Car buyers span generations and yet there are huge disparities in how much knowledge each generation has with regard to how financing a car actually works. Good news, though, as there are ways to keep your dealership profitable AND help provide valuable education to buyers to help earn their trust.
A recent study conducted by Instamotor uncovered some interesting findings about the state of F&I education among car buyers, shedding light on the how much different generations of car buyers know and understand about the process.
Gen X-ers seem to understand more about the financing process than Millennials when it comes to knowing how a lender evaluates a loan but not by much (46% vs 30%). Gen X-ers also understand the use of GAP insurance more than their Millennials counterparts but again, not by a large margin (42% vs. 35%). With age and more car buying experience, you would expect the disparity to be greater, but it isn’t.
So, what does this mean? This is an opportunity for your dealership to position itself as a F&I education resource for all buyers. With nearly everyone going online for information and tips on just about everything (Google, anyone?), your dealer website could provide valuable information and education for buyers, so they truly understand more about the process of financing a car.
Here are 3 ways to increase profits by better educating your future customers:
- F&I Tools Online: Use the F&I page as an educational portal for payment calculators (which you probably already use), a glossary of popular F&I terms, and lease vs. buy ROI tools. Interactive tools increase engagement and keep your potential buyers on the website longer.
- Product Spotlight Blogs: Blogs are everywhere (after all, you are reading this one right now). So why not have an F&I blog that features a different product each month or bi-weekly? A short piece on GAP with a compelling story to illustrate the importance of it…an article explaining the different credit bureaus and their role in financing, etc. Link or post to your social media channels for wider audience.
- F&I ‘Clinic’ or Online Chat: Offer a monthly F&I ‘clinic’, inviting car shoppers to come to the dealership to get their financing questions answered. Service departments do this often to go encourage new customers to bring their cars to the dealership for maintenance and repairs. F&I managers can earn trust with car shoppers by positioning themselves as educators first rather than simply perpetuating the stereotype of the fast-talking salesperson looking to make a buck. Trying an online chat for a couple of hours every week can have the same positive benefit. Be available, approachable, and watch trust and CSI rise.
The study polled 800 adults who have applied for at least one auto loan and those results highlight the need for car buyer education across all generations. If your dealership is already offering this level of F&I education, you are ahead of the curve.
If not, consider a new approach starting with these suggestions. Your profitability is dependent on many factors. The ‘hard sell’ doesn’t work as effectively as it once did. We live in a world where the person that teaches us something or adds to our knowledge before the selling starts gets our business and our trust. Help your F&I managers be that person and watch your profits soar.