Jensen, based in Phoenix, is chairman of the CBA auto finance committee. He asked the panelists to weigh in on the sale of F&I products, but didn't get much of a response.
"As long as they're offered in a transparent manner ... the customer should be free to buy it," said Andrew Koblenz, general counsel for the National Automobile Dealers Association.
Automotive News Special Correspondent Jim Henry followed up with Jensen after the panel discussion.
What do you mean when you say F&I products are an issue for lenders?
The difficulty you can have is when it adds too much.
Loan-to-value ratios include some room to add products, don't they?
Yes, and we do that, too. We're trying to keep to our LTVs. I mean, we're interested in doing more business, too. We're trying to approve more transactions. The dealers need to realize it can be more difficult (if they add too much).
Dealers must have a pretty good idea of whether they're over the limit on a particular vehicle, don't they?
We're looking at the value of the vehicle, of course, but there are other things in there, too. Tax, license and title can add significantly.
Regulators seem to be going after product sales. For instance, there's talk of a new format for disclosing the annual percentage rate where you disclose the financing for the products separately instead of rolling everything into a single number.
It's everything: the profit margin, the cost of financing, whether it's financed, and the financial stability of the folks that are offering those products. I certainly get why dealers offer these products. They're profitable, and that (making a profit) is not always easy.
Is this phenomenon a bigger problem for subprime customers than it is for prime?
If somebody is really trying to stick to a budget, it could be. What happens, and what we'd like to avoid, is the bank is in the position of saying, "No." Meanwhile, the dealer wants to sell it. The customer, who has listened to a presentation all about the features and benefits, wants to buy it. And like I said, we really want to do more deals, too.