learn from the leaders in f&i: a panel discussion moderated by david parker f&i is how you...

Learn from the leaders in F&I: A Panel Discussion

Moderated by David Parker

“F&I is how you make the money. Compliance is how you keep it.”

Learn from the leaders in F&I


Tuesday, Nov. 132 p.m.

Finance Department Best Practices

Jared Zimlin – Priority One

• F&I = Sales Position not clerical

– Selling & Reassuring Customer

– Selling Underwriters • Why they should buy the deal




F&I Menu

• The best way to present to all customers every time

– “Sign to decline”

– 100% T/O = Most $

– 3 x 100!




Reserve

• Initial Interview

• How much above buy rate do you start with?

• How do you ask for it?




Gap / Credit Life / Disability Insurance

• What is it?

• Who should buy them?


• “Sign to Decline”




Extended Warranty






Tire & Wheel Coverage

• Presented on the Menu

• Similar to AAA – Except covers the tires and wheels

• Often offered through Extended Warranty companies




Prep the Customer for T/O to Business Mgr.

• Bring up the topic of financing

• Cash or Finance?

• Mention a product or two…

• Introduce the Business Mgr.




Know Your Lender Limits

• Some will advance 120% plus extras– Tax, Reg., After Market Products

• Some = 130% of advance all inclusive

• Can be $3,000 to $5,000 + / deal for after market products




Document Fee & After Market Products

Mark Vanlente – Action Water Sports

• Different names – - Doc Fee / Admin Fee, etc.

• What is a reasonable charge?

• Some states limit the amount

• Many states – charge to one customer, must charge to all




Document Fee & After Market Products

• Make the Doc Fee Non-Negotiable

• Preprint Doc Fee on sales order

• Charge the same $...cash or finance

• Many states = taxable

• Charge for freight and prep instead?

• How do you explain what it is for?




After Marker Products




Retail Insurance

•Better Coverage…Stated/Agreed Value vs. Market

Value

•Bind Coverage on Weekends

•Marketing Fee Paid on each referral?

Aftermarket Products

• Pre-paid service (Provided In-House)– Bundle 2-3 Seasons Maintenance/Storage– 50/100/150 Hour service included– Discount 20% to 30% for prepayment– “Worry Free” Boating for 2-3 seasons

• Fiberglass & Vinyl / Upholstery – Many sell for $1,499 cost installed $450=$1,000 + profit

• Any other products???




Subprime Credit RisksGlynn Cooper – Marine One Acceptance

• How is it different from “A & B” Risks?– Indirect Paper Only–Max Loan/Term–Recent Bankruptcies–Reserve Paid?–Avg Credit Score?–Non-Recourse Loans?




Credit Application Best Practices

• Credit Application –More information - Quicker approval

–Written Authorization

–Minimize Access

–Keep it Secured




Credit Application Best Practices

• Credit Application –Written Security Procedures w Chain

of Authority

–Written Procedures for Storage

– Ignorance of rules opens mgmt to Personal Liability!




Compliance IssuesLen Bellavia – Bellavia & Gentile

…Compliance is how you keep it!

•Privacy Act – 2 Components

1.Privacy Notices- Dealership policy – How their private

info is collected, stored and protected- Includes SSN and DL #’s

2.Safeguarding information - What you need to know & do




Compliance Issues…Compliance is how you keep it!

2. Safeguarding information – Must be secured at ALL times

– Designated person to pull Credit Bureaus

– Keep credit apps for two years

– Proper disposal of documents – Shred or Burn

– Penalty for Non-Compliance = $11,000!




Compliance IssuesOFAC Check List “Office of Foreign Asset Control” = Terrorist Watch List

•Keep a copy of Driver’s License and OFAC Clearance in each deal folder

•Penalties for non-compliance – $5m fine & 30 years in prison




Compliance Issues• Red Flags – Written Manual

– Compliance Officer in dealership

– Red flags check – copy in deal folder

– Max civil penalty = $3,500 per violation

– Medco, FPC are sources – OFFAC & Red Flags Checks




Compliance Issues

• Patriot Act – 3 Provisions

1. Cash Reporting – Form 8300– $10,000+ collected in cash

– Includes cashier’s and bank checks

– Does not include personal checks




Compliance Issues

• Patriot Act – 3 Provisions2. Adverse Action Notices

- Circumstances when a dealer is required to provide…

3. Notations on Credit Report- Must call customer




Compliance Issues• Fair Credit Reporting Act (FCRA)

Requirements:1. Risk Based Pricing Notice

2. Credit Score Disclosure

3. Keep all credit applications 24 months

4. Penalties – - $100 to $2,500/infraction




Compliance Issues

Truth in Lending Act (TILA)”Regulation Z” •Accurate Marketing Disclosure of –Down payment, terms & APR%

•Trigger Terms:– Down Payment– Interest Rate or Term

•Penalties – Up to $5,000 fines + up to 1 yr in prison




Compliance Issues

Electronic Security•Enterprise level Firewalls

•Intrusion Detection System (IDS)

•Backups daily

•Employee access restricted

•Complex passwords – changed often




Compliance IssuesElectronic Security•Lock file and server room

•New Login required if no keyboard activity

•Background checks on all employees

•Cross shred all sensitive documents

•Email filtering for personal info – SSN’s

•Do not email credit apps or contracts




Summary“F&I is how you make the money, compliance is how you keep it”

•Ways to increase Income– F&I Menu

– Reserve

– Doc Fees - $399.00 / deal

– Subprime Lenders

– GAP/ Credit Life/ Disability





•Ways to increase Income– After Market Products

• Extended Warranty

• Tire & Wheel

• Retail Insurance referrals





•Ways to increase Income – cont’d– After Market Products

• Fiberglass / Upholstery Protections +$1,000/deal

• Prepaid Service





Summary“F&I is how you make the money, Compliance is how you keep it”

•Procedures for Compliance– Credit Applications

– Safeguarding Information

– OFAC and Red Flags Check Lists

– Form 8300 – $10,000 Cash Rule




Summary“F&I is how you make the money, Compliance is how you keep it”

•Procedures for Compliance– Fair Credit Reporting Act

• Risked based pricing notice• Credit score disclosure notice

– Regulation Z – Payment Disclosures• Trigger Terms – Down Pmt, Rate, Term

– Electronic Security – Firewalls, PW’s, etc.




F&I Panel

Questions?Learn from the leaders in F&I



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