Bank and Insurance Company Financing

Everyone wants to be in the automobile lending business, it seems. We are faced with competition from credit unions,
banks, insurance companies, home equity loans, etc. We have talked about conversions in the past and continue to
research the most effective ways to keep the financing at the dealership.
There is, however, a new trend that you should be aware of. Banks and Insurance companies have been getting
pummeled by F&I Managers for the last several years. F&I Managers have learned how to control the financing of their
customers and don’t let many good customers slip out of the dealership to go to another finance source.
The banks and insurance companies are committed to increasing their penetration into this lucrative market and are
developing strategies to combat the auto dealers. Banks and insurance companies have a problem here, however, and
that is lack of control. No matter what they do, a customer still has to go into a dealership to buy a car. When they do,
they are going to meet an F&I Manager who is going to do everything possible to get the financing.
One way that some bankers and insurance salesmen have developed to combat dealer financing is by advising the
customer to lie.
They tell the customer, before they go car shopping, to tell the dealer that they are paying cash, that way they get a
better deal, and then arrange either a line of credit or auto loan through them. They advise the customer not to discuss
financing with the dealer, (they’re all crooks, you know), and so the customer arranges to pay cash.
The next thing the F&I Manager hears is a call from the lender placing a lien on the title.
So, how do we combat this scenario?
The first problem we have to overcome is credibility. True or not, customers have the opinion that car dealers are out to
cheat them. The stereotypes shown them by the media create this impression and they tend to have more faith in their
bankers or insurance agents advise. The other problem is calling the customer a liar. The customer will go through the
sales process, tell the salesman they are paying cash and then be embarrassed to admit they lied. This has to be
handled very carefully. We need a way of handling this customer that is non-confrontational yet effective.
How do we find out the truth without creating tension?
We have discovered that there is a very effective way of identifying these customers and converting them.
The answer is to assume every customer is financing, somewhere, and offering them finance options. Those of you who
use the Team One method, (or a menu), have the perfect tool for this.
The key is to offer finance options to every cash customer. When they say they are paying cash, go directly to the cash
block on the menu, read them the lien holder requirement, and ask them if they will be borrowing any portion of the
balance. Many of them will tell you the truth. If not, take them through the options, don’t try to make too much rate, and
you will be surprised how many of them will start asking questions, open up, and convert to your financing.
A couple of hints, though. Be sure the salesperson is not in the office. They will not open up in the presence of the
person they lied to.
Also, never listen to what they told the salesperson. Salespeople like their customers and tend to believe them. If the
salesperson tells you that they pay cash for all their cars, he or she might not know that they have been financing
somewhere else for years.
One more tip. Don’t try to prejudge who these customers are. Assume they are every cash buyer and offer your choices
to every one of them.
You will be amazed at how many of them will open up to you and convert.

George Angus is with Team One Research and Training, a research and training company that specializes in scientific,
research based program development and training programs for the automobile industry. George has trained thousands
of F&I professionals and develops programs and techniques with the top performing F&I departments in the country.
Team One can be reached at 1-800-928-1923 or on the web at
George Angus has had over 100 articles published in news and trade publications. This
article is a recent example of George's reporting of information derived from researching,
training,  and working with the leading F&I managers in the US and Canada.