Quoting Payments at the Desk
Since 88% of all major purchases are financed, most people view the car deal as the amount of their monthly payment. There are four parts to any deal: (1) Sales Price, (2) Trade Allowance, (3) Amount of Initial Payment, and (4) Amount of Monthly Payments.
Increasing the balance to be financed by including the retail price of a service agreement and/or other F&I products without disclosing these items to the customer is an unfair and deceptive business practice. Most state attorneys general view “packing payments” in this manner as a violation of the consumer protection laws of 1968. Dealerships would do well to eliminate this practice.
Sales managers must quote accurate payments, rounded up to the nearest dollar. They must also disclose the APR used to calculate the payment, along with the term of the loan. For this reason, sales managers should be cross-trained with F&I managers to read credit bureaus and understand each lender’s funding criteria.
Typically, the sales manager structures the figures and sends the paperwork to the F&I manager. The sales manager and the F&I manager must quote the same APR. Quoting an inflated APR is also viewed as an unfair and deceptive business practice. The APR does not depend on the customer’s additional product purchases. The customer’s credit history, collateral, character, and capacity to repay the note are the primary factors used to determine APR.
When the sales manager closes the deal on payments — a common practice since sales personnel usually complete the credit application — the entire F&I process should not exceed 30 minutes.
If the sales managers work every deal as a difference figure and F&I completes all the loan documentation, including the credit application, the F&I process could take up to one hour.
When F&I managers are with a client for more than an hour, they are probably “step selling” — inching through separate product presentations until the customer, the manager, and optimal sales time are all exhausted. Customers can view this practice as intimidating and some record their concerns on CSI questionnaires or cancel product purchases.
Ethical sales and F&I practices limit dealership liability and increase CSI. Be sure to use a “Transfer of Liability” form when the customer chooses not to participate in the customer protection packages.
To enhance customer satisfaction, use the time you have with customers wisely and well – especially the crucial first 20 minutes. Greet the customer in a non-confrontational environment and build rapport, planting “product seeds” all along the way. The customer interview is critical not only to the sale of the unit, but also to tailoring the presentation to fit the customer’s use of protection products. The more you learn, the more you can earn!
A clear understanding of customers’ needs, wants, hopes and desires put you in a better position to present products as solutions rather than options. In this economy, customers buy solutions and let options wait.
Dealer Marketing Magazine, April 2003, p. 18.