Categories
Dealership Training

Creating a Culture of F&I

Contributing Author: Steve Roennau Vice President Compliance EFG Companies
Contributing Author:
Steve Roennau
Vice President
Compliance
EFG Companies

Q4 is here and that means it’s time to reflect on where your business is today and plan for what lies ahead in 2016. Many dealers not only forecast their future business, but also develop plans to create a cohesive team and workflow between all functional areas of the dealership.

Everyone knows the F&I department is an important driver of profitability – they get deals bought, sell profitable protection products, and ensure the delivery of the vehicle. Successful dealers don’t just think of F&I as a department, rather they adopt a culture of F&I throughout the dealership.

A culture is a way of life of a group of people – the behaviors, beliefs and values that they accept and pass along. As a dealer, do you understand the benefit of having your sales and service teams adopt an F&I culture? Where the employees believe in and accept the value of the F&I process and products as a way of doing business and impart it on everyone in both the showroom and service drive?

It’s obvious for dealers to see the value of training your sales team on F&I products.

Your sales people know many of their customers today work on a tight household budget. With a culture of F&I, they also know how a VSC helps them stay within that budget when their car unexpectedly breaks down. Or, that GAP protection will ensure customers can pay off their vehicle in the event of a total loss.

Categories
Compliance

Rolling with the Times!

Karen Klees, Certified Consumer Credit Compliance Professional, EFG Companies

 

Contributing Author: Karen Klees, Certified Consumer Credit Compliance Specialist, EFG Companies

Recently, U.S. Bank issued a letter to its dealer partners describing the Bank’s policy in regards to fair and responsible lending. Well, that in itself is not news. Lenders have been issuing letters of that nature for the past few years. However, this letter did mark a significant milestone in the CFPB’s regulation of the automotive industry. In this letter, U.S. Bank became the first lender to explain a monitoring program with a heavy focus on how F&I products are priced and sold.

To date, dealers have had substantial leeway with F&I pricing practices. The only minor cap dealers have as far as marking up products is concerned, is how much money lenders are willing to fund. So, it’s natural for dealers to pucker when a lender like U.S. bank says they are watching for potential discriminatory practices in F&I.

However, from a lender standpoint, U.S. Bank is taking proactive steps to protect itself before any regulatory decisions are made. And, it’s possible that other lending institutions may follow suit, especially those who’ve already felt the influence of the CFPB.

As a dealer, you could simply say “Good Riddance!” to any lender who tries to restrict F&I product markup. However, you could be losing quality lenders in the process. And, then there’s the potential eventuality that the CFPB will have all lenders monitor F&I product pricing. Rather than purely reacting, a better option might be to begin the process of preparing your dealership now for industry trends that could impact your business.

Categories
Compliance F&I

Are You In Control of Your Profit Potential?

Karen Klees, Certified Consumer Credit Compliance Professional, EFG Companies

 

Contributing Author: Karen Klees, Certified Consumer Credit Compliance Professional, EFG Companies

If you’ve been paying attention to industry news, you probably know about the Federal Trade Commission once again setting its sights on add-on products. While large industry players expected this on the heels of the CFPB’s increased oversight into auto lending practices, many dealerships looking to make up for lost dealer reserve with the sale of F&I products are looking to tighten up their policies and procedures.

If you haven’t already begun re-evaluating your compliance procedures, now is the perfect time! While there are many elements to consider as you review your current policies and procedures for your existing product offerings, there is an upside. When sold in a compliant manner, F&I products provide dealers the ultimate control in their profit potential.

This being said, applying compliance standards and scrutiny to your policies and procedures is growing in importance.  A recommended starting point, as you evaluate your product offering, is to ask a simple question:  Do your products’ benefits fulfill a real and mathematically calculable customer need? 

Starting with this premise, here is a checklist to perform due diligence: