Mind-Deal Manipulation Sales and Finance Create Dilemma: How Many Mind-Deals Make A Sale?

June 2007, Auto Dealer Today - WebXclusive

by Becky Chernek - Also by this author

Untold sales are lost daily on mind deals! Every dealership has experienced them.  A mind deal occurs when a sales manager finalizes negotiations with a customer on extended terms with no money down—generally utilizing subvented interest rates—and the customer demonstrates a serious delinquent payback history. Assuming the deal will get bought from one source or another, this sales manager hands the deal over to finance with crossed fingers. The deal will likely sit in finance for a few days while the managers think about which bank might pick it up without unfavorable conditions that are too outrageous – either that, or the manager will shove the deal to a corner of the desk and ignore it. The sale is lost, and the customer is gone forever. Multiple such sales failures each week equal lost profits.

What are you going to do about it? Very few customers are willing to wait by the phone for even a few hours. Any customer who comes to your lot is on a mission to buy a vehicle and will go to another dealership the same day if you cannot quickly and efficiently make the sale. You must take action.

Proper Qualification of Customers

Your sales and finance managers must know how to effectively qualify and structure a sale based on the customer’s credit criteria to maximize profits. They must quit assuming that such customers are able to qualify for terms that simply don’t apply. They must quit assuming that because such customers have a slow pay history, anything they dish out will be snapped up. Managers must learn to back away from deals that don’t make sense, pull such customers off their vehicle of choice without delay and steer them to a vehicle where qualification will not be a problem. This should take place the second they obtain a customer’s credit and determine that qualification for the specified vehicle is improbable or that payments will be too high. Mind deals are a waste of time, and if they actually produce income for the dealership, it is modest at best.

Unqualified Sales Managers and Unproductive Finance Managers

In today’s marketplace, dealerships have limited time to make a positive impact and close the sale. It doesn’t make sense to allow the bulk of business to be managed by a sales manager who has no experience or training in finance. Too many sales are stalled and too many profits are lost because a sales manager may not fully understand how to structure a viable deal or may reject a customer by relying on a credit report while negotiating or structuring a sale. Does your sales manager know how to read a credit report properly? Maybe so, but when was the last time you monitored the number of such “deals” a sales manager finalized utilizing interest rates and terms that put them in a hotspot?

Conversely, when was the last time you monitored how often a finance manager accepted such doubtful deals and kept your hopeful customer waiting while calling several lenders? In most cases, if a lender finally accepts, the customers usually cannot accept the terms. If you don’t monitor the deals your managers are attempting to make and take action, this mind manipulation of your customers will continue, and if it continues, deals will be lost and profits will be diminished. Mind deals rarely make your dealership money.

The action you take involves a simple solution: retraining with more up-to-date and effective sales processes and a thorough education in effective procedures. Sales managers can be taught how to structure a proper transaction for each customer, regardless of what the credit report says. A poor payment history and budget restraints are no longer inhibitors in the making of a sale that maximizes profitability. It starts with knowing how to effectively qualify such customers for the right vehicles. It also starts with honest and direct communication.

What Constitutes a Workable Process?

Sales and finance managers should know certain information about potential lenders and at-risk customers before a transaction ever takes place. 

  1. Which lenders will buy such a customer with no money down?
  2. What credit terms are acceptable? 
  3. What advance is appropriate, based on a customer’s payment history and debt to income?
  4. What interest rate will be charged based on a customer’s credit history, advance and terms?

In addition to knowing the answers to these questions beforehand, every finance manager should plan to sit at the desk with the sales manager to show support for the deal and to offer solutions, whenever asked to do so. The talent of a great finance manager should never be ignored. Finance managers must take the lead and interview all customers outside the finance office in the following situations:

  1. On ordered or dealer exchanged units, to determine why a stocked unit isn’t an option
  2. On cash or credit union sales, to determine if there is the possibility to arrange financing
  3. On credit checks to determine the reason behind a slow pay history and the potential for lender disapproval
  4. At time of delivery to qualify a customer for product objections

Stephen R. Covey, author of the book bestseller, The 7 Habits of Highly Effective People, stated that if we keep doing what we're doing, we’ll keep getting the same results. When sales and finance managers are well trained in effective procedures and well informed about the terms of various lenders in advance, they can treat each deal as if it was being delivered that very day. Mind manipulation will no longer be a factor and everyone will be happier. Sales and profits will rise as a new and valuable customer market is established.

Vol 4, Issue 4


Your Comment

Please note that comments may be moderated. 
Leave this field empty:
Your Name:  
Your Email:  



Jim Ziegler
Stupid Is as Stupid Does

By Jim Ziegler
The Alpha Dawg charts the brief rise and long fall of Johan de Nysschen, the recently departed president of Cadillac and author of the business plan that effectively crowned Lincoln as the new king of American luxury.

They Finally Killed Somebody

By Jim Ziegler
Ziegler believes Uber’s directors should face criminal charges for their role in an Arizona woman’s violent death.

20 Things a GM Must Do Every Week

By Jim Ziegler

All Things Must Pass

By Jim Ziegler

Opening Observations

They Took Cadillac for a Ride

By Tariq Kamal
Hindsight is 20/20, but at least one industry member saw GM’s latest mishap coming a mile away.

Stand Up and Be Counted

By Tariq Kamal
The Dealers’ Choice Awards are the Yelp of vendors and finance sources.

Over the Curb

This Is Us: Dealer Edition

By Jason Heard
Heard knows delegation and outsourcing are the quickest path to a work-life balance.