Some dealerships forbid showroom salespeople to even mention F&I products like extended-service contracts, for fear of raising buyer resistance before the customer is turned over to the F&I manager – but nowadays, Internet car shopping makes it impractical, maybe impossible, to avoid the subject completely.

“Those questions are going to get asked,” says Raleigh Page, an income development manager for dealership vendor CNA National, Scottsdale, AZ, in a webinar hosted by the American International Automobile Dealers Association. “We’re hurting ourselves by answering incorrectly, or unsurely,” he says.

Instead, CNA National recommends dealership salespeople follow suggested scripts, commonly called “word tracks,” which mention F&I products only at certain times in the deal process, and only in certain specific ways – without any hard-sell, and avoiding too much detail.

Tread Carefully

It’s a fine line. Granted, it’s awkward, and likely a customer turn-off, to avoid the subject entirely. But there are legitimate reasons to make finance and insurance managers the sole source of detailed information on F&I products.

For example, F&I managers are more thoroughly versed than salespeople in up-to-date pricing and information on F&I products. It’s also up to the F&I manager to make sure the dealership complies with a long list of rules and regulations – for fair, equal-opportunity lending, for disclosure of terms and conditions; the list goes on and on.

It’s also important for salespeople to avoid any suggestion that buying an extended service contract makes a customer more likely to get financed. That’s illegal, yet the practice comes up often enough that speakers at F&I industry conferences, like the American Financial Services Association Vehicle Finance Conference, commonly need to remind the audience that it’s illegal.

Share The Content

Another reason to confine talk about F&I products to the F&I department is the potentially very sore subject within dealerships of who gets compensated, and for how much, if employees in other departments contribute to selling F&I products.

CNA National says dealership management needs to change the internal mindset, to concentrate on the “total yield” for the dealership. “This requires both finance and sales to step out of their comfort zones,” Page says.

For example, a hypothetical total yield of $3,000, consisting of $1,500 in front-end gross profit from the sale of the vehicle, plus another $1,500 in back-end gross profit in F&I, is better than $2,000 front-end gross and zero back-end, if the high front-end gross means the customer can’t afford to buy F&I products, CNA National says in the webinar.

Right Time, Right Place

With “total yield” in mind, CNA National says salespeople should be trained to bring up extended-service contracts at three different points in the sales process, before the turnover to F&I.

• During the vehicle walkaround: A potential word track could be, “This vehicle comes with a 3-year/36,000-mile manufacturer’s warranty. This vehicle also qualifies for extended coverage, which you can explore with the finance manager.”
• At trade appraisal: “My appraiser typically puts a little more value on a vehicle that has been covered under an extended service contract, because he knows it’s been well taken care of. Did you have one?” is a potential word track.
• At the turnover to F&I: “Don’t forget to ask about the extended-service contract I mentioned earlier,” is a good parting reminder, says Greg Sexton, also an income development manager for CNA National, in the webinar.

Keep It Clean Cut

Veteran F&I trainer Gerry Gould, of Gerry Gould & Associates, Trinity, FL, tells WardsAuto it’s widely recognized in the industry that better-informed shoppers are bound to ask salespeople about F&I products.  At the same time, he also agrees that salespeople should avoid too much detail and above all avoid any hard-sell approach.

Gould says some dealerships even add the cost of an extended-service contract to the dealership’s “first pencil” price quote, before the customer has even seen the F&I manager. The F&I manager then has, “to explain to the customer what that extra $5,000 is for.” He strongly disagrees, but Gould says it happens.

“(Customers are) going to ask. Don’t try to deflect it, but put it on the finance manager," he says. "The next step is for you to see the finance manager. I like it clean-cut.”