Selling Lenders on F&I Products

By Denny Sims

The goal of the F&I office is to sell a customer on a product, but in today's reality it's the lender that needs to be sold. F&I expert lays down a five-step plan for making the dealership's F&I products more appealing to the lender.

With auto sales plunging to a 15-month low in June, maximizing profits on every deal is the challenge every dealership faces in today’s tough economic climate. In other words, this is not the time to dwell on how tough it is out there.
One of the most common challenges I hear from business managers across the country is that lender policies unrealistically cap the advance amount on certain F&I products. Some finance companies are even refusing to advance on certain products. Make no mistake about it, this is a challenge but it is not necessarily an uncontrollable one.

In order to understand the lenders' reasons for this policy, we must first ask the question, "Why have lenders adopted these policies?" The question really answers itself when we consider the way we priced F&I products in the past. As a result, many dealerships are now setting maximum and minimum selling prices to insure higher product penetrations, compliance with lenders, and to show the consumer greater value.

A successful product sale is achieved because the customer sees the value is equal to or greater than the cost. However, the lender is, in essence, the ultimate buyer of what we are selling for the term of the loan. The first thing we need to do is show lenders that allowing the customer to choose these protections and conveniences is worth their risk in advancing for the product. We need to do this for all F&I products.

We need to step up and become better business managers rather than having no business being managers. We sometimes accept situations as uncontrollable, when, in fact, there are proactive things we can do for our dealership. Understanding this lender-created challenge we must determine what attitudes we need, what solutions are viable, and what actions we must take to overcome these obstacles. With that said, let's discuss the practical solutions and proactive actions we need to take.

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Tags: Automotive Finance F&I Finance & Insurance