Selling F&I Without The F&I Manager

Autoline Detroit recently had an interesting segment in which they interviewed three people from the retail side of the automotive industry – specifically, the “F&I” (finance and insurance) part of car buying.

After you agree on the car and pricing, the salesperson usually hands you off to the F&I manager’s office, which is where the lease contract is prepared and signed, and F&I products (excess wear and tear protection, GAP insurance, prepaid maintenance, etc) are sold. It’s often the least pleasant part of car buying, so it’s interesting to hear these folks talking about their industry and trying to justify their existence.

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Here it is folks…a cynically staged bull shit attempt to make a silk purse out of a sows ear or how can I convince the customer that an over priced almost useless and expensive add-on at the last minute is a worthy thing to purchase. These products are low in value and high in price, they are extremely lucrative to the dealership or they wouldn’t be offered via high pressure deceptive sales tactics.

I sometimes have to remind myself when watching a video like this, that we (users of this site) are not the vast majority of customers. We know what we want, we are chasing a deal, we understand the finances, the F&I offerings, and want zero nonsense but are willing to tolerate it if we still get the price we want.

My experience more recently is that many of the products in F&I are actually useful these days, but that I’m so focused on walking out the door with the bottom barrel number I negotiated by email, I’m unwilling to take it on principle. That isn’t the type of customer a dealer can or should plan for.

I actually think an F&I person is necessary unless you completely upend the process and fill it with sales folks that are experienced, well-educated on every aspect of the process (product, selling, administrative process etc), and understand how they can manipulate the various aspects of the deal. And yes, you have to pay those sales people more than you do now, because otherwise, where is the motivation to put up with that nonsense? Hard to do that when so many deals these days are mini’s if not significant losers. Plus, as some of our most popular dealer participants here will tell us, not every dealer or sales person can make it up on volume.

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Aside from not buying insurance unless absolutely necessary (there is a reason Warren Buffett owns so many insurance companies!), the biggest tip off was the first time when the F&I guy lowered the price every time I said no…three times! It was like listening to Mustafa in Austin Powers!

While it pays off when you need it (as does all insurance), you really need to have bad luck with your car (or treat it like garbage…why lease a new car then?) to make it worthwhile.

Having said that, everyone of my clients falls for the f&i garbage despite my pleas to say no!

If they made sales people try to hard sell on these extra products than they wouldn’t be able to sell any cars except to the ones who will stand for that s**t.

They need to make it a good cop bad cop scenario too, where they brush the rubbish to the F&I. I helped my buddy with a deal where he was purchasing a car, and when he went in to sign papers on his day off, they kept him in their and tried to raise the price on his car by 30%

I fully agree that F&I tactics leave a lot to be desired. I went in planning to buy wear n tear based on a long history of leasing so I didn’t feel taken (after I negotiated it way down) but the package was worth it because of tire replacement and curb rash alone that was more than the cost of the package. If I had lost a key it would have covered that too. They’re crazy expensive.

Do F&I managers make any money from leasing (buy rate, no MF mark-up) if you decline all products? Recall reading somewhere that GM Financial pays a $200 “flat” for each lease.

Fascinating stuff…

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Every store is different. Our store pays $0 if they don’t sell anything. No flats. Our finance also doesn’t get paid on reserve (rate)

True. Cody at Tustin Toyota has a much discounted rate for us. I actually bought the tire and wheel~ and have exercised it appropriately. No complaints.

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