There's a shocking amount of paperwork that must be filled out exactly right for each finance and insurance transaction. And there are even more shocking consequences for getting it wrong.
Northwood University is helping aspiring auto dealers and managers deal with the assault head-on.
Students come in "thinking it's so simple," says Julie Becker-Myers, 34, director of automotive systems technology at the Northwood campus in Midland, Mich.
She teaches a 15-week F&I course that culminates in certification by the Association of Finance & Insurance Professionals for those who pass the AFIP exam.
Becker-Myers says that even students who grew up around a family-owned dealership are surprised at how strict the rules for F&I compliance are and how common the mistakes. That's one of the reasons she has students role-play through F&I transactions.
Becker-Myers talked about teaching F&I with Special Correspondent Jim Henry last month.
What attitude do most of your students have about F&I?
It's interesting that they go into this class thinking it's so simple. Fill out one thing and they're done, right? But then they learn there's this form, then they go to that form, and that form, and that form.
I tell them: "We are our own worst enemy. The reason why we have all these rules and regulations is because our predecessors didn't do this. They lied, they hid things. That's why we have to do all this."
The paperwork comes as a surprise?
A lot of our students are sons and daughters of dealers, and so they've been around dealerships. But the biggest issue -- they're so surprised by this every time -- is all the regulations, every issue that can come up that can really get you in trouble.
If you've ever bought a car -- anybody who's ever bought a car -- you've probably heard somebody say, "That's the best payment I can give you." Well, you actually can't say that to a consumer. The word "best" is what gets you in trouble.
What do you teach them to say?
What you should say is something like: "Based on your qualifications and the lending companies that are available to me." Because if you say, "The best I can get you is $500 per month," who's to know? Is that based on one lender? Five? Ten? The customer could take that and go to other dealerships or other lenders.
And the customer can make a complaint, if somebody beats what was supposed to be the best price?
Yes, you can. There are so many tons of regulations. That's where it becomes scary, I think. Here's another problem. If you say, "This is the best payment I can give you," is it the same figure that the salesman gave the customer on the sales floor? The same figure they got in the box -- the F&I office?
Some students go home to their dads and find out that back at the dealership, they didn't know you couldn't do this.
How does one go about teaching F&I? Is it all about future technologies, or is it about using what's available today?
Definitely, we do talk about what's going on today.
We concentrate a lot on regulations, especially with regard to any potential problems that can result in fines and things like that, which as you know there are a lot.
But you do talk about future technologies, such as putting everything online, for example?
We have to limit it at some point. We can't talk about every idea that comes up. We also try to talk about some extreme ideas. Some are probably going to prove to be good ones, and some aren't.
What's one of the wackier ones?
We have seen a dealership -- I think it was in Iowa -- which agreed to take grain in trade. Then the farmer showed up and just dumped all this grain, and they didn't know what to do with all this grain in the parking lot.
Do you look at case studies?
We do look at some case studies. More to the point, we do AFIP certification, so in doing that we are usually on top of the latest changes.
The way I teach the course, the way I teach F&I, is more scenario-driven -- the things you can say, the things you can't say. We do more in the way of role-playing, rather than case-study-driven. When you take the AFIP certification test, it helps to be able to ask yourself, "If I said that to a customer, would it be OK?"
Does everybody get certified?
When you graduate from here, employers say, "Wow, you're AFIP-certified already? A lot of my employees couldn't do that." This year we had the highest percentage pass that we've had. This past fall it was 84 percent.
Are all your students on their way to a dealership?
They usually have some aspiration to be a dealer principal. Some want to work for an OEM, some for a lender. But they see here the costs of not watching to make sure these regulations are being followed. Think how much lost money it could represent.