For decades, the F&I department of every dealership has had the reputation among car buyers as being some horrible financial black hole whose very existence is meant to get car buyers to swallow high interest rates and pay for products they don’t need. And yes, that was a reality in many dealerships. There was little to no transparency for the customer, ever. It was ‘Sign here and we’ll get you the best rate.’

But things have changed. And with that change came the way F&I managers disclose and sell everything. The recession and subsequent consumer safeguards that came as a result have forced a greater sense of transparency throughout the industry. F&I managers often have to be certified, they are constantly educated on new regulations, and have their deals audited and scrutinized for ethical practices.

The one area that some dealerships still struggle with is the loan negotiation process with the customer. It can be a delicate balance between the sales manager’s needs to move the unit, the customer’s need for a reasonable payment, and the F&I manager’s need to make a living.

Here are a few ways to help navigate that potentially uncomfortable intersection between the three and maintain a high profit per unit –

F&I Makes the Quote

When you have salespeople or the sales manager quoting payment terms and rate, the F&I manager has now been put in the unenviable position of having to potentially deliver the bad news if the FICO or overall credit worthiness ends up being out of line with that initial quote. Your F&I personnel should have a good command of what banks will buy, whether it’s commercial lenders or OEM finance arms.

Let them do what they do best…give the customer the most informed and reasonable approximation of the payment. Nothing is worse than unwinding the numbers when they come into the F&I office.

Honesty is Always the Best Policy

Your customer may have come in looking for OEM 0% interest deals they saw advertised but as we know, not everyone qualifies for those deals. If the customer pushes back or wonders why they DON’T get it, respectfully go over the fine print on those offers and resist the temptation to gloss over it and start focusing on payment or product, etc. A clear explanation and a touch of empathy goes a long way to preserving the deal for everyone and maintaining a strong CSI.

Be Creative

For the same reasons trainers tell your F&I managers to be using a variety of methods to sell products (interviewing, menu-based systems, etc), they should also be creative when negotiating loan terms. Every F&I manager should have a commanding knowledge of what banks buy deep, what banks will consider B-C paper or subprime, and how far their OEM finance companies will bend to help dealers make their numbers.

This will come across to the customer that the F&I manager is trying every option to help them with loan terms they can live with. Show the customer (without showing buy rates of course) several financing scenarios and ask them what looks like a payment they can handle and feel good about. It’s all about letting them know that F&I is working FOR them, not against them. You may be surprised at the response.

Dealerships make a lot of profit from the F&I office. Often, they have to because margins are so slim on the salesfloor. However, today’s car buyer is more educated than ever, and they expect a completely different type of F&I experience than their parents had decades ago.

F&I managers can be transparent without tanking their per copy numbers by taking control of the quote process, respectfully tempering expectations regarding loan qualifying, and simply presenting a creative menu of finance options. An open process can go a long way to keeping profits high and customers happy.

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Kristine Cain is a freelance writer who loves the car business, hiking long trails, and the Steelers (not necessarily in that order). After finishing a degree in psychology at George Mason University in Virginia, she got her first taste of the dealer world working in the service department of a high volume Honda store. Warned early on that the car business would ‘get in her blood’, it did and Kristine made the leap into F&I departments at several stores around the Washington DC area and later to an automotive information company in dealer sales. A veteran of over 20 years in B2B sales to dealers, she leverages that knowledge to help write within the dealer market. Kristine lives in Holly Springs, NC with her husband and family.

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