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The Seven Deadly Sins of F&I

February 2008, F&I and Showroom - Feature

by Bob Harkins - Also by this author

The number of regulations placed on dealerships is constantly increasing. With the Truth in Lending Act and the addition of 10 Federal Trade Commission (FTC) regulations and five federal laws, dealers must stay current with changes to compliance requirements. Even if a dealership is hit with a federal charge, the fine may be reduced if the noncompliant act is not something that happens frequently, and if the dealer can show evidence of compliance programs in place.


The National Association of Attorney Generals recently reported more than 40,000 consumer lawsuits filed against dealerships in the last two years. Of those, more than 6,000 were filed against the F&I department. More than 90 percent of F&I lawsuits were caused by the same problems, which are repeated again and again in dealerships around the country.


Let’s review the seven deadly sins of F&I, as identified by AFIP’s David Robertson.



1. The Word “Best”


“Best” should never be used when discussing the finance charge (APR). Although the F&I practitioner views the word “best” as the “buy-rate” plus a couple of points, a reporter or plaintiff’s attorney understands the word to imply that the quoted rate is either the dealer’s “buy-rate” or the lowest rate known to man. A better way to address an inquiry on the rate is to say it is the rate that is available for the person if he or she wishes to finance at the location where buying his or her car.


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