F&I’s High-Value Role in the Dealership

“People don’t like to be sold, but they love to buy!”

— Jeffrey Gitomer, The Little Red Book of Selling

The real key to success in any endeavor is to become valuable. The more valuable you are, the more successful you become and the more money you make. Want to increase your income? Get promoted? Own your own dealership? Then become more valuable.

Your ability to sell products — and ultimately your income — is tied directly to your value to your dealer, the sales department, your lenders, and most importantly, your customers.

I can always tell when I’m in the presence of valuable F&I managers. I can tell by the way they treat customers, by the way they treat their lenders and by the way they treat their teammates. Their primary goal in every interaction is to help the other person, not just themselves.

Support the Dealership, Train Your Teammates

Certainly, an F&I manager’s income per retail unit determines to a great degree his or her value to the dealership. However, customer satisfaction with the F&I experience also dramatically increases (or decreases) an F&I manager’s value. No matter how much income an F&I manager generates, no dealer today will tolerate dissatisfied customers. Successful dealers know it’s not just about making a lot of money one month; it’s about creating customers for life.

You greatly increase your value when you help protect the dealership. This is done by ensuring everyone is familiar with the laws and regulations regarding credit information, payment quotes and interest rates. Everyone involved in the sales process is responsible to comply with Reg. Z, Reg. M, the Sherman Antitrust Act, the Gramm-Leach-Bliley Act, the Patriot Act, the Equal Credit Opportunity Act, the Credit Practices Rule, the Fair Credit Reporting Act, etc.

Not only must F&I professionals be familiar with these laws and regulations, but they should continually train salespeople and managers to ensure they are also in compliance when obtaining a credit application, pulling a credit bureau report and negotiating the sale or quoting payments. A huge part of being a valuable F&I professional is continually training your teammates to protect the dealership from potential litigation.

One of the best ways you can increase your value to the dealership is to become AFIP Certified by the Association of Finance & Insurance Professionals. The AFIP Certification Program consists of college-level courses focusing on the federal and state regulations that impact every dealership and F&I manager on a daily basis. These courses are designed to ensure F&I professionals are familiar with the legal and ethical guidelines they need to know to perform their job within the confines of the law. AFIP Certification clearly demonstrates your commitment to your profession, intent to comply with all laws and regulations, and ability to conduct yourself in accordance with the highest standards of ethical conduct.

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Interview Customers, Analyze Credit Reports

As an F&I professional, you have a responsibility to your dealership and the sales force to obtain an approval for every deal possible. You become extremely valuable to your sales managers and salespeople when they perceive you as someone who will do everything possible to put a deal together, hold a deal together and protect the front-end gross profit. You should help them sell cars by obtaining acceptable financing for customers, even those with less than perfect credit.

The F&I office is responsible for evaluating the information contained in the credit bureau report. This assists the sales department (and the customer) in structuring a deal prior to submission to a lender and increases the chance of receiving an approval. You become a valuable asset to your sales team when you can answer their questions and educate them about what lenders look at when evaluating a customer’s credit. It’s critical for you to be able to assist them in structuring a deal to help obtain an approval.

A credit report reveals many aspects of a consumer’s borrowing activities, and all are considered, to some degree, when a lender evaluates credit risk. The key to analyzing a credit report is to know what the primary indicators of risk are, so you can assist lenders in identifying the relevant predictors and assessing the potential risk, and help them justify approving a loan or changing a tier level.

Interviewing every customer prior to submitting the application to a lender allows you to learn the circumstances and details surrounding any adverse credit information disclosed by customers or revealed by their credit bureau report. This helps you increase your chances of obtaining an approval. You must paint a picture of the customer that will allow the paper buyer to justify approving the loan, despite the negative aspects of the deal.

Be Honest, Ethical with Your Lenders

Lenders are in business to approve as many qualified retail deals as they possibly can. There are many factors that influence your paper buyer’s decision, many of which relate to your own personal code of ethics. When you develop and maintain a professional relationship with every lender, based upon honesty, integrity and mutual respect, you become a valuable part of the credit evaluation process.

It is critical that you know what is important to your paper buyers and what guidelines they use to evaluate deals, so you can accurately anticipate their response and structure the deal in advance to ensure an approval. It’s essential to use the customer interview and any necessary support documentation to provide the paper buyer sufficient reasons to justify an approval.

Keep in mind, your lenders never see the customer. All they see is a computer screen with the customer and vehicle information input from the credit application, an on-screen version of the credit bureau report, and their own internal credit scoring system. By learning the details surrounding any adverse credit information, you become a vital component of the decision-making process.

As you evaluate a credit application prior to submission, the customer’s past isn’t the only factor. What’s more important is his or her current financial situation.

In addition to the credit score obtained from their credit bureau reporting service, most lenders today also utilize an internal computerized scoring system. This assigns different numerical point values to various aspects of a customer’s individual characteristics to determine their credit worthiness.

Virtually all of these factors can be found on either the credit application, the credit bureau report or the buyer’s order/deal sheet. Regardless of the scoring or evaluation system a lender uses, the customer interview and proper deal structure will allow you to compensate for weak areas by emphasizing the customer’s areas of strength.

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Above All, Provide Value to Customers

The most important part of any F&I professional’s job is to help every customer. That means helping customers with good credit, customers with bad credit, cash customers and customers who want to finance through their own bank or credit union.

You become valuable when you give value first, not when you try to add value later. Give your customers information that they can use, without any expectation of financial return. Let them know your service department hours, and that you provide free shuttle service if they need to drop their vehicle off for repairs or maintenance work. Make sure they know exactly what is, and what is not, covered by the factory warranty.

You add value to the customer’s F&I experience by confirming that all information on the purchase agreement is correct, and by reviewing the credit application, to enable you to arrange attractive financing. You add value by helping customers understand the criteria a lender uses to evaluate credit. It doesn’t matter whether they’re financing through the dealership or paying cash, whether they have perfect credit or horrible credit. If you pull a credit bureau report, you should review that report with the customer.

Ensure the information in their bureau is correct. Educate customers about the reasons for their score, and how their score helps determine the interest rate they qualify for, based upon their tier level. If there is incorrect information in the bureau, you also add value when you provide the customer with information on how to dispute credit reporting errors.

Today, identity theft and credit fraud are huge problems. You should educate customers who have not obtained a copy of their report within the past year that when thieves steal someone’s identity, they look for someone with good credit. Thieves also look for people who don’t check their credit on a regular basis. With their excellent credit, it’s something they really should do at least once a year to ensure someone is not fraudulently using their credit and ruining their good name.

By giving value without asking or expecting them to buy anything, customers recognize you are trying to help them, not sell them. Customers appreciate having someone take time to review the options, answer their questions, and help them make an informed decision with regard to those options; they resent having to listen to a sales pitch.

Helping customers demands that you seek out, with eagerness, reasons why they need each and every one of your products, and helping them see how those products will benefit them. If customers trust you, believe you know what you’re talking about and feel as if you’re genuinely trying to help them, they will value your knowledge, expertise and input.

A valuable F&I manager protects the dealership, is AFIP Certified and helps ensure compliance by everyone involved in the sales and F&I process. He or she also ensures every vehicle sold gets delivered, and the front-end gross profit remains intact. A valuable F&I manager helps lenders approve as many deals as possible by providing them with the information they need to make favorable decisions. He or she also creates an atmosphere where customers want to buy by adding value to the F&I process. Valuable F&I managers don’t just make a sale, they make a friend.

Ron Reahard is president of Reahard & Associates Inc. His workshop “Quoting Payments: The Rules, Risks, and Getting It Right!” was featured at the 2005 F&I Conference and Expo in Las Vegas. To obtain a free copy of the handout “How To Dispute Credit Report Errors,” and “Answers To Your Questions About Credit Scoring,” contact Ron at 866-REAHARD, or [email protected].