LAS VEGAS – Ron Reahard says he hated the finance and insurance manager at a dealership where he worked as a salesman.

“After he had a great deal, he’d come out and say how much he screwed the customer,” Reahard recalls of the manager. “He sometimes made $1,200 in 40 minutes. We floor sales people, making a flat $50 selling cars, were loath to turn customers over to him.”

When Reahard became an F&I manager himself, he took a decidedly different approach, one that treated customers fairly and educated them on vehicle financing.

“Selling is not about outsmarting customers,” he says at the F&I Management and Technology conference here. “The F&I sales process must add value, not aggravation.”

Dealerships have come a long way since the days when customers walked out feeling abused and bamboozled. But poor practices still exist.

“On planes, I hear a lot of dealership horror stories from fellow passengers,” Reahard says.

A good F&I manager helps customers understand the mechanics of financing (such as how lenders look at the way deals are structured), the effects of credit scores and advantages of down payments, says Reahard, now president of Reahard and Associates Inc., a training and consulting firm.

Dealership F&I personnel should be valuable to customers and be easy to do business with, he says. “If the process isn’t the way you would want your mom to be treated, change it.”

It’s fine to have a system of selling. “But processes, technology and menus don’t sell products,” Reahard says. “People do. Customers still have to ‘buy’ you first.”

His F&I taboos includes low-ball rates and payment packing, which secretly is inflating monthly car payments to make room for the selling and financing of F&I products.

Payment packing was once common. Now it’s illegal. “It’s a felony, like changing an odometer,” Reahard says.

F&I managers anxious to make a killing often end up shooting themselves in the foot. “Sell customers what they can afford,” he says. “Forty to 60% of those who don’t buy didn’t because we tried to sell them something they couldn’t afford.”

Dealerships should regularly evaluate their F&I products to determine which ones are most beneficial to customers. “An extended service contract doesn’t do well at a Lexus store, but a paint and dent-repair appearance package does,” he says.

Almost any F&I manager can get financing for customers with sterling credit. The challenge is in securing loans for people with less-than-perfect credit, he says.

Doing that requires talking to the customer about their financial situation, obtaining a credit-bureau report, determining debt-to-income ratio and confirming the accuracy of information on the credit application before it is submitted to lenders.

“Trust, but verify,” Reahard says. “Our job is to confirm that a customer who says he is making $4,000 a month is indeed making that. You need checks and balances.”

Technology can expedite the F&I process. But it can be a turnoff if a customer can’t see what an F&I manager is doing on the other side of a computer screen.

“Let them see,” Reahard says. “It’s not secret spy stuff.”

He recommends avoiding 10 questions, which he calls “profit and deal killers.” They are:

  • “What kind of payment were you looking for?”
  • “How much did you want to put down?”
  • “How much do you owe on your car?”
  • “What do you want to pay?”
  • “What kind of rate were you looking for?”
  • “What did you want for your trade-in?”
  • “Are we comparing apples to apples?”
  • “If I could match or beat their deal, could we earn your business?”
  • “If I could beat their rate, would you finance with me?”
  • “What kind of price/rate/payment were you thinking?”