4 old-school F&I tactics that experts say must go

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Some tactics F&I managers learned early in their careers are out of date, counterproductive or potentially illegal today, and managers must change with the times, F&I insiders say.

"I haven't done the same thing for 35 years," finance trainer Gerry Gould told F&I conference-goers this year. "I've been embracing what works."

Here are four traditional dealership F&I practices that experts say should get the heave-ho.

1. Hounding 'em till it hurts. Many F&I managers were taught to keep customers in the F&I office as long as possible and grind them down until they bought something, says F&I trainer Luis Garcia.

"If it works, it's not because the F&I manager is such a good salesman. It's just because we wore them out. That's not such a good salesman," says Garcia, vice president of sales and business development at F&I provider Safe-Guard Products International in Atlanta.

Nowadays F&I trainers are more likely to use a stopwatch to see just how fast an F&I manager can get a customer through the process. Sonic Automotive Inc., the nation's third-largest auto retailer, has said its goal is to get customers through the entire buying process, including F&I, in 45 minutes or fewer.

2. Packing payments. Some salespeople still quote customers an inflated monthly price so that if the customer accepts it, they can pack the deal with unwanted extras. The salespeople believe that's OK as long as the F&I manager discloses to the customer what went into his or her monthly payment at some point later in the deal.

That's wrong -- and naive, says F&I trainer George Angus. "It's the easiest thing in the world to identify," says Angus, head trainer for Team One Group in Scottsdale, Ariz.

He says any customer with a smartphone has access to a payment calculator and can easily figure out what the payment should be based on the amount financed, the rate and the term. "This happens," he says. "The customer says, 'Wait a minute, your payment is $100 higher than what my calculator says.'

"Dealers are concerned about this," Angus says.

Chernek: Use the phone.

3. Keeping finance face to face. Now that customers shop on the Internet, it no longer makes sense to refuse to discuss financing over the phone.

"The world is changing, but as F&I people we haven't quite gotten there yet," says Becky Chernek, president of Chernek Consulting in Cumming, Ga.

"Back in the '80s it was: 'Don't you dare even think about sending me a phone call to talk about financing. I will talk to that customer when that customer comes into my F&I office.' That's because they wanted to control the conversation -- control everything. But things are changing. We have customers who are buying vehicles, shopping vehicles online. They have questions as it pertains to financing."

4. Promoting products as "no extra charge." That's the way F&I managers were taught to pitch credit life insurance decades ago, says Charlie Robinson, COO of Resource Automotive in Atlanta, who was taught to use the pitch himself in the 1970s. The problem? It's not true: Credit life -- which covers the balance left on a loan if the customer dies -- is optional, and it adds to the monthly payment, he says.

Today, that approach could spell trouble. This year the Consumer Financial Protection Bureau directed Dealers' Financial Services in Lexington, Ky., to rewrite its disclosures to include the fact that aftermarket products are optional. In addition, the company also had to tell consumers that financing aftermarket products costs more than paying cash.

You can reach Jim Henry at autonews@crain.com.

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