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‘Best’ Is Not Always Best

AFIP’s executive director reminds us why the word “best” should be avoided when discussing financing or lease rates with customers.

January 2015, F&I and Showroom - Feature

by David Robertson

Next to, “Did I get approved?” the second most common question customers ask is, “Is this the best rate available?” So how do you respond? I have a few recommendations, but let me first say that the word “best” cannot be used when discussing the installment sale finance charge or lease money factor with a customer.  

What the F&I professional believes is the best rate and what a regulator, reporter or plaintiff’s attorney believes is the best rate are two entirely different things. To anyone outside the car business, the best rate is either the dealer’s buy rate or the lowest rate known to man. We believe it’s the buy rate plus “x” number of points. So any reference to the APR being the best rate available will be seen as a deceptive act on the part of the F&I practitioner.  

Bear in mind, there is nothing illegal, unethical or immoral about a reasonable markup of the buy rate. The F&I practitioner, on behalf of a funding source, is competing with other  funding options for the business, negotiating mutually acceptable terms, preparing the necessary documentation and conducting the required disclosures. As such, he or she should be fairly compensated for providing these services. Even the most rabid opponent of in-store funding will grudgingly concede this point; however, the practice somehow slides over to the dark side when the word “best” is used.

A greater effort might be mounted in defense of the practice if an acceptable solution wasn’t so readily available. The simple response to a “best rate” inquiry is, “If you wish to finance here, this is the rate that is available.” Nothing else should be added, because any further explanation will either create a legal liability or tip off the customer that there is something to be gained from pursuing the matter.

If the customer persists, the response should be, “Since I have no way of knowing what funding resources are available to you, I can’t make any judgment about what your best rate might be. You are free to explore your options, but if you wish to finance here, this is the rate that’s available.” The customer’s brother-in-law might be the local banker, so who knows at what rate he or she can borrow money.

As a quick caveat, stay away from discussions that tie, directly or by inference, the quoted APR to the customer’s credit history, because telling the customer the APR is based on his or her credit history is only partially true. Remember, the finance charge also includes the dealer markup at an amount based on the F&I person’s discretion.

So keep your responses simple and to the point, because any embellishments may imply that you are personally making a credit decision as it relates to the customer’s creditworthiness. In fact, adding a qualifier tagline like “and other factors” when discussing the quoted APR begs the question: What are the other factors? So, again, keep your response simple.

“If you wish to finance here, this is the APR (or money factor) that is available” does just what it is intended to do. It is to the point and free from any statement that would cause the customer not to seek a competitive comparison, as would be the case if the word “best” is used. The aforementioned statement satisfies both the legal and moral obligation to fully and accurately disclose the terms to car buyers who take advantage of the funding options you offer.  

David Robertson is executive director of the Association of Finance and Insurance Professionals. Email him at


  1. 1. CC [ January 24, 2015 @ 12:33PM ]

    I tell guests that we offer a competitive rate, and, as this article discusses, letting them know that doing business/financing at the dealership, the rate is what we can offer. The customer is always welcome to refinance on their own at the lender of their choice, but to complete the deal/ transaction today, this is the financing that we (the dealership) can provide for you. Also good to give your sales rep a word track to avoid a "best rate" discussion

  2. 2. Buddy [ January 29, 2015 @ 05:33AM ]

    As a customer, and a person familiar with cost accounting, I would disagree a dealer's F&I manager should receive additional compensation for doing his or her job. Customers purchase a vehicle at a dealership at a negotiated price. Price includes all dealer costs plus dealer profit or loss. The F&I manager is an employee of the dealership and his or her salary is one of the dealer's costs. Therefore, those costs are considered in the price. If the actions of F&I manager is to be an increase to the negotiated price it seems fair this should be clearly disclosed to the buyer.

    I doubt many buyers would agree to pay several hundred additional dollars for the F&I manager to spend a half hour or so preparing the paperwork or contacting the financing providers. Particularly in the age of instant communication via the internet. One might ask, why do dealers not attempt to charge a fee for the time of the salesperson, you spends considerably more time with the buyer?

    And yes a customer is always able to arrange their own financing. But really, the new car dealership does not finance the vehicle. So saying you offer a competitive rate is not accurate. The truth is you are offering a rate with a markup.

    As a customer, if the F&I manager was to tell me the buy rate and then tell me to complete the deal today I would have to agree to the buy rate plus a hefty markup the next thing the F&I manager would see is me walking away and the sales manager walking in to determine what happened. As any knowledgeable buyer knows there is always another dealer who may want our business a bit more!

  3. 3. Mike [ February 04, 2015 @ 07:29AM ]

    For someone to imply that they are familiar with cost accounting and then associate that to the compensation plans of an automotive dealer is like saying I understand the law so let me help you build a bridge. Obviously a clearer understanding on compensation plans that are atypical in most dealerships are needed for one to draw a conclusion as to whether or not an F&I manager deserves to not only make a living, but also, increase the overall profitability of a car deal. The simple facts are that the car dealer is in business to make money. So if the dealer can make money on the vehicle sale and then make some additional income in the F&I office, then he stands to be more profitable per vehicle sale. The second fact is that most F&I managers are on a commissioned based pay plan and don't have the luxury of a salary as one responder suggests. Clearly the intent of this article is to guard against using words such as "best" when discussing rates and prices to help protect people working in the automotive industry against the rabid lawsuit happy society we live in and to remind over exuberant F&I managers from putting themselves and their dealer in the line of fire with a poor choice of words.

  4. 4. Bubba B [ February 04, 2015 @ 11:26AM ]

    Buddy must not know that most dealers are able to secure buy rates below the rates published on bankrate dot com. Depending on the customer's credit score, employment, and assessed risk to the lender, the contract rate (with markup) is usually going to be right around a rate the customer is going to get from their local credit union. In addition, most dealers have solid relationships with the local credit unions and can sometimes pull some strings to get a rate for a credit challenged customer much lower than they could get on their own. Plus, I've never known an F&I manager on a set salary - they may get a small salary plus commission, but they have to have an incentive to sell. Although I will concede - I've seen plenty of deals where the finance reserve is upwards of $2K. Our max markup is 2% and California limits it to 2.5%, so our cap is below the state mandate (in a business hostile state like California).


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