Dealership F&I Strategy Can’t Be Ignored: 3 ideas for wowing car buyers in 2020 and beyond

Securing car loans for customers has become an important source of income for many dealerships, especially as front-end margins for new vehicles continue to decline. Larger dealerships are particularly seeing success here.

At the same time that dealer-secured loans are becoming more important to dealerships, their value must also be conveyed to the customer. The best way to build that value is through giving them excellent F&I experiences.

More of what consumers want

Consumers today want transparency and personalization in all of their transactions. They want standout service and exceptional experiences. They want ease and speed. Give them that in their financing experience, and you’ve won their respect – and likely their business and their recommendations.

In addition to building great relationships with your lenders and banks to ensure smooth transactions, here are three ways to wow your customers in F&I.

1. Pre-qualify them

Out last month, the J.D. Power 2019 U.S. Consumer Financing Satisfaction Study reveals that consumers who prequalified for a loan were much more satisfied with their lender and the overall buying experience, positively affecting Sales Satisfaction Index scores.

There are great options out there, like AutoAlert, that not only prequalify customers but even create personalized offers just for them, based on their current shopping behavior and other relevant factors. This is an excellent opportunity to save your customers’ time and provide value through doing the legwork for them.

Approved car loan application

2. Educate them

Many car-buyers walk out of the dealership with new keys in hand, and no idea who their lender is.

“They get a bill in the mail from some bank that they don’t think they’re using, and some just toss it,” says Jim Houston, Senior Director of Automotive Finance at J.D. Power. “This is a key area where dealerships can improve, by making sure that their customers know who the lender is and why, when the first payment is due, if there’s an app – everybody wants to do everything from their phone.”

Car shopping and financing on the internet

Don’t let your customer walk out the door without having answers to these questions. It makes the next several weeks much easier for them, and they’ll appreciate your efforts. Details like this build your reputation as a dealer that really puts itself in the customer’s shoes.

You might also consider providing credit-education classes. Jessica Charris, the number one saleswoman at Russ Darrow Chrysler, Dodge, Jeep, Ram of Milwaukee, does just that, for free. In fact, educating her customers on credit is her favorite part of her job.

“There was one lady in particular who I could have sold to the day she came in, but I gave her some tips and when she came back she was in a much better position to buy what she wanted,” Charris told Modern Dealership recently. “She ended up being my best referral program ever.”

3. Offer options

Right along with pre-qualifying and educating comes options.

In PricewaterhouseCooper’s report Financing the car of the future: Re-imagining the auto finance customer experience, researchers state that “providing customers with options so they have the time and information necessary to make informed financing decisions – on their own schedule” is one of the top things dealers can do to succeed in coming years.

Many consumers enter the car-buying experience with a monthly payment in mind. Here’s another place where AutoAlert shines.

“The offers we create with dealerships are the same as the customer’s current payment, or even lower,” says Jennifer Wolf, AutoAlert’s Senior Marketing Project Coordinator. “They’re always relevant, always totally personalized.”

Wins for all …

Just because dealerships are seeing success with auto loans doesn’t mean that customers are being duped.

In its most recent Auto Financing Report (Q3 2019) WalletHub stated, “Consumers in the market for a new car should start their search for financing with car manufacturers (34 percent below average) and credit unions (rates 12 percent below average). Regional banks (14 percent above average) and national banks (14 percent above average) should be secondary options.”

Interest rate for new cars graph

In addition to often being able to provide customers with better loan rates, dealerships (mainly through OEM-owned captive finance companies) are also usually better able to provide subprime loans, which can be critical for buyers with below-average credit.

“Loans from a captive finance company can be mutually beneficial for customers as well,” says Investopedia. “Obtaining loans from a captive finance company involves minimal guesswork as rates and payment schedules are often predetermined. Sometimes captive finance companies offer lower loan rates than other types of loan companies. [T]hey can also extend loans to buyers with below-average credit, as they control both the loan and purchase in one sitting.”

Beyond rates, build strong relationships with your customers through pre-qualifying, educating, and providing options to relay the value that your Finance Department provides. After all, who doesn’t want to save time and money when shopping for a car?

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