BNPL Reduces the Stress of Paying for Auto Repair

When the staff in the service department at auto retailer Momentum BMW saw that customers were declining auto repairs at an excessive rate, they asked each customer for the reason — price, convenience, value?

“A lot of times it had a lot to do with just the financing options — they didn’t have the money at that particular time,” Shawn Sharp, fixed operations director at Momentum BMW in Houston, Texas, told PYMNTS.

To give these customers another option, the company added buy now, pay later (BNPL) for parts, service and collision repairs in November 2019. Since then, the decline rate that had been running at 21% or 22% has dropped to 13%.

“One of my favorite things is tires,” said Tommy Kuranoff, general manager at Momentum BMW. “For customers, it’s always a hassle to buy tires — it’s a big investment. You can offer them 0% for 90 days on tires.”

The executives said the ease, flexibility and speed of the BNPL option are what help close the sale. With the Sunbit BNPL option offered by the auto dealership service department, the approval process takes 30 seconds to 45 seconds. The customer then has access to financing that offers them 90 days same as cash.

Facilitating Additional Sales

In the case of collision repairs, customers often use BNPL to pay the deductible on a job that is being paid by insurance.

Beyond having the primary repair done, customers who have learned about BNPL sometimes take the opportunity to have other repairs made at the same time. For example, along with a collision repair, they may take the opportunity to use the BNPL to have the shop repair door dings that were there before the collision.

From the merchants’ perspective, they get paid within a day and are guaranteed their money. Sunbit manages the financing after the transaction, including any customer service or collections that may be required.

That has proven to be valuable to Momentum BMW. The company recently stopped taking personal checks after experiencing a rash of insufficient funds, frauds and headaches around collections.

“When the economy dips like right now, that’s when all the fraudsters come out, that’s when all the people with bounced checks — that’s when you see more and more of it is when the economy looks the way it does today,” Kuranoff said.

Boosting Awareness of BNPL

Beyond BNPL, Momentum BMW accepts credit cards, cash, money orders, insurance and extended warranties.

The company promotes the availability of BNPL in several ways, including decals and posters at the point of purchase, email signatures and advertisements. The service advisors also offer it to each customer during the writeup of the repair.

“We generally do it on every writeup, even if the car is going to be initially written up under warranty,” Sharp said.

Even if the main repair is covered by a warranty, customers who are aware of the BNPL option are more likely to choose to have other repairs done — such as those door dings or anything else that is found during an inspection of the vehicle.

“It ultimately means more approved repairs,” Sharp said, “with customers getting approved for higher dollar amounts and then turning one-line repair orders into two-line repair orders — rather than just fixing one thing, now we oftentimes have the ability to fix two things.”