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What is a Pick-Payment or Deferred Down?

By Deal Pack - July 24, 2012

This term has many names in the used car industry, “Pick-Payment”, “Pick-up Payment”, “Deferred Down Payment”, to name a few. But what does it actually mean and how does it benefit the dealer? In short, a pick-payment is an extension of the amount allotted to the cash down portion on a retail deal. This allows the buyer to reduce the amount financed by indicating a larger payment towards cash down than what was actually paid at signing. The difference is then collected over time in what is referred to as a pick-payment. Most DMS solutions will allow you the ability to schedule payment dates for these pick-payments so that the customer is not stuck with a large balloon payment.


While the dealer loses out on the interest that would have been earned on the pickup payment, it gains goodwill with its customers. If your dealership sells its loans to outside lenders they may also offer to purchase the deferred down along with the principal balance. This of course may be purchased for full face value or at a discount along with the note. In this case the lender purchases the deferred down payment and assumes it as an asset on their books. With this transfer it is now the responsibility of the lender, not the dealer, for collecting the deferred down payment. In short, giving your customer the ability to use a pick payment equips your sales force with one more reason to be able to close the deal.

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