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Here’s What Snap-on Tools Says About Credit Purchases

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I recently posted about Gearwrench’s new marketing campaign, and how they focus on how tool users can go in long-term debt with tool truck brands.

For as long as I can remember, I attributed the higher pricing of Snap-on and other tool truck brands’ tools and tool boxes to their quality, with a premium built in for the at-your-door sales and warranty services.

In the Gearwrench post, Mike S wrote:

What [tool users] don’t realize is that there are big financing costs built to [tool truck brands] high prices. I’ll pay a fair prices for the tools but I don’t want to pay off someone else’s truck debt.

I had not considered this before, and it seems like a reasonable argument.

Most pro mechanics and techs are required to buy their own tools and tool boxes. Such lines of work typically involve high upfront equipment costs, and then regular purchases can add on top of that. This is where payment plans can spread the costs over time.

Judging from the many online discussions about tool truck debt over the years, payment plans seem extremely commonplace.

I haven’t seen any statistics or hard details about the matter, and sought to take a closer look.

Snap-on Revolving Account Google Search Results

In wanting to learn more about the tool truck brands’ financing, credit, and loans programs, I conducted a couple of Google searches, including for “Snap-on financing apr.”

In Google’s Q&A section, there’s an entry about “does Snap-on charge interest?” which draws upon a Snap-on Franchise Operations Manual (PDF) on Revolving Accounts.

The document is for the Australia and New Zealand region, but I don’t think this changes the nature of the information.

Here’s an excerpt:

It is a goal for every Franchisee to develop and maintain large enough total RA balances so that regular collections provide sufficient cash flow to replenish tool inventories, pay expenses and provide a good regular weekly income. It is only by consistent RA development and collection efforts that a Franchisee can realise this objective.

Snap-on also says:

As the Franchisee will already have purchased the product from Snap-on, the Franchisee is essentially extending their own credit to the customer, so it is critically important that the franchisee collect the money owed to them.

It sounds like franchisees – the tool truck dealers – buy products from Snap-on and resell them to their clients.

This part isn’t very clear:

It is a goal for every Franchisee to develop and maintain large enough total RA balances

Why is that better than accepting payment in full?

So it’s a goal for franchisees to buy their own inventory and then sell it to customers through payment plans?

The document also says:

However, Snap-on recommends a repayment schedule of less than 10 weeks for most RA purchases.

Is that the typical payment period? 10 weeks doesn’t sound like long-term debt to me. The stories I hear convey that many auto mechanics and techs have a constant balance, where regular purchases can lead to overlapping balances and increases in either payment amount or duration.

There’s a part in the document that says:

If the customer thinks that repayments are always round numbers, it can make it difficult to increase weekly repayments when their balance increases.

This suggests that Snap-on is at least aware that purchases can stack and lead to higher balances that need to paid off.

Snap-on Epiq 60-inch Tool Cabinet in Red

This 60″ 10-drawer roller tool cabinet is priced at $13,905 on Snap-on’s website.

Are new auto mechanics and techs able to pay off just this tool box in 10 weeks?

Every so often we hear from franchisees and tool truck dealers. In a Reddit post titled “Snap On Franchise a lucrative business?” from around 2 years ago, the first commentor starts off by saying:

I just finished my first year as a tool dealer. Perhaps it’ll get easier / less stressful but I’ve never been more miserable. It’s not all that physically demanding, but it’s more about chasing money than it is selling stuff.

I have heard a mix of good and bad things over the years, and it seems that tool truck dealers’ experiences can be very different.

Snap-on’s franchise website says:

Out-of-pocket start-up expenses for a franchise when using Snap-on financing:

  • Range from $45,088 – $67,928
  • Includes $14,472 – $27,516 working capital

The estimated total investment range is from $217,505 – $481,554.

That they have different cost estimates for “out-of-pocket” and “total investment range” is cleared up further down the same page where Snap-on lists potential financing options available to franchisees.

Across the industry, buying on credit seems to be unavoidable, at least for new mechanics and techs based on the sheer volume of tools and equipment, but it also seems to be encouraged.

There are advantages of Snap-on and tool truck dealers’ at-your-shop sales and service.

I think that at the heart of things is the requirement for most mechanics and auto repair and maintenance pros to buy the bulk of their own tools and equipment. I’ve heard various explanations and justifications for this over the years.

Would long-term tool truck debt still be prevalent if mechanics and other such users didn’t have to buy their own tools?