There may not be a much more maligned F&I product to sell than GAP insurance. It’s the one product that buyers seem to understand the least about yet if they total their car, they will kick themselves for NOT having. It’s a tough sell but it doesn’t have to be…
F&I pros know what it is…the coverage to handle the difference between what the car is worth and what your outstanding loan balance is at the time of a total loss or vehicle theft. It can save a buyer thousands and keep them from loan default.
Where this can get tricky is the bad rap the GAP insurance has gotten over the couple of decades since it was introduced as a staple product for F&I. There used to be a good chunk of profit in this years ago but state and Federal regulations have put the brakes (forgive the pun) on how much can be charged. Back in the day, it was a cash-cow and F&I managers loved selling it for high margins.
For your buyers who have their guard up about this right from the start, let’s take a look at some of the ways an F&I manager can approach a buyer with this product without blowing all of their goodwill…
Focus on Trust
Let’s face it…buyers don’t have much trust in the F&I staff. They already are wary of the whole process but when GAP insurance comes up, that seems to be the biggest ‘red alert’ in their mind. Time to educate and win their trust on this one.
Take the time to educate your buyer on why this product is so important now more than in years past. Cars are more expensive than ever yet the depreciation factor has not changed. Cars still drop in value rather quickly.
Explain everything about the policy. What it does, what it doesn’t do, and how it may differ than similar coverage that their auto insurer may offer. Explain that having it wrapped up in the loan is easier than paying upfront or quarterly through their insurer. Be upfront, answer every question, and don’t use fear tactics.
Ask the Right Questions
Don’t be afraid to ask the right questions here. Ask how many miles they tend to drive per year so they understand higher miles from the start could put them behind quicker in the event of a loss.
Ask if they can put more money down to reduce that loan balance from the start. If they cannot, stress that GAP may be more important in that scenario.
Ask the buyer to consider a shorter loan term to bring down the balance quicker. If they cannot swing that, again – remind them that GAP insurance can help if they have to take a longer loan term where the balance is not dropping fast.
These leading questions, while seemingly obvious, can help reverse engineer the argument for why they NEED to consider GAP insurance. Thoughtfully delivered questions can help the buyer walk themselves into the sale without you having to resort to fear tactics.
Paint the Picture
Any good salesperson knows that painting the picture can be the most effective way to get the buyer to ‘see’ the product or service’s value in their own mind. If your staff has any stories of how a GAP policy helped to handle an unexpected shortfall for a past buyer, use it. Be very descriptive and make the point that while most of us don’t like to buy against a future event that may or may not happen, when it does the extra protection will be invaluable.
If your GAP provider has a rep that you can reach out to, ask them for some stories. Your buyer has to ‘see’ themselves looking at a $3000 outlay to their bank to clear up the balance. They need to ‘feel’ that loss in their checking account or the pain of falling short on bills.
You don’t have to be Debbie Downer but you can be the person that wants to help them NOT have to face this. If you are approaching this as consultative sale, you can’t go wrong.
And if they want to decline and take the chance that a loss doesn’t happen, so be it. But ask them to do you a favor and call their insurer to see if they offer some level of similar protection. They will appreciate that and will come away feeling like they were not bullied into buying something they were not sure about.
