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A New Lease on Profits

By all accounts, leasing is back, but that doesn’t mean your F&I profits have to suffer. F&I trainer breaks down a process for making leasing a win-win for the finance office and the dealership.

July 2011, F&I and Showroom - Feature

by Rick McCormick - Also by this author

As the economy and the auto finance landscape continues to improve, manufacturers are once again turning to leasing to reach their annual sales goals. Whether that’s a good thing for F&I production or not will depend on the F&I manager’s ability to educate their customers about the issues they could face from the time they leave the dealership to the time they drop off the key at lease end.

Leasing can be advantageous for both the customer and the dealer. It allows for shorter trade cycles, builds loyalty and, most importantly, keeps payments low. And with credit criteria and income requirements loosening, leasing is becoming a serious option for today’s car buyer. To maximize profitability and make the return of leasing a positive for your dealership, the F&I office must develop intentional and effective strategies.

Different Payment Type, Same Approach

The misconception is that lease customers aren’t interested in protecting their vehicles. After all, it’s not their vehicle; they are just “renting” it for a short period of time. Unfortunately, nothing could be further from the truth.

When a lessee loses a key or dents a rim, they have to pay for it at lease end, if not sooner. That’s why you have to approach lease customers with the same needs-discovery process used for retail buyers, because they need the same level of protection.

The key is to implement an intentional process that will uncover how the customer will use the vehicle and what he or she intends to do once they turn in their key. Questions about what they like about leasing also are great ways to uncover a possible need. We’ll get into that a little later, but the message here is that good F&I managers are always thinking of what to say next. Great F&I managers, however, are thinking of what to ask next! And the more needs discovery questions you ask, the more you’ll find out why your customer needs your product.

Your questions will extract the need for your products, but customers won’t buy if they haven’t discovered that need for themselves. That’s why your intentional needs-discovery process must center on how your products will protect them from the hidden costs of leasing. And remember, nothing hurts customer satisfaction more than finding out they’re on the hook for an unexpected cost at lease end.

What’s In Your Contract

The manufacturer’s wear-and-use guidelines provide a perfect starting point for building a tailored product presentation. Just check the back of the lease contract for the list of costs the customer could incur. This list will typically include six to eight categories of wear-and-tear items, such as lost or damaged keys, interior stains, rips, burns or excessive wear.

Having the contract handy also works when the customer raises an objection. Simply turn it over and highlight the excess wear-and-tear disclosures and point out the items the manufacturer will be looking at when the vehicle is returned. Some manufacturers even offer a “Lease Return Guide.” Just be sure the products you offer cover all the possible issues your customers could face throughout the life of the lease. 

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