F&I goal: Leave no cent on the floor

Paw Paw (Mich.) Cycle known for its F&I

By Dave McMahon
Senior Editor

Justin Rzanca, finance manager at Paw Paw (Mich.) Cycle, takes an approach to selling F&I and warranties that would delight any dealership owner. Rzanca began his tenure at the dealership in 2003, working in sales. He moved into his newest position in 2008, and has found that life on the back end of sales is supreme.

“Financing is more fun than the sales part of it. Let the salesmen do the ‘not fun’ part at the beginning and let me do the fun part at the end. I like that part,” the 28-year-old Rzanca said.

Rzanca brings a competitive nature to the showroom floor — and the finance office — that gives him the drive to attempt to bring the dealership as much profit as possible. One previous finance staffer at Paw Paw Cycle called the dealership “definitely one that doesn’t leave a cent on the floor.”

Increasing F&I sales as much as possible is an uphill battle from the second the customer says “yes” to the sale. But it doesn’t have to be that way, Rzanca says.

“They’re going to tell you ‘no’ 70 percent of the time [after you ask them if they want specific F&I menu items],” Rzanca said. “You’ve got to change their mind — somehow, some way. Make them think they’re crazy for not getting it — that’s kind of what I do. I act pretty surprised when they don’t want it, and a lot of times they’re pretty surprised that I’m pretty surprised that they’re not getting it. That raises the customer’s eyebrows, and then things start going our way.”

To make things even more interesting, Rzanca, at the time of the interview for this story, was the dealership’s lone salesman.

“It’s real different for me now because I’ve got to put two different faces on,” he said. “I’ve got to sell it to them, then I’ve got to tell them these things are bullet-proof, and then bring them into my office and tell them they need a warranty.”

Revenue stream
Paw Paw moves 300-350 units on average per year, down from 800 in its heyday. Finding a way to capitalize on those sales through F&I provides the dealership with added revenue.

“It’s extremely important to our bottom line,” Rzanca said. “You can make a good portion of profit on it. If you’re not approaching F&I and warranty the right way, you could be losing $400-$500 a deal, I would think.”
One of the best ways to boost the F&I segment is to encourage financing with the purchase.

“We offer everything, and I think you have to offer everything in order to sell the stuff. At a lot of places, they’re scared to ask for it,” Rzanca said. “You have to push people to finance and get the cash buyers to switch to finance. The big thing is don’t be afraid to ask the customer.”


Breaking down F&I
Rzanca broke down a potential F&I sale to a would-be customer.

Warranty. “Start with the warranty and explain to him what comes with the warranty. Explain how much a 60-month warranty would cost, or whatever the longest term is you can go. I usually break it down per year how much it would cost him and give him the smaller number. Always try and sell the smaller number. If it’s $150 a year, explain it to him that route. If he doesn’t like that, then ask him about a four-year, then a three-year, then a two-year, then a one-year and go from there.”

Maintenance. “I move on to the maintenance program next. Ask them what they’re planning on for maintenance. We do a one-, two-, or three-year maintenance program, depending on what’s in the owner’s manual.”

Life insurance and disability insurance. “Explain what they cover and tell them how much it changes their payment.”

GAP insurance. “Once again explain what it does, especially if they’re buying a new product, because the value of its drop considerably at the beginning of the loan. If something does happen to product, you’re still going to owe some money on it. The $595 you spend on it could save you $3,000-$4,000.”

Accident. “Explain what it does and how much it changes the payment.”

Tire warranty. “Explain to them that if they get a nail in the tire, they get credit back depending on how much tread life there is on the tire. Or if you hit a curb and dent your rim, you get a new rim.”

Theft insurance. “I’ve had it work multiple times where the customer actually gets double paid. If you have full coverage on an ATV, for instance, and it gets stolen, your insurance gives you $5,000 and the other one will give you another $5,000. Now you’ve got $5,000 toward the purchase of your next four-wheeler or bike.”
Rzanca has found that many of the dealership’s customers mistakenly assume that interest rates for loans are in the 6-7 percent range.

“They don’t realize what’s out there, so you have to get that across to them,” he said. “We have some 0 interest loans, some 0.9 percent. The 0 percent are easy to sell — just tell them to keep their money in the bank and borrow somebody else’s for free. They also don’t realize there are 1, 2 and 3 percent rates available.”

Regulations increase
Governmental regulations of F&I transactions continues to rise. Rzanca knows all too well the paperwork involved in keeping several governmental branches appeased.

“They’re constantly putting stuff out there,” he said. “It’s like doing a mortgage when I’m signing somebody up nowadays. There’s 3,000 pieces of paper and we have our pieces of paper just to cover [the dealership] on top of those pieces of paper. The owner’s got me signing 15 pieces of paper for one thing, but we’re covered pretty good, that’s for sure. It’s all for good reasons.”

The proof at Paw Paw Cycle is in the bottom line.

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