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ReprintsSurvey stats that can help sell more service contracts
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Results of the National Foundation for Credit Counseling's July online poll suggest that most Americans could not afford a $1,000 unplanned expense.
The survey of 7,500 consumers showed that 36 percent could tap their savings account, but the remaining 64 percent lacked enough in savings to shell out $1,000.
That's good news for F&I managers pitching the value of service contracts and tire and wheel plans to their customers. It means there's strong potential demand for insurance products. And the data also can be used to urge fence-sitters to buy these plans.
Some 17 percent of the respondents said they would borrow the money from friends or family and another 12 percent said they would sell assets to pay the expense.
Another 17 percent said they would neglect other obligations -- such as their mortgage or credit cards -- which would damage their credit and often require them to pay late fees.
A survey from AAA had similar findings. It suggested many American drivers could not afford a car repair of $1,000 to $2,000 if faced with one today.
That study found only 38 percent of the drivers had the savings to cover a $2,000 repair. Others would put the repair on a credit card or borrow money from friends, family, retirement or home equity accounts.
Many F&I managers already use large repair invoices to make the case for a service contract. Some also keep expensive auto parts on hand as a visual aid to demonstrate the potential high cost of repairs.
These studies are another arrow in the quiver. Do customers really want to dig into savings or borrow money to cover future repairs?
