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Mad Marv

Call On ‘Line 5’

After hearing what one finance executive said about financing back-end products, the magazine’s front-line columnist decides to delve into the root of the dreaded ‘Line 5’ call.

August 5, 2011

Last month, the magazine’s F&I Forum lit up after a certain, high-profile finance executive — I don’t think I need to name names here — told a competing publication that dealerships would get more deals approved if they focused on loan-to-value (LTV) limits rather than trying to load a deal with back-end products.

I get his message, but I feel compelled to at least make a case as to why F&I products are important to both dealers and car buyers. See, I believe in the products I sell. I wouldn’t carry them if I didn’t. I buy them on every vehicle I purchase, including service contracts and, yes, credit insurance. And that goes for Mrs. Marv as well.

For you newbies unfamiliar with the finer points of F&I jargon, "Line 5" refers to the total amount the lender will advance, including taxes, document fees, title charges and all back-end products. The term irritates F&I managers because a Line 5 call usually means the lender is excluding or limiting your back-end products. Now, to be fair, a Line 5 call is usually the result of the front-end hitting the lender’s LTV limits.

However, I want to make it clear to lenders that products like service contracts, GAP and credit insurance are where we earn most of our income. Finance sources who understand that are an F&I manager’s best friend. They value their relationships and will do all they can to make room for these products in the approval. At the very least, they’ll make an exception when the deal comes in for funding.

For those that don’t, I get it. If the loan goes bad, you’re on the hook. And the more products included in the loan, the more you stand to lose. I also realize that computer scoring models are playing a part in this as well. They were designed to help lenders make better decisions, but I think there are far too many lenders that rely on those models.

You lender reps reading this column may scoff at that, but just keep in mind that the dealer is your customer, not the car buyer. Yes, the buyer will eventually become your customer, but that relationship and your indirect lending arm wouldn’t exist without dealers. And what matters to the dealer is the opportunity to earn a profit from aftermarket product sales.

And let’s be clear: The products offered in the F&I office are aimed at protecting the customer’s investment. You also have to remember that we are, as F&I managers, legally responsible for offering all customers every product for which they qualify. Denying customers the opportunity to protect their investment because my products might put the loan at risk is, in my opinion, simply unethical.

And if your argument is that $40 a month for a service contract increases the monthly payment and the likelihood of default, then maybe the deal is too risky in the first place. And what happens if our customer suffers a mechanical breakdown and you’ve denied him or her the ability to finance that coverage? Doesn’t that also increase the chances of the customer missing a payment or two?

I just highly doubt that loans perform better without back-end product, but I do agree that we F&I managers need to be conscious of back-end percentages. I mean, trying to stuff a $3,000 VSC down a lender’s throat on a $5,000 vehicle is about as incredulous as a lender giving a Line 5 call on an 800 FICO consumer who is looking to finance at 90 percent LTV.

Strong-arming a lender isn’t the way to go, either. We F&I managers need to pick our battles when asking for back-end exceptions, and we must approach the customer with good reasons for buying the products.

Lenders are notorious for guarding their purses, so give them a good reason to fund the deal by showing courtesy and respect. We’ll talk a little bit more about this next month, but I wanted to leave you with some words of advice I picked up from my esteemed colleague, George Angus: "Stop whining, get proactive in solving the problem by soliciting the help of your GM or dealer and seek out more lenders."

What Angus is suggesting is that you track the impact (i.e., lost F&I income) of every Line 5 call you get. I’m sure your boss will be more than happy to go to bat for you the next time the lender rep comes in for a visit.

Marv Eleazer is the finance manager at Langdale Ford in Valdosta, Ga. E-mail him at

Don’t miss your chance to see "Mad" Marv in person as he leads a panel of top F&I professionals at the Industry Summit in September! Visit for details.


  1. 1. klay kelso [ August 06, 2011 @ 12:02PM ]

    Great advice Marv. A balanced, fair and thoughfull aproach to the issue. Most customers that finance a vehicle benefit from the back end products as much as the lenders when the customers have an emergency that the product provides benefits for. There is no way you could convince me that a protected loan wouldn't, in most cases, perform better for a lender than an uprotected loan. One of the main considerations of the 300 or so community banks we do business with in offering CL and A&H to their customers is so they don't take the hit when something bad happens to the customer. It puts the lender in the position of helping the customer out of a bad situation instead of making it worse by turning the loan over to the collections department..

  2. 2. CUD [ August 10, 2011 @ 11:35AM ]

    As a lender I can say the reason you may get a line 5 call is concern over the buyer's ability to afford the monthly payment. What I have been doing is giving a call on the max monthly payment instead. This gives you the choice on whther you sell the car for less and add back end or vice versa.

  3. 3. LINDSAY [ August 23, 2011 @ 12:35PM ]

    Good article!

  4. 4. Art [ August 23, 2011 @ 12:48PM ]

    its all crazy there are no cars to buy so throw the book out, you guys think that selling payments is how you sale. What ever happened to value and hard work.

  5. 5. Marv [ August 23, 2011 @ 04:31PM ]

    Art, it's ALWAYS been about the value. What other reason besides value would a person plop down the money it takes to buy a car these days? You're absolutely right! It IS hard work selling a car. I pounded the pavement for 8 years before I entered the finance office and remind myself daily of what the sales staff have to endure to deliver a car. Customers are difficult and pensive because of the economy so selling value demands dedication and knowledge about the customer's needs. The finance department works hand in hand with sales to wrap up the deal and put a nice bow on the package. My intent in this article was to shine a light on some of the misunderstandings that often occur in the negotiations between the finance department and the lenders who actually give us the green light.

  6. 6. Chris from New Jersey [ October 26, 2014 @ 12:53PM ]

    A very interesting article. After 8 years in the car industry, I have decided to go the F&I path. I emailed Marv to see if he had any suggestions. I am struggling but I know I can be great at this position.

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Author Bio

Marv Eleazer

Finance Director

Marv is no insider. He’s an actual F&I manager with more than 20 years of experience. Get his from-the-trenches take on the industry every month at

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