June '18

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90 • RV PRO • June 2018 rv-pro.com 2. Only selling the easy protections Selling only extended warranties is another way to neglect your F&I potential. There are multiple protections, coverages and insurance platforms that are designed to increase the benefit to your cus- tomer while adding significant profit to your F&I department. Rate markup is only a fraction of the profit puzzle, but many F&I managers rely on it too heavily. Most customers have not made up their mind against any given protection or coverage and they will listen if you present the benefits professionally. Extended warranties are a staple in the RV industry, as many of the standard manufacturers warranties are only a one-year coverage. The majority of the profit neglect is in additional protections such as GAP, credit life, disability, and paint and fabric coverage. When all of these are in play – even with below average sales ability –the profit becomes undeniable. 3. Ignoring compliance measures There are many compliance measures that must be routinely modified and managed. Privacy policies, red flag compliance, adverse action notices, customer verification procedures, OFAC checks, truth in lending laws, state laws and federal laws, to name a few. If these are not understood and applied to your daily routine, at some point the regulations will show their teeth and cost you. It may come from a state regulator, the U.S. Consumer Finance Protection Bureau, or one of your lenders may require an audit that brings up something you have done wrong for many years. The point is to routinely stay plugged in to the F&I laws and be aware of changes and how to adapt. 4. Ignoring subprime and near prime lending Most dealers have ser- viceable solutions for prime lending and good credit customers, whether it be national lenders or local banks. Most of these lenders prefer the consistency of blue chip credit and have defined approval patterns. S u b p r i m e a n d n e a r p r i m e l e n d i n g , o n t h e other hand, are unique and require a completely different appetite than a prime credit customer. The profit potential is drastically less, the conversion rates are much lower, and the time commitment to chase the extra work can be heavy deterrents to an F&I manager. Still, considering these variables, the value of financing difficult or marginal credit customers should not be overlooked. Unfortunately, too often, dealers and service companies neglect this area and allow staff to justify either not having the lenders to be effective or not doing the work to successfully capture this type of customer. 5. Ignoring fees If you are using service companies to handle your F&I function, be careful not to overlook the effect of fees on your profit percentage. The fees charged to your customer should be your revenue and are a creative swipe of F&I profit out of your hands and into the service company to tip the scale. Are you already sharing profit with a service company? If yes, why allow a fee in addition? Many dealers overlook this, as they feel the customer bears the expense and it does not cost them profit. This is incorrect, as the fee revenue is part of the F&I profit center and the customer is brought to fruition by your dealership. The rollup to consider is the fee revenue directed at your customer is your money and your decision. 6. Overreacting to chargebacks Loans and back-end protections are cancellable, which requires a tolerance and understanding of chargebacks. The question here is: How often do you sell something and how often does it cancel and require a profit refund? If everything B U S I N E S S

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