When an F&I practitioner presents vehicle funding and owner protection options or discloses a contract, the customer almost always has questions. How the financial services practitioner answers these questions falls into three categories:
- The practitioner possesses the knowledge required to respond accurately and succinctly and does so.
- The practitioner is clueless and makes up something to placate the customer.
- The practitioner’s level of knowledge falls somewhere in between the two.
In the first case, the customer is told the truth, and in the second, the customer is told a lie. However, it’s the third situation — getting it about half right — that is the most prevalent. But it’s also the easiest to correct.
If you’re in the third group, you’ve no doubt experienced the following scenario: The customer asks you a question and you want to answer truthfully. However, you’re knowledge of state and federal regulations is spotty, or you haven’t read any of the documents you’re asking the customer to sign, or both.
Enter the disjointed “Elmer Fudd” response. You launch into a stuttering, meandering monologue, hoping that somewhere in this sea of words the truth will drift by. An astute customer quickly realizes that the answer to his simple question doesn’t warrant a long and convoluted explanation. In other words, he thinks you are full of it. And he starts to question every aspect of the transaction.
And that’s the good news. The bad news is, if you’re partially right, you’re also partially wrong, which means you may have inadvertently committed to benefits or performance obligations not supported by the contracts governing the transaction. It’s a customer hassle at best, a legal entanglement or regulatory agency action at worst.
The long-term solution is to expose yourself to the governing state and federal regulations in an academic setting, and familiarize yourself with the covenants in the documents you’re asking the customer to sign.
As a quick fix, identify the Top 10 customer inquiries. Then conduct the research required to develop simple and accurate layman’s language responses and add them to your work routine. Two examples are offered below:
TILA/Regulation Z Total Sale Price Disclosure: It’s always easy to tell whether the customer is paying attention during the contract disclosure when you get to the total sale price, because it’s the largest number on the contract. With the customer’s mind basically blown, this is not the best time for an extemporaneous soliloquy.
What you can say is, “This figure represents the total of the payments, the cash down payment, and the net equity in your trade-in. You paid $6,000 down, you had $1,500 net equity in your trade and you’ll make $42,000 in monthly payments to ABC Finance. For you, this is your total investment in your vehicle — your total sale price.”
Catalytic Converter and Emission Control Device Coverage: Vehicle service contracts typically don’t cover emission-control components. But because they represent a potentially expensive repair, prospective buyers often ask whether they are covered items. The correct answer might be “No,” but that simple answer isn’t conducive to the customer saying “Yes” to the VSC.
A more effective response would be, “Emission-control devices aren’t included because they are covered by a federally mandated — and in some cases, state-mandated — warranty, which in most cases supersedes your manufacturer’s warranty in months and miles. You will need to consult your factory warranty book or go online to confirm the specific coverage for your vehicle.”
Finally, a word of caution: There are various types of emission-control warranties, including performance and design, and defect warranties, that offer differing coverage, and months and miles limitations. They can vary by state as well. Don’t let your VSC pitch get sidetracked with a discussion on specifics, and don’t quote generalities that may not be applicable in your state.
If you’ll recall from Saturday morning cartoons, Elmer Fudd’s mission in life was to successfully hunt down Bugs Bunny. After countless episodes, he finally did — once. You’ll have about the same rate of success using Elmer’s approach in closing finance and aftermarket product transactions. Solutions are at hand, with happy endings all but guaranteed.
David Robertson is executive director of the Association of Finance and Insurance Professionals. Email him at [email protected].