F&I Managers Can Boost Profits by Partnering With Lenders

Dealers who work with lenders’ sales representatives rather than rely solely on digital platforms make financing more efficient and can boost a dealership’s profitability, Patrick Roosenberg, senior director, automotive finance intelligence at J.D. Power tells Wards.

The 2023 J.D. Power U.S. Dealer Financing Satisfaction Study found that 77% of dealership finance and insurance teams say in-person meetings with sales reps are the key to increased business with lenders.

The survey was fielded from April through May 2023 and is based on responses from 3,552 auto dealer finance professionals.

“What all the dealers are saying in one large voice (to lenders) is (that) we want you in-store, but you have to bring value,” he says. “Dealers get a higher level of service and hopefully become more profitable.”

Dealers should look for lenders who are prepared to dig into a dealership’s specifics, not just stop in for quick meet-and-greets. Dealers also find lenders that clearly communicate time-saving current and upcoming programs are solid choices for their customers.

“A lender has to say this is bank A’s value proposition,” says Roosenberg.

That includes loan terms, interest rates, the advance and dealer compensation, as well as areas a lender specializes in.

Knowing those kinds of details saves time. For example, if the F&I team knows a lender handles only super-prime, it won’t send the lender prime deals, he says.

Sharing a lender’s value proposition is a crucial step for Southeast Toyota Finance when its associates meet with dealer customers, Nick Funsch, assistant vice president of sales at Southeast Toyota Finance tells Wards.

Southeast Toyota Finance was top for overall customer satisfaction in the Captive Mass Market – Prime category in the J.D. Power study. Its score was 901 on a 1,000-point scale. The segment average was 731.

Its representatives also share information about programs that may be valuable to the dealer, says Funsch.

“Through this quick step, the manager is able to gain an understanding of one another’s intentions and can establish if they are both trying to accomplish the same objective,” he says.  

This is not always the case; unfortunately, far too often, sales reps don’t educate dealers, says Roosenberg.

Sharing Expectations Works Both Ways

 Of course, dealers must share their expectations for value during meetings.

“If a dealer’s sales slow, they are going to want to maximize the deal flow,” says Roosenberg. “They can do that by knowing who the best [lender] is for each deal.”

Knowing more about its dealer customers allows Southeast Toyota Finance to build initiatives tailored to their needs, including loyalty programs, college graduate and military rebates programs and innovative financing, says Funsch.

There are red flags in the dealer/lender relationship. An F&I manager should be cautious if a lender’s representative isn’t balancing the dealer’s situation and the transaction needs, such as supporting a customer with affordability concerns, says Funsch.

“At Southeast Toyota Finance, our company focus has always been twofold -- to support our customers and get them behind the wheel of their dream vehicle while providing solutions for Toyota dealers in the region to serve their customers better," he says.,

Artificial intelligence and machine learning are playing an ever-larger role in the loan adjudication and approval process, and dealership finance teams must become more comfortable with such technology, Roosenberg says.

In the study, only 30% say they are comfortable with it.

“You would be naïve to think that AI is not going to touch every aspect of lending in some faction,” he says. “It is a matter of when.”

But in-person communication is key, Roosenberg adds.

Funsch agrees. If a lender understands each store’s goals, it can be “equipped with an arsenal of programs to help (the store) reach these objectives,” he says. “The best way to establish this connection is through an individualized relationship rather than a transactional one.”