Editor’s note: In the latest in an I-CAR column series on industry issues, business development Director Elise Quadrozzi writes that training can be useful for insurers — who…
CARSTAR on Wednesday announced a new credit card program to help customers across the chain finance out-of-pocket costs like deductibles.
The move by the national franchise offers an interesting strategy for capturing more customer business. The CARSTAR card is managed by Synchrony Financial, which reports that its CarCareONE financing can raise an average auto service ticket from $275 (per the National Automobile Dealers Association) to $578.
CarCareONE is open to other auto service providers as well, and other collision repairers might want consider joining CARSTAR and other competitors like Gerber on the Synchrony network. The program is open to small independent shops as well, Synchrony said.
Bankrate estimated in January that about 63 percent of Americans don’t have enough savings for a “$500 car repair or a $1,000 emergency room bill,” while GOBankingRates.com estimated in September that more than 69 percent of Americans have less than $1,000 in savings. (Ironically, there are signs Millennials might be better at saving than some of the other generations.)
“Many times, customers are surprised with a bill for their collision repair for uncovered expenses, depending on the type of policy they have, or don’t have the cash to cover their deductible,” CARSTAR wrote in a news release Wednesday.
That could cost a shop business if the customer gets scared off by the deductible or ancillary expenses and opts against filing a claim. It also might deter drivers from seeking more cosmetic repairs, since they wouldn’t be covered by the deductible anyway.
“While drivers are required to have insurance for their vehicles, sometimes all of the costs are not covered, like towing, additional repairs, detailing or a specific type of replacement parts not mandated by their policy,” CARSTAR President Michael Macaluso said in a statement. “And, some people take a higher deductible to reduce their insurance premiums, but neglect to save for that expense should it come time for a collision repair. At CARSTAR, our moto is ‘Relax, We’ll Take It from Here,’ so offering a financing option helps our customers through what can be a stressful time.”
The CARSTAR card has no minimum purchase requirement and offers 0 percent interest if a customer charges more than $199-$1,499 and pays that individual sale off (including minimum monthly payments) in 6-12 months, depending on the amount. CARSTAR said the only fee to customers would be the interest.
About 80 percent of auto customers do so and avoid interest, according to Synchrony. The others do face 29.99 percent APRs, backdated to the purchase date, per Synchrony’s terms. The company boasts that 68 percent of automotive customers plan to use their CarCareONE card at some point in the future, and 39 percent make a repeat purchase within two years.
The same financing is possible on any subsequent purchases spaced at least a day apart — useful for courting customers which might go years between collisions.
“Cardholders can get 6 months promotional financing on every purchase of $199 or more every day (within their individual credit limit),” Synchrony auto network marketing Vice President Synchrony Financial John Howard wrote in an email.
The card can be used any of CarCareONE’s 25,000 automotive locations, including as a gas card at certain national gas chains and at entities like NAPA.
“(S)ome consumers find it beneficial to consolidate all of their auto repair and servicing purchases onto one credit card for budget management and tracking purposes; it also allows them to keep their general purpose credit cards free for other expenditures, including emergencies,” Howard wrote.
CARSTAR said they’re not offering any incentives to shops for signing up customers, aside from the prospect of increased sales now that purchase financing becomes available.
“Most shops do not want to carry a balance for a customer,” CARSTAR spokeswoman Debby Robinson wrote in an email.
Howard said Synchrony, a federally chartered bank, will offer shops the necessary training to make sure they comply with all applicable credit card laws.
CARSTAR, Nov. 15, 2016
The Driven Brands CARSTAR CarCareONE credit card is shown. (Provided by CARSTAR)
CARSTAR on Wednesday announced a new credit card program to help customers across the chain finance out-of-pocket costs like deductibles. Examples of promotional financing upon signup are shown here. (Provided by CARSTAR)