Selling vehicles and selling add-on products for them are dealership processes that differ from each other so much “some people are amazed they take place in the same building,” says veteran finance and insurance trainer George Angus.

Showroom salespeople bedazzle customers by extolling the pleasures of owning and driving a shiny new car. Then F&I managers, while pitching protection plans and the like, talk about the grim possibilities of the car getting wrecked or breaking down.

“It’s tough selling F&I,” says Angus. But he offers these tips:

  • Make the presentation as easy as possible “or you won’t do it.”
  • Make it customer-friendly. “We sometimes complicate it so much, the customer doesn’t know what we’re talking about. What’s credit life? You die, it pays off the car. Don’t say: ‘In the event of an untimely death…’ Use your own natural way of speaking.”
  • Make it fast. Any product presentation past seven minutes runs the risk of “putting a customer in a coma,” Angus says. “Simple descriptions get customers to buy.” For example, a quick way to pitch paint protection is to say: “You’ll never have to wax your car.” 
  • Structure a presentation in a way that assumes the customer will buy something. “Insurance companies don’t ask if you want insurance. They assume everyone wants it in order to protect themselves.” Accordingly, an F&I manager might present three extended-service plans and then ask the customer, “Which one do you want?” rather than “Do you want one?”
  • Build credibility.

Government regulations require F&I managers to disclose certain things, including the base payments for a vehicle that are separate from the price of any F&I product.

F&I managers can use the required disclosure process to their advantage by performing it sooner than later.

“Do disclosures the minute the customer walks into your office,” Angus says. “Go straight to it. It breaks down sales resistance and builds your credibility. We were forced to do disclosures, then found out it helps us.”

He began selling cars in 1975, moving to F&I three years later. “Back then, we didn’t disclose anything. As far as we were concerned, the customer didn’t need to know.”

F&I wrongdoings still occur occasionally, but they’re no longer widespread, nor legally tolerated.

In a common past practice, dealerships slipped F&I products into a quoted monthly car payment, often without the customer’s knowledge. Called payment packing, it is illegal today not to present separate payment-plan documentation for the vehicle only. Federal Trade Commission regulators are on the lookout for dealerships that fail to do that.    

“One thing we’ve seen audited is the disclosure of the base payment,” Angus says at an F&I Management and Technology conference.

“They are looking for payment packing, and it’s easy to find,” he says. “Former (dealership) finance managers are being trained as FTC auditors. They know what to look for. An FTC guy said, ‘If you don’t try to deceive someone, you won’t have a problem with us.’”

Aftermarket product sales are gaining more importance as many dealerships shift their F&I-profit emphasis to them and away from auto financing.

That’s because the U.S. Consumer Financial Protection Bureau disapproves of dealer reserve, a prevalent way most dealers get compensated for arranging customer auto loans. The practice typically involves adding a percentage point or two to a lender’s so-called buy rate.

But as the CFPB calls for flat fees instead, Angus warns against dealers relying on loan markups as a primary revenue source.

“A Phoenix dealer had 67% of F&I profits coming from dealer reserve,” he says. “He said to me, ‘What do you think about that?’ I said, ‘Your house is on fire.’ Angus adds: “Top-performing dealers are moving to selling products. Dealers that did that are making more money. This is the trend. This is where things are going.”