F&I Potential
Used car dealers often view F&I as a pain-producing income center they prefer to leave to their franchise cousins. In fact, an in-house finance function can produce for a used car dealership just as it does for the used car department in a franchise.
While outsourcing the F&I process out may save you desk space, it can cost you half the profits plus a flat fee per deal and leave you with 100 percent of the legal liability to the lender and customer. For the same dollars you expend to outsource, you can hire a professional financial representative with revenue to spare and gain control of the F&I function altogether.
It’s a matter of minding your P’s & Q’s for Place, Personnel and Process.
Place
First, tour your facility. View it though the eyes of a customer. Where would you, as a customer, feel comfortable discussing your past credit? The answer to that question will lead you to the perfect office space for the finance center. It should be a place with a door that can be secured and have room for one desk, three chairs, a printer, fax machine, and forms. Forms are the inventory of the F&I office.
Personnel
Do you have someone already employed who wants to develop selling skills? Someone who works according to professional standards and shows a strong commitment to customer satisfaction? If you prefer to recruit, run an ad in the local paper or find someone employed by a local credit union who would like to make a career change. Many successful F&I managers have credit union experience and seem to excel at working with people who have had some credit difficulties.
Process
Now that you have a place and personnel, the next step is to locate lenders and establish a financial center process within your dealership. The most important part of the process is to ensure that the F&I professional can meet every customer at the point of purchase, not just at delivery. And sooner is decidedly better. In many cases, the F&I professional will need to conduct a proper credit interview, identify lending opportunities, and work with the sales manager to structure the deal for both the customer and lender. After all, a deal is only as good as the ability to get the contract funded.
Profit
The right place, personnel, and process will put you on the path to F&I profit. Remember that F&I is a sales position that also includes some documentation – and not the other way around. When you are tempted to put your F&I producer in a paper chase, remember that it takes more than one person to handle bookkeeping and title work requiring an audit trail and checks and balances. The focus of F&I is to sell and secure funding on deals.
If you do not have a dedicated in-house F&I producer, my recommendation is to hire one. If you do have one, invest in that employee’s education and your future. If you have a process in place, monitor performance. F&I can put the “cash” into Cash Flow faster than any other dealership function. It is a painless antidote to the outsource outflow.
Used Car Dealer Magazine, January 2005 Issue, p. 10