company is Paythen – these services will add extra costs, and it’s up to you if you take the hit or pass a small fee on to your customers.
  • Customer creditworthiness: As a point of due diligence, you would have to run a credit check on any customer looking to take out a payment plan. Your finance provider may be able to help with this, or again, there are numerous third parties that can help.

Beyond payment plans: Building trust and transparency

Payment plans are just one aspect of a customer-centric approach that can help boost a garage’s turnover. But building trust and transparency go hand in hand with implementing new ways of doing things.

  • Ensure clear communication: Explain the whole repair process, what the associated costs are, and payment options clearly before any work starts.
  • Itemise your invoices: Provide a really detailed breakdown of the costs involved in the repair, including parts, labour, and any additional charges like disposal or cleaning fees.
  • Flexible options: Offer different payment plan options to cater to individual customer needs and budgets – can you accept PayPal? For example, they already offer a credit service that would enable customers to pay in 3 or 4 instalments or spread the cost over a year or more.

The success of any payment plan hinges on its implementation. By partnering with reputable finance providers, streamlining admin, and prioritising customer communication, independent garages could reap the benefits of the ‘pay monthly’ trend.

It’s early days, with only a few independents opting for payment plans, so their long-term impact remains to be seen, but the early signs are encouraging.

3 Comments

  1. awesome idea
    sign up all the no hopers and wasters and fill your workshop with crap cars to work on
    our motto if you need to ask the price you can not afford to run the car

    Reply
  2. well said no more to add

    Reply
  3. same here we have 1 muppet that does it here guess what did not last long all he got was all the losers with bad credit and bangers for cars

    Reply

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