Know your lenders’ priorities.
Do you know how well the business you send your lender is performing? Remember the relationship is a two way street, says Jo Ann Maruffo, a rep from GMAC’s western region. If your business performs well for the lender, the better your chances of getting the lender’s help when it’s time to re-hash a deal. You should always keep an eye on your “look to book” ratios with lenders to make sure you’re not sending too many deals that don’t get brought by a given lender, adds Gill Van Over, head of gvo3 Consulting. “Lenders want to buy paper that works for them” and they’re less likely to lend a hand on tough deals if they know you consistently shotgunned paper to multiple lenders. His advice: Track the kinds of deals each lender customarily buys - looking at credit bureau scores and debt-to-income ratios, to help insure you send contracts to lenders who are likely to approve it. “We get rate specials all the time” from lenders, says Dave Hanson, F&I director at Polar Chevrolet, White Bear Lake, Minn. The reason: The store knows what deals a lender will approve and ensures all customer info is accurate to avoid any lender surprises. In turn, lenders offer the rate specials as an incentive for the store to continue sending more business.

Establish a payment at your sales desk.
This is especially important given that your customers increasingly are focused on the monthly cost they’ll incur from buying a vehicle. Chernek notes that F&I managers typically cringe at the idea of sales desks quoting a payment - largely because it requires a greater amount of cooperation and collaboration between F&I and sales. In those stores, sales desks typically pull credit bureaus and, at a minimum, give customers a payment range based on average rates given to customers in similar circumstances. Bob Harkins, director of training at EFG Companies, Houston, says his client stores will give customers a payment and tell them it represents the average rate given to customers in their circumstances. The payment also comes with a disclosure of rate and term -and the caveat that the payment amount is contingent on a lender’s final approval, which is based on the customer’s credit track record. Joe Jankowski, COO of Baltimore - based dealer group Schaefer & Strohminger, says his stores cross-train sales managers on F&I to ensure they understand lender criteria and can quote accurate payments.

Have your F&I managers meet customers at the sales desk.
Customers are already wary of the so-called “black hole” your F&I office represents, says F&I consultant Ron Martin, head of The Vision of F&I, Inc. He and others recommend F&I managers meet customers at the sales desk, preferably in conjunction with the desk’s effort to pull credit reports and establish the customer’s credit worthiness. The meeting helps your F&I managers establish rapport and eases the transition when they go to the F&I office.

Beware of menu-pricing pitfalls.
As the concept of menu-based selling gains popularity in stores, the issue of including itemized pricing on menus is generating debate among dealers, regulators and F&I directors. At the moment, there’s no clear answer. State laws only require that, by the time a customer signs a contract, they know what they’ve purchased and how much they’ve paid for it. That said, some menu advocates suggest that, in the interest of helping customers understand pricing, that you itemize prices for products in a menu selection. They add that it’s important that before you begin your menu presentation, your customers understand the base payment required to purchase the vehicle and that your F&I products are optional purchases.

Audit your F&I business.
Jankowski’s stores require F&I managers, sales managers and clerical staff to sign off on a checklist for every deal to ensure each has a menu presentation form and all appropriate paperwork completed. In addition, sales managers interview each customer, querying them on the F&I process. The store’s business development center also gauges F&I performance, and the feedback gets directed to managers who review it with F&I managers in individual monthly meetings.

Sell based on customer needs, not your own.
That starts with a proper needs assessment by your F&I managers, says F&I consultant Ron Reahard, of Ron Reahard & Associates, Soddy Daisy, Tenn. Use open-ended questions to assess how a customer will use a vehicle, how they maintain it, etc. Customers who understand that your F&I managers care about them and their circumstances are more likely to buy than from those who sense that F&I managers are “just trying to sell something,” Reahard says.