Your #1 source for auto industry news and content

Converting More Customers to Financing

On this week’s edition of F&I Today, Becky Chernek discusses how converting more of your customers to financing can be beneficial in your F&I department.


Welcome to F&I Today I’m your host Becky Chernek. I’m so happy you’re able to join us today.  I’ve been in the automotive industry for over 30 years and in finance insurance since 1989.  I founded Chernek Consulting in 2001 and provide current and up to date best practices in F&I training, offering workshops and in-dealership implementation for automotive dealers throughout North America. My goal is to help you to significantly boost profits utilizing innovative upfront sales strategies.  It’s a pleasure to be here with you.

If you think you’re the only dealership getting hit with cash customers lately you’re not alone! More customers than ever before are coming into the dealership with a check made out for the exact amount. There are several factors for why this is happening. First, how many of you offer online financing? Give the customer the option to do some of the heavy lifting online at the dealership website? By this I mean give the customer the ability to determine what they might qualify for, perhaps an idea of a payment range and terms that are available based on their credit?

I realize many dealers today still don’t want to give customers the option to self-desk. They prefer that the customer wait it out until they get into the dealership to discuss financing options. It’s about protecting the golden goose at all cost. In fact, in many of these dealerships it might even surprise you that the BDC is left in the dark and hardly given any training when it comes to discussing financing options or answering customers specific questions when it comes to financing.

Did you know, to date there are 209 million digital shoppers in the United State and 70% of those shoppers go online before they buy their next car, and out of that, 70% will land on eight different dealership websites before making a decision to buy a car, and only 25% of customer’s specific questions are even answered? Disruptors such as AutoGravity, and other third-party providers will compete by offering the customer the flexibility to shop payments online. CarMax, among other public automotive groups, announced last year they offer online financing to help keep the customer captive at the dealership by making the shopping experience a breeze.

So, in my opinion online financing isn’t going away anytime soon. It doesn’t surprise me that with all the options customers have available today, shopping finance online is becoming standard practice. If your dealer doesn’t offer the customer the ability to at least explore these options online by offering self-desking in real-time, what makes you think the customer will stop in their tracks and wait until they step foot into the dealership to do their fact finding? If you haven’t had a chance to explore online desking capability, you may want to do just that.

Another dilemma we face today is that many credit unions are getting into the act of offering financing and are more competitive than ever before. In fact, many credit unions are advising their members to tell the dealership they are paying cash, that way the F&I guy or gal won’t try and convert them. Tricky huh? Now you and I know that when the salesperson and desk manager negotiate the deal based on a cash deal, they likely don’t offer payment options. Unfortunately, no one checks the fact the customer is obtaining financing elsewhere, the customer slips through the cracks, and you find out that the customer has a lien on the vehicle when the deal finally makes its way into the accounting office.

So how much does it cost you for a non-turnover or the chance to convert the customer? Let’s say you’re running $1,200 per car – a reasonable number today –and you had 10 cash deals that slipped through your hands. That is a total of $12,000 for the month. Take that by 12 months, and it starts to add up fast. It’s a whole lot of money – $144,000 of missed opportunity. You need to be asking the right questions during the sales process. Are you missing out on the chance to be able to convert more customers to financing?

I know some of you are going to get sick of me talking about this, and I’m hoping that sooner or later, it will stick. But if you do the interview and meet the customer at the sales person desk, take the time to review the transaction and ask appropriate questions to determine if the customer is obtaining financing elsewhere you might be surprised at what you uncover. When you first introduce yourself to the customer, you’ll want to state your name and position, determine if the customer has agreed to purchase the vehicle, ask if the customer is going to take the vehicle home today, and if they are considering financing with you.

This introduction will tell you a lot even before you get started. During the interview, if the customer tells you they are paying cash, I will make it a point to ask them to validate if the dealer is required to record a lien. I explain this is for Department of Motor Vehicle purposes only! Now this is generally the time the customer comes clean. Once they confirm the vehicle has a lien, I continue by validating the lien information. I do not stop in my tracks and attempt to convert the customer to the dealership financing nor do I ask the customer to fill out a credit application either.

Instead, I ask the customer if they happen to know what the credit union interest rate is and the term they will likely use. I explain to the customer that it will be my responsibility to share their payment utilizing the credit union financing, and I am also going to share other options they have available. I seldom get resistance from the customer. They don’t seem to have an issue providing me with their rate and term. Besides it’s for their own good. I have everything I need to complete the paperwork.

Once the customer comes into the F&I office for delivery, I present my menu with both the credit union payment and the dealership payment. I caution you. It’s very important that you check the interest rate from the credit union. Sometimes the rate the customer provides may not be correct. I like to use the Green Lender’s Guide or some F&I people use I love the Green Lender’s guide because it provides me with all the banks and local credit unions in the area along with their rates, guidelines and terms with a valid telephone number to call just in case you need to speak with someone directly. You never want to do a conversion without it! You are comparing the dealership financing to the credit union financing.

Should the customer still want to go to their credit union, at least you’re able to offer the products beforehand, and the customer is aware of their payment, no surprises, bingo. Also, try and collect a few of the major credit union contracts and have them on file whenever possible. Many credit unions have a clause on the back of the contract you want to point out to the customer. The clause is “right of offset”. If you’re not familiar with the term “right of offset”, you definitely need to get out a sheet of paper and a pen. The “right of offset” definition is quoted from a blog on The “right of offset” is when a financial institution has the ability to grab money out of a deposit account, like your checking or savings, in order to satisfy an outstanding debt to the same institution. When the right to offset occurs, it can trigger a snowball effect on your finances warns Kathryn Bossler, a financial counselor with Green Path Financial Wellness in Detroit. “If you’re already in a financial hardship, you don’t want to be surprised that the money you were counting on is not there,” she says. She adds that she sees this a lot with credit unions: Her clients lose their month’s rent or cash for groceries because the right to offset was triggered without their knowledge. The best part of utilizing the dealership financing – you don’t have to put your eggs all in one basket, save the money for a rainy day, and if something should happen – you lose a job or have a catastrophic event – the vehicle is collateral not your entire savings account.

I am sure some of you are wondering what if the customer doesn’t qualify for the loan at the dealership? During the menu presentation, make it a point to stress that the loan is not approved and these terms are subject to bank approval. Many dealers access a soft pull analysis that will give you some clarity to the customer credit without putting a hard inquiry on the customer credit bureau. The worst thing that can happen however, is the customer would have to get financing with the credit union.

I promise if you are meeting the customer at the sales person desk, and you get the opportunity to present a menu, you will convert a lot more customers. You will always have to deal with the F customer who will want to pay 2% more than the going rate at their credit union. They are loyal! Even if you offered your car deal $1,000 below invoice some of these guys wouldn’t take it. Just do your best effort and move on. The idea here is to convert more customers to your financing. It’s about engaging with the customer earlier on in the process either at the dealership website or at the sales person desk. Don’t be afraid to get involved earlier in the process. That’s where the magic starts.

Should the customer not come into the dealership – perhaps the unit is being delivered to the customer instead – your best bet is get on the phone with the customer and invite the customer to go online to present the menu. Use Skype or Go To Meeting. They are great tools for sharing your desktop if you don’t offer self-desking. Frankly, there is no reason today why you can’t get at least 99.9% turnover if everyone pitches in and does their job.  Meet the customer on their terms. Engaging earlier in the process with the customer will make a huge difference and increase the likelihood that you will convert more customers rather than having the customer come walking in with a check made out for the exact amount.


For those of you who are concerned about your performance in F&I, take the CBT Automotive Chernek Challenge! One complimentary (1) single store online analysis and find out how much opportunity you could be missing out on, feel free to contact me regarding my consulting services. My specialty is providing F&I Training, helping auto dealers achieve high levels of performance and profit by improving internal processes that begin the moment customer touches down on the dealership website and ends with finalizing in-person transactions in F&I. Thank you for joining me on F&I Today. Be sure to come back next week right here on the CBT Automotive Network for our next edition of F&I Today

Becky Chernek
Becky Chernek
Rebecca Chernek, founded Chernek Consulting, LLC in 2001, has nearly three decades of experience in the automobile dealership industry. She started her career by working with her father at their family-owned auto dealerships in Have De Grace, Maryland. She gained hands-on skills and experience in almost every aspect of the automotive sales process: new used cars and trucks sales, F&I, Director of Finance for volume operations and general management. She was hired in 1986 as the first woman to sell cars for Al Packer Lincoln & Mercury in Baltimore, and in 1989, she was promoted to F&I Manager for Ron Bortnick Ford in Upper Marlboro, Maryland. In 1995, Rebecca took a position with the JM&A Group and was promoted to District Manager for the AutoNation division — the #1 retailer in the United States — to hire, train boost profits and implement menu selling. She single-handedly earned a sterling reputation for adding millions of dollars to the bottom line for all her accounts! Rebecca has a well-deserved reputation as a self-starter, high-performer, and spirited entrepreneur and motivator. It’s not a matter of what you think you know… it’s a matter of proving it! As a consultant, trainer and nationally recognized expert in F&I Training and sales procedures, Rebecca has helped hundreds of automotive car dealers throughout the United States and Canada streamline their processes and closing techniques and significantly increase profits. She writes regularly for Wards Business, CBT Automotive Network, Dealer Magazine, Subprime News and as a NCM 20 Group F&I Guest Expert. She facilitates for the NCM Institute, Desking and F&I Integration. Rebecca is the anchor for F&I Today – CBT Automotive Network headquartered in Atlanta, GA. Don’t forget to check out our interactive continuing F&I online education platform Chernek Consulting Virtual Pro the best kept secrets on how to be successful in F&I! Boost your F&I performance! Every dealer must have to help your F&I manager increase sales and profits while reducing liability.

Related Articles

Latest Articles

From our Publishing Partners