Lessening the struggle for F&I income

You’ve heard it many times, F&I is “found income,” and it most certainly is. It’s income you can generate without the need for a floorplan; there’s no inventory to do each year; and the shelf life of the products is better than even the late great Hostess Twinkie. It can also be one of the most challenging profit centers to manage and maintain. The position itself can be extremely challenging to fill, especially in smaller market areas. Even in the larger markets, I’ve heard dealers complain about the difficulty in finding the right person for the job.

Regulations affecting this department are abundant on state and federal levels. Sadly, many dealerships aren’t aware of all the regulations they must comply with due to the fact that they operate a finance department within their dealership. It follows, then, that they aren’t fully aware of the penalties that can arise from this non-compliance.

On the plus side, this department can potentially offer the highest return on investment to the dealership on a square footage basis. The products sold, such as extended service contracts and prepaid maintenance, offer additional benefits to the store in terms of new business to other departments. This “link” of customer to dealership can provide financial benefits to the store long after the initial sale to the customer.

It’s likely that most of you know this. Some of you may already be reaping the rewards of a successful F&I department; others are probably looking for ideas on how to improve your current operation. With that in mind, I’d like to share with you the top three things that the most successful dealerships all have in common when it comes to F&I. I’d also like to give you some ideas to keep in mind when either evaluating your own department or building a new one.

Let’s take a look at those successful operators and what they have in common:

They have very strict sales processes. Each and every customer is seen by the finance office prior to leaving the dealership to arrange for their own financing. Finance managers conduct an interview, present the offerings and provide an alternative to leaving for their own financing. For those customers paying cash or using in-store financing, an interview is done to plant seeds on products and lay the groundwork for a proper menu presentation later.

They have strict payment quoting processes. Sales managers don’t quote the lowest rate and maximum term to each and every customer. The finance and sales managers have discussed what the “average” rate is for the dealership and an “average” term that is available to most customers; these are then used in payment quotes. That lenders utilize credit scores to determine rates for each customer is also explained.

A menu is utilized in every transaction. Not only is a menu utilized, but objections are handled. At times, finance managers will jump at the chance to sell one product and not address objections to others. Successful dealerships have finance managers who work to overcome every objection.

What can you do to either build that successful finance office or rebuild the one you have? In addition to what the top operators are already doing, please also consider the following:

Have the right people in the chair. Just because someone has a finance background or did well on the show floor doesn’t mean they’ll be a good F&I manger. The best candidate isn’t afraid to handle objections when they’re raised. Be sure the person you have isn’t afraid to ask for more, even when they’ve already asked for everything.

Make the transition from sales to finance smooth. Make sure the payment quoting process is agreed upon by both the sales and finance managers. I’ve seen many sales departments quote the lowest payment possible to people who don’t actually qualify for it and wonder why their finance department can’t make a profit.

Plant the seed. Make sure you have a process in place to “plant the seed” about your extended service contracts and pre-paid maintenance programs. It makes a huge difference in your product penetrations when it’s not simply the finance department trying to sell these products.


Have a good mix of lenders. Constantly look for new lenders but maintain a close relationship with just a few. There are many different sources that allow you to work with multiple lenders simultaneously; search these out. Local credit unions are also great because you’ll have the ability to move some customers with questionable credit backgrounds.

Use a menu. I don’t need to go into a lot of detail when it comes to menus. If you’re not using one, ask yourself why and ask yourself why the majority of dealers do use it.

Video record your transactions. As long as you post signage and gain your customers’ permission to do a recording, it’s legal. It’s also the best training tool around bar none. Watching your finance manager present products and handle objections will give you a clear understanding of any issues you might be having. It’s also a great resource in the event that a customer should challenge you on something that may or may not have been said during closing.

Similar to the other departments in your dealership that require more than “one” thing to be successful, successful F&I requires multiple processes, people and procedures to truly maximize it’s potential for any dealership.

Peter Jones is an industry trainer and consultant as well as founder of Peter Jones Powersports. He can be reached at peter@peterjonespowersports.com or 904/742-3080.


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