Online F&I Benefits Both Auto Dealers and Consumers

Car buying has entered the digital age. More than half – 61% – of the vehicle shopping process is spent online, according to the 2019 Cox Automotive Car Buyer Journey study.

While the purchase path is getting shorter with the shift to digital, the two most frustrating parts of the car-buying journey remain the same: negotiating a price and filling out paperwork to finalize the purchase or lease.

Despite these frustrations, dealers still are leaving a key component (and a potential remedy to these complaints) out of their digital storefront: finance and insurance.

F&I is a critical part of the car-buying process for consumers and dealers. It determines payments, protections and services that will last for years. For car buyers, though, it often can be one of the most time-intensive and frustrating stages. After a long day, haggling over terms and prices is an unnecessary stress point, especially if it can be done ahead of time.

Bringing F&I online dramatically reduces the paperwork. The latest Cox study shows negotiating and completing paperwork online has the single-greatest impact on reducing a customer’s time at the dealership. It can save 45 minutes, the study found.

However, many dealers continue to rely on the outdated tactic of strictly conducting this part of the process at their physical storefronts. They’re missing a major opportunity to speed it up, improve customer experiences and increase profits.

The following are four ways dealers can successfully incorporate F&I into their digital storefront.

First, provide monthly payment calculations on lease and buying options for specific vehicles. This is a key element of personalization for shoppers who want to see how incentives, taxes and fees tailored to the chosen vehicle will be applied to their payment.

This detailed payment and pricing information also ensures a level of clarity for consumers who can now see the exact terms of the deal. This transparency improves the customer–dealer relationship and eliminates any discourse that stems from negotiations between the two sides.

Second, customers should have the option to apply for credit and financing online. Only 16% of car buyers currently secure credit and financing online, representing an area with great upside for dealers to improve the process.

Finalizing these terms prior to arriving on the lot is a relief to both sides. With credit checks done and financing in place, dealers and consumers can spend more time on the fun aspects of car shopping, such as test-driving vehicles, pairing smartphones and configuring personalized settings in the car.

Third, F&I is a key way for dealers to increase profits. Highlighting aftermarket services and products, such as pre-paid maintenance plans, extended service contracts and accessories drives consumer interest to these F&I products.

It also allows consumers to see how purchasing these products would factor into their monthly payments. It helps them understand product benefits. Instead of feeling pressured to decide at the moment, consumers can make confident, informed aftermarket purchases.

Finally, a trade-in valuation tool can help boost consumer confidence on their current car’s worth and eliminate another common source of negotiating friction. Trade-evaluator tools such as Kelley Blue Book’s give buyers a greater sense of control throughout their car-buying journey. They can clearly see the trade-in value validated by a third-party, giving them peace of mind that they’re getting a fair trade-in price.

Bob George Headshot

Bringing F&I online benefits consumers as much as the dealers. For dealers, it serves as another way to increase back-end profits. For consumers, it provides the utmost transparency prior to their dealership visit. (Wards Industry Voices contributor Bob George, left)

The end result is an improved relationship, facilitated by trust on both sides. That leads to higher close rates and increased customer satisfaction.