Training to Stay in Control

By Marty Lisk

That’s why training is such an important component of any F&I operation. Other responsibilities include calculating payments, creating a menu, and preparing and properly completing all the paperwork involved in a sale. He or she must also be familiar with all the laws and regulations governing the F&I process. Maintaining relationships with internal customers (the general manager, office manager, new-car manager, used-car manager, the entire sales force, service manager and parts manager) and external customers (numerous paper buyers, product vendors and retail customers) is also a critical part of the job description. And we haven’t even mentioned the importance of an F&I manager’s ability to train the sales department, as well as monitor his or her performance. Oh, and they have to be able to sell products.

The best way to ensure your F&I manager is properly prepared to do the job is to break down training into three components: compliance, communication and F&I product sales. Let’s explore each one.

Trained to Protect the Dealership

The typical F&I manager will prepare and execute approximately 45 bank contracts per month, plus all the legal documents on 20 more cash or outside finance retail sales in the average month. That is a total of 780 deals a year in which an F&I manager is preparing and completing all of the legal documents involved in the sale. That’s more legal documents in one month than an attorney handles in an entire year.

To become an attorney, you must graduate from a four-year college or university, attend three more years of law school, pass a state bar examination and then fulfill continuing education requirements to retain your ability to practice law in a particular state. In most dealerships, all it takes to be an F&I manager is the ability to convince the dealer or GM that you want the job and that you’ll make the dealership a lot of money.

Life is definitely grand if the F&I manager you hired can sell some products and make some money for the dealership. But what happens when one of those well-trained attorneys gets a complaint from a customer?

For one, your dealer principal will get a visit from the local sheriff notifying him or her that the dealership is being sued. What happens next really depends on the type of compliance training you’ve provided your F&I manager.

When it comes time for the deposition, you can be sure that the highly educated, thoroughly trained and extremely knowledgeable attorney will ask your F&I manager more than a few questions. One would be, “Do you present a menu and disclose the installment loan agreement the same way to each and every customer?” Here are two more of my favorites: “What are customers told with regard to the interest rate?” and, “Is every customer provided a copy of Truth-In-Lending disclosures prior to signing?”

You can also be sure that the attorney will ask, “Did you disclose any kickback the dealership received from the finance company?” and, “Did you explain the amount of and reason for the interest rate in his or her installment loan agreement?”

Another question your F&I manager will have to field is, “Was the customer ever told the APR was the best rate the dealership could find for him or her?” Your F&I manager should also be ready for: “Was the customer ever told he or she was ‘upside down’ in his or her trade-in?” and, “Where is that negative equity disclosed?”

With electronic menus being used more and more by dealers to present products, it is easy for an F&I manager to arrange, omit or arbitrarily change the price of F&I products to suit his or her own agenda. Most of the time, this is done without considering the potential liability your dealership will face. Here’s what you need to know about your dealership’s F&I process:

• Is the rate being changed depending on the number of products being sold?
• In the case of a customer paying cash, does the menu diff er from that of a customer financing? Credit insurance and GAP are great conversion tools since they’re only available if they elect to finance.
• Are cash customers off ered the same products as finance customers (they should be)?

One of the primary benefits of using a menu is it helps ensure that every customer is being off ered all of the products all of the time. Without consistency in the F&I process, consistency in the products being off ered and consistency in interest rates and product pricing, a dealer might as well get out his checkbook when it comes to a lawsuit.

Before they take their first deal, F&I managers must be thoroughly familiar with the laws and regulations that they must deal with every day. Just remember that the F&I department is the No. 1 source of litigation in today’s dealership. That’s why an F&I manager is responsible for reviewing every credit application for accuracy, checking the customer against the OFAC list, reviewing the customer’s credit bureau report and entering into multiple legal contracts with the customer on behalf of the dealership. Any verbal promises or representations made by the F&I manager, or disclosures not made, can create serious legal liability.

F&I managers can also create tremendous legal liability for the dealership by unknowingly asking a customer a prohibited question, or by inadvertently misrepresenting coverage or eligibility for a product. Should a salesperson or F&I manager make a derogatory comment while reviewing the credit application, or should they leave a deal jacket with a customer’s credit bureau out on their desk, it can get enormously expensive for the dealership.

Communicating as a Consultant

An F&I manager has to communicate clearly with customers and present a professional image, not just to the customers buying and financing an automobile, but with all internal and external customers. When communicating with a retail consumer, does the F&I manager have a “road to the sale” he or she follows?

Helping customers self-discover their need for a product is critical. Should a customer not see how that product will benefit him or her, the sale will not take place. Asking open-ended questions is important to learn the needs of the customer and to determine what products can meet those needs. Selling products just to maximize a pay plan is deadly when it comes to customer satisfaction.'

Consultative selling techniques must be learned, practiced and utilized by today’s finance managers if they are going to help a customer see the need for a product. Practicing a selling technique cannot come at the expense of the next customer, which is why role playing with another manager or salesperson is a good way of perfecting those skills.

It is also an F&I manager’s responsibility to participate in the regular sales meetings, as well as the new-hire training sessions. That means F&I managers should be creative and have the ability to develop a basic curriculum. For instance, how should a salesperson respond if a customer asks, “Is that your best rate?” The term “best” should never be used by a salesperson, sales manager or anyone else at the dealership when quoting rate. “Competitive” would be a more accurate response to that question.

Primed for F&I Product Sales

Finance managers’ performance are measured by the profit they generate through the sale of F&I products. They are expected to do this not only legally, but with great customer satisfaction. Unfortunately, in most cases, their only training involves an on-the-job crash course on the computer, what forms to use, and then sitting in on several deals with the other managers. Then, for the next few weeks, the cash deals all seem to flow to the “newbie.” Once comfortable with the computer and the paperwork, he or she is placed into the rotation. The only product knowledge the person gets is from what perceptions he or she received while on the floor selling, or from what was learned while shadowing other F&I managers during his or her first week.

Preparing for the New Hire

In most cases, the new F&I manager has never read through any bank contracts or product agreements. The more information F&I managers can share with a customer, the less likely their customer will cancel a product after the sale. Yet many dealers hesitate to send their managers to training because they want to “see if they will work out” before making that type of investment.

That is no different than hiring new salespeople, giving them no product training and then sending them out to sell cars. And when they don’t sell 10 vehicles the first month, it’s obvious they’re not meant to sell cars for a living. If dealers feel strongly enough to put someone into finance, it is only fair to give that person the proper training and tools he or she will need to succeed.

Whenever you hire a new F&I manager, you should utilize a checklist with specific items that need to be reviewed before letting him or her get in front of customers. Every credit bureau should be contacted so they can teach the F&I manager how to read everything on a credit report. Product vendors conduct training on coverage, eligibility requirements and product benefits so the managers can overcome objections.

When hired, the new F&I manager should be given the passwords for key Websites, and he or she should have an email address set up. Your new hire should also be given a training schedule to follow. Give him or her a clean office and a tour of the dealership. Introduce him or her to management and office personnel. Have a reference book with current bank rates and product pricing available. Have a manual for proper procedures and processes in the dealership. He or she should be excited about being promoted to F&I, not overwhelmed.

Immediate, comprehensive and continuous training is critical to the success of every new F&I manager. In today’s F&I department, it’s not what you can make, it’s what you get to keep. In a recent AFIP exam review with Dave Robertson, he asked an interesting question: “We all know what a stop sign means and what to do when we come to one in the road. But if we had to take an exam, could we answer within how many feet of the stop sign are we legally required to stop?”

A dealer can reduce his or her liability by having a comprehensive and consistent training program that includes laws and regulations, and F&I policies and procedures that ensure F&I managers know precisely when and where to STOP. With a lot of people looking for a reason to sue your dealership, now is a great time to ask yourself, “Are they really worth training?”

Marty Lisk is a senior training consultant with Reahard & Associates Inc., which provides customized F&I training to dealerships across the United States and Canada. With more than nine years of retail automotive experience in sales and F&I, he has spent over 13 years providing F&I training to dealers and general agents. Dealers can contact him at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it