February 2009 - Feature
F&I Experts Discuss F&I Basics: The Art of the Deal
By Glenn Roberts
In today’s challenging economic environment, almost every
dealership needs more profit. F&I provides the highest profit margin per
dollar sold in the dealership, so it makes sense to look to F&I. And by
understanding changes in lending and making the appropriate adjustments, you
will increase your likelihood of success.
When you get a qualified customer in F&I, you need to make
sure you have systems in place to maximize your profit opportunities. These
systems will be guided by these six principles.
1. Salespeople will need to
better qualify customers
Salespeople will need to be
trained (or retrained) on proper qualifying techniques, as fewer customers mean
fewer opportunities. Since F&I (or sales)
can’t afford misfires or “do-overs,” it’s critical customers are placed on the
right car on the sales floor.
2. Cash is king
It’s also queen, prince and princess.
Customers with no equity or no cash aren’t going to get financed. The sales
department will need to learn (or re-learn) how to extract cash from the
customer.
3. Know your customer’s ability to buy before entering F&I
You will want to obtain a credit bureau
report at the point of customer commitment. Based upon his or her credit
history and down payment, you will want to be proactive in directing a customer
to a car for which the bank is likely to approve a loan. (Be careful that you
aren’t making credit decisions that require adverse action notices.)
4. Sales managers have to
know the science of the deal structure
The role of the sales manager is to ensure
that F&I is presented with a viable deal. That means the customer was sold the right car, and the deal is structured so
the bank will allow F&I products.
5. F&I can’t make up for
bad deal structure
The greatest F&I manager with the best
new closes can’t overcome an unqualified buyer, or the deal being conditioned
by the bank. Sales managers should have hands-on F&I experience.
6. F&I must have a
system to maximize profit from every customer
You need a selling system for F&I. A
selling system is what you have for selling cars: meet and greet; qualify;
demo; write-up; and close. A selling system in
F&I ensures that every customer is qualified properly and shown every
product for which they are eligible — every time.
Glenn
Roberts is the national training and business development manager for Zurich’s Programs &
Direct Markets’ unit. He can be reached at glenn.roberts@bobit.com.