Opinion: Coaching Tips to Avoid Today’s F&I Headwinds

A picture of Brown and Brown's Shawn Moran, a speaker at the 2021 RVDA conference/expo

As the RV selling season starts to kick into full speed, many F&I professionals are speaking about long hours, too many daily closings and rushed customer interactions.

Our training team generally hears these common phrases this time of year. Sometimes, however, F&I pros can forget the methods and tools we learned via training and built over the slow winter season.

These forgotten tools can cost F&I professionals profit and, ultimately, reduced paychecks. Let’s review some simple tips to quickly get back on the right track, maximizing our efficiencies and personal goals.

Managing Yourself

As customer closings rise during the approaching season, we need to contemplate how rushed interactions sneak errors into our job performance. To give an F&I scenario example where “thinking” errors occur, we must consider the most recent closing we had with a customer in our office.

Many of us commonly believe APR is the most substantial number to a customer. Many work feverishly to find the lowest APR for our clients. When Brown & Brown trainers see this, we ask finance professionals whether they interviewed the customer. Did they ask buyers about an additional down payment or investment to achieve a lower possible APR? Most F&I professionals say the customer put down all the cash they had.

Instead, during the interview, propose other options to the customer. For instance, during the interview: “Mr. and Mrs. Smith, we see the rate and term the sales manager offered you are great. If a different term or lower APR existed, and the lender requested an additional $1,500 down (as an example) to achieve the term and lower APR, would you be interested in knowing what that bank offered you vs. what rate and term we show on your deal right now?”

Most customers would jump at the chance to see a scenario that might financially benefit them.

As a note, APR is not always the most significant item to a customer. The most important item instead may be term. We remind F&I professionals across America that manipulating term is a forgotten art in the F&I office. F&I professionals may find using term to lower payments is frequently much easier and faster than seeking a lower APR or rate.

This is a crucial concept that you should investigate before instantly running to lower an APR. Normally, chasing a lower APR means using a credit union and not a national lender, where reserve profits are higher and back-end potential is much greater.

Next, remember that most national lenders have no early payoff penalty. Thus, if customers take a slightly higher APR and a longer term to make their payment more palatable, they might find the term more advantageous for their RV budget.

With this in mind, a lender might offer a larger advance toward back-end products. The longer term makes the payment easier for the customers’ budget and they are not as worried about the higher APR because there is no early payoff penalty.

Stock market fluctuations, rising inflation and increased lenders’ funding costs should not intimidate us regarding the bank rates we offer. Rather, consider that APR is not always the most critical financial consideration.

By offering more term options, many dealerships are finding greater ancillary product sales. Have you considered fewer columns on a menu and more payment options per column? We call this approach a choice within a choice.

Asking our customers, “Which of the payments in our Platinum Protection Package work best for your budget?” is much easier than asking whether the Platinum Protection Plan seems like their preferred choice.

Consumers tend to migrate to options compared with a single “yes-or-no” question.

Once again, we are finding term is king in the financial decision to protect one’s coach.

New Objections

With the F&I office offering some longer-loan terms today, our dealerships may face new financial objections from our customers. F&I professionals may commonly hear the objection: “Why would we finance a five-year service contract on a 15-year note? The five-year service contract will cost us much more money if we pay it back over a 15-year period.”

The answer here is easy but requires us to step out of our F&I shoes and into a customer’s shoes.

Most RV consumers do not want to take 15 years to pay off their RV. Many financially minded customers may make an additional principal payment once or twice a year to shorten their loan term.

Many F&I professionals are amazed when we remind them during training that an additional annual principal payment on an RV note will pay off a 15-year term in just under 10 years. Two extra yearly principal payments can pay off a 15-year note in just under six years, depending on the consumer’s APR.

Ultimately, this is why most lenders tell us RV loans are currently being paid off in just under five years. Your dealership’s five-year service contract term is in line with most RV clients’ common payoff periods. Yet again, the term becomes the more significant principle, rather than the APR.

Promoting the RV Lifestyle

With rates increasing, F&I professionals and sales managers may easily assume we need to use credit unions and nonconventional lenders to find the lowest APR. Remember, many national lenders provide an abundant term range.

Because most national lenders have no early payoff penalty, customers can budget a far more attractive loan payment. The loan payment also represents a much more lucrative reserve to a dealership’s F&I budget. APR headwinds do not always have to be negative for our dealerships. Rather, they give us a reason to look for other avenues to help customers join the RV lifestyle and create treasured memories.

These simple concepts can create numerous opportunities for increased F&I profits and more budget-friendly customer payments. Headwinds are not always scary. They can be an opportunity to try new F&I concepts and expand the business office’s importance.

Shawn Moran is the national RV and marine training director with Brown & Brown Insurance, Dealer Services Division. He started his career in 2002 as a business manager at an automotive dealership in upstate New York. In 2003, Moran became a successful finance director for a multilocation RV and marine dealership. In November 2008, he opened F&I Consulting Unlimited. In July 2013, Brown & Brown bought the agency, creating the largest RV master general agency in the USA. Moran provides personalized finance training to RV business managers. He conducts numerous weekly training sessions with small and large RV groups.

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