Whenever I design a menu system, I always include a second finance term that defaults to the base term plus six months. When I did the first menu system for AutoNation, I was coached on this by Arthur Knosala who learned it, I believe, at JM&A.
We had an object lesson when I was working on Route One’s menu. The team was just getting into this requirement when the product owner happened to buy a new car, and took the term bump. She was able to maintain the agreed payment, and still buy some good products. Even a three-month bump is significant.
My spreadsheet, below, shows how this works. The idea is to goal-seek the amount of product that maintains the original monthly payment, at the longer term. The input values are blue. Everything else is calculated. This allows the possibility that the APR may be higher with the longer term.
If your menu system won’t do this, you can download my spreadsheet. It automatically calculates the finance amount which, with the term bump, results in the same payment. Remember, only type in the blue cells.
Magic tricks are easy once you know the secret — Marshall Brodien
When I was at MenuVantage, one of the guys put together a demo in which he used the term bump to sell a raft of products, and then a biweekly payment program to ratchet the term back down. It was like a magic trick. Same payment, same term, and presto! He pulls two thousand dollars’ gross out of his sleeve. Dealers couldn’t sign up fast enough.
Virag Consulting 