One of the most frequently asked questions we get from both F&I and sales managers is, “Who should quote the rate and payment to the customer, and when?”


We did a study in this area and were quite surprised with the results. Our research philosophy is a simple one. We address each issue and area with no preconceived ideas. We simply measure the results of different techniques and methods, develop a training program, and share them with our dealer partners.


The quoting of rate and payment was one of the most controversial areas we have ever studied. Very competent, even brilliant professionals in the business seem to hold strong views in this area. The problem is that many of these top-performers radically disagree as to the best method and technique to use. Because of this disagreement, we conducted a study of top-performing dealerships. Many of you will not agree with our findings, which is OK. This study deserves your attention, however, because facts are facts and this information may be of great help to those of you who face a problem in this area.


Quoting Payment in Sales

There are many ways a payment can be quoted to the customer. It became immediately clear as we looked at these different techniques that more and more customers are buying cars with the payment being a major deciding factor. This makes it imperative that the payment become part of the actual sale of the vehicle. It also became clear that the salesperson must be able to quote the payment. Customers express a negative opinion of the sales process when the payment question is not answered quickly and honestly. Customers were very astute at recognizing any attempt to avoid this question. Therefore, we need a method that allows for the salesperson to deal with the payment question immediately. Even though this idea goes against much of the conventional wisdom, the results are overwhelmingly in favor of a system that allows the salesperson to quote payments. The question is: How do we do it?


The best results came from using a method we found in dealerships that are consistent top performers in sales, customer satisfaction, and F&I penetration and income. They created a small card for the salespeople or closers to carry at all times. It gives approximate payments for different amounts financed. The payments are based on 8 percent APR for 36, 48 and 60 months for new vehicles, and 12 percent APR for 24, 36 and 48 months for used. When the payment is quoted, the salesperson tells the customer that this payment is based on a standard rate, and that the rate will vary depending on credit criteria. These payments do not include additional products or services. Quoting a “loaded” payment creates a loss of credibility that you cannot overcome. It is also viewed as a deceptive practice without a complete Regulation Z disclosure.


This approach not only aided in the satisfaction of the customer, but resulted in higher penetrations and product sales for F&I.


Maintaining Credibility With Interest Rate

The simple rules with interest rate is to deal with it directly and openly. Waiting until you get to the contract to disclose the interest rate has proven to cost you and the dealership credibility, and it is extremely damaging to the customer’s opinion of the process. It is also counterproductive. Unless you are not disclosing properly, dealing with a negative while completing the contract disclosure will cause the customer to reevaluate everything on the contract and possibly rethink the products that he or she agreed to buy.


The best techniques seem to have some things in common. First is the ability of the F&I manager to obtain a credit report on the customer before he or she is turned over to F&I. With this information, the F&I manager can decide on the rate to offer and be prepared to have the rate discussed. Second, it is important that the rate be offered openly and written down. It seems that seeing the rate in writing gives it more credibility and causes less resistance.


Another thing we discovered in this study was totally unrelated. Some F&I departments have changed from introducing the F&I manager as “the business manager,” to calling him or her the “financial services manager” or “lender representative.” These introductions created tons of sales resistance in cash customers. “If I’m paying cash, why do I need to see a financial services manager?” I don’t know who invented these new titles but they didn’t do much research. “Business manager” or “customer business manager” works just fine.


George Angus works with Team One Research and Training, a research and training company that specializes in scientific, research-based program development and training programs for the automobile industry. Those interested in speaking with him can call (800) 928-1923.