A ‘Sale’ on Auto Loans

For decades, lenders have offered auto loan promos ― $0 down, no payments for 90 days, interest-free financing, and the like. But why not offer borrowers periodic “sales” on their loans?

Here’s how I envision it: The consumer signs up for a 60-month loan. At periodic intervals, the lender offers a discount on a particular month’s payment.

For instance, in advance of each anniversary with the lender, the customer could receive a $25 or $50 reduction on that month’s payment. Another scenario would be to offer 10% off the anniversary payment for the first year, 20% off for the second, and so on.

Another idea is to offer periodic “sales” similar to what the carmakers offer ― either for federal holidays or seasons. For example, the lender could offer 4% off in honor of July 4, or 11% off in honor of Veterans Day. A summer or end-of-year sale could be celebrated with a flat-fee discount.

Yet another spin on this strategy is to let the customer choose from a handful of options. There could be 10 options in all, let’s say, and once a year he could select one.

Certainly, lenders could attach some strings to these discounts. For instance, the customer might be required to provide some additional contact information, “like” the lender’s page or “share” a photo of himself with his vehicle on Facebook, or “tweet” something specific on Twitter.

The upshot is that consumers like to feel appreciated, and they love discounts (especially unexpected ones). And in times like these, when competition is fierce, anything lenders can do to engender customer loyalty is critical.