Tag Archive | "Brian Crisorio"

Whatever Happened to Credit Life?


There was a time when credit life and disability insurance was the No. 1 product sold in the F&I office. In fact, for the better part of the 1970s and ’80s, it was the only product. When John Braganini, principal at Great Lakes Companies in Kalamazoo, Mich., entered the auto retail channel in 1986, credit life was still king.

“At the time, dealers here in Michigan limited their F&I product offerings to credit insurance, service contracts and appearance products such as rustproofing and paint sealant. Some accessories and other related products were offered at various dealerships, but the three mentioned above, along with bank reserve, provided the F&I landscape,” Braganini recalls. “The service contracts and appearance products were often priced and administrated in a manner that led to performance issues, so credit insurance was often the primary income source for F&I.”

Since their inception, credit life policies have been designed to continue making payments on an auto loan if the car buyer dies or becomes disabled or seriously ill. Braganini describes them as a “simple value proposition” for customers. For a modest premium, which can be financed along with the loan amount, customers who opt for credit life coverage, disability coverage or both are relieved of what could be a major financial burden when disaster strikes.

Credit life began to lose its luster at the turn of the 21st century, when regulatory changes limited its income potential in some states and dealers and agents began to see more value in products such as vehicle service contracts, GAP coverage and appearance protection. Several large providers, including Zurich and JM&A, pulled out of the segment.

But many others remained, and advocates say credit life still represents a tremendous value to dealers and end users and deserves a seat at the F&I table.

Licensing and Rates

“As one of our people likes to say, our industry put the ‘I’ in ‘F&I,’” says Richard Kizer, chairman of Central States of Omaha (CSO) in Omaha, Neb. “In the early years, the F&I department would help people secure loans and present them with credit life insurance. They needed to borrow money and needed protection on their loans. So the product was offered a high percentage of the time and our penetrations were very high.”

Today, sellers of credit life and disability insurance must be licensed by the state or states in which they operate. Some states allow the dealer to establish an entity and maintain the license; others mandate that everyone involved in the sale be licensed. Kizer doesn’t take issue with licensing requirements but says they have restricted sales in some states.

“There are a handful of states, including California and New York, where they have made the licensing of that employee in the F&I office very difficult,” he says. “They may have to get fingerprinted or take a test or have continuing education. And we know there is a fair amount of turnover in F&I.”

The commissions dealers earn from selling credit life and disability are determined by “prima facie” rates set at the state level. Sellers can go below the established rate but may not exceed it.

“Back in the ’70s and early ’80s, the rates for credit insurance ranged anywhere from 70 cents up to 90 cents per 100,” says Arden Hetland, president of The Woodlands, Texas-based American Financial & Automotive Services (AFAS). “Louisiana was at 110% for joint life. So the rate was high and commissions were high.”

Things began to tighten up, Braganini says, beginning in the late 1990s and continuing through the early 2000s.

“The landscape changed. One by one, states began reducing the price that could be charged for credit insurance. Many states reduced the price to the point where commissions had to be reduced to 10%.” As a result, and in combination with the emergence of competing F&I products that did not require licensing and could be marked up, Braganini adds, “credit insurance started getting lost in the shuffle.”

At Pekin Insurance in Pekin, Ill., Jay Holloman brings more than 30 years of experience in the credit insurance field to his position as director of financial products. He says credit life’s decline was accelerated by a regulatory change in the housing segment.

“In the early 2000s, the federal government decided to treat single-premium credit insurance as points and fees in its definition,” Holloman says, so banks were no longer able to finance credit life and disability in mortgage-backed loans. “A lot of people were using a second mortgage to buy a vehicle. We couldn’t offer the credit insurance, so our business was greatly reduced.”

Determined to stay in the game, Holloman and his management team decided to expand their geographic footprint. With the help of a network of agents, Pekin rebounded. The company now offers services in 21 states and counting.

“It has been a rocky road,” Holloman admits. “We went from writing as much as $20 million down to $8 million. Last year, we turned $19.2 million. There is a huge need for the product in our society and for our economy.”

Sales and Reinsurance

Not everyone agrees that the arguments listed above are strong enough to make room for credit insurance on the F&I menu. By the time Brian Crisorio, vice president of marketing for United Development Systems Inc. (UDS), joined the company on a full-time basis, the role credit life would play in the company’s future was already in doubt.

“As the young blood in our organization at the time, I was the one pushing to cut ties with credit insurance,” Crisorio says. “It’s a generational shift. I wasn’t around when it was one of two products available and one of the main sellers and profit contributors. When I looked at the total landscape, I saw that we had all these other products that made more sense.”

In Crisorio’s home state of Florida, he adds, the numbers just didn’t add up. He agrees that the product represents a good value to some end users but says the company had to make a business decision based on the needs of its dealers.

“It didn’t seem like the smartest thing to be pushing it for sales. I think what it all came down to was that a lot of our business is done in Florida and the pricing was too high, the profit was too low and there were too many other good options to take up real estate on the menu.”

Kizer points to Texas as one state in which the sale of credit life and disability can produce “substantial” income for dealers. Using a hypothetical loan amount of $25,000 at 6% interest over a 72-month term — and using round numbers — he calculates the cost of credit life at $450 and disability at $950 for a total premium of $1,400, assuming the car buyer opts for both types of coverage. Texas has a “floating cap” on commissions, meaning the selling dealer would earn somewhere between 30% and 45%, depending on the loss ratios they have generated.

“Texas is on the low side as far as rates are concerned,” Kizer says. “They have good penetrations. Some states have hard caps and some have floating caps. It all comes down to loss ratios but it’s still good income for the dealer. What can be so confusing from state to state is regulation. But if a dealer and the folks in the F&I office are committed to presenting the product, then it does generate significant fee income. If a state makes licensing difficult or makes the commission rate extremely low, the dealer loses the incentive to sell it properly.”

He acknowledges that a portion of the income dealers make from credit insurance goes toward the cost of the F&I manager’s time and compliance training, but the more policies sold, the more those per-deal hard costs are defrayed. And then there’s reinsurance.

“Some states, like Nebraska, have a hard cap,” Kizer says. “Our commission cap is 30%. What dealers in such states will frequently do is invest in captive reinsurance companies and take underwriting risk on their product.”

Dealers who elect to offer below-rate credit insurance are following the lead of credit unions, as Kizer and Hetland pointed out, many of which subsidize the sales of the product to protect their own interests as well as their members’ ability to obtain credit in the future.

“It’s a different mindset,” Kizer says of credit unions. “They will sell it at a lower rate and take a lower commission.”

“Despite all the changes, we continue to produce significant sales volume with credit insurance,” Braganini says. “One of the primary reasons is that we are one of the few agencies that have providers, licensed sales executives and a compliance department to fulfill the regulatory requirements. Most of the national F&I providers outsource everything but service contracts, GAP and tire and wheel. As a result, providers that have focused solutions can consolidate their market opportunities.”

“We still provide credit insurance because, if it’s on a menu, that’s a great value,” Hetland says, particularly for car buyers who are 40 and older. Consumers in that age group have a higher risk of death and illness, but the rates set by the state don’t vary with age, and the policies don’t require a physical exam or a lengthy health assessment. “There is very little underwriting. You might have to say you’re not having a heart attack or fighting cancer, and that’s it.”

Kizer points out that, if every car buyer walked into the F&I office with a robust life insurance policy in their back pocket, credit life would be a harder sell. At the moment, on a nationwide basis, that is not typically the case.

“Four out of 10 Americans do not own life insurance,” Kizer says. “Only 35% of low-income households and 54% of middle-income households have whole or term life insurance.” He recalls a story told to him by a banker about a young woman whose recently deceased husband had, unbeknownst to her, added credit life to his auto loan. “The husband was the primary breadwinner and he got in a wreck and died. His wife came in crying to the loan officer, thinking she was still responsible for the loan. The banker told us, ‘I can’t tell you what a great experience it was to tell the widow that the loan was insured.’”

Compliance Issues

If nothing else, our experts said, credit life and disability is a product that has been through the regulatory ringer so many times, it’s practically unassailable.

“When I started, there was no disclosure of any of the F&I products on the buyer’s order, bank contract or vehicle registration documents,” says Braganini. “All incremental products were rolled into the selling price of the car and it was ‘convenient’ to include life and disability into every loan quote. Consumers would get a loan that ‘included protection.’”

Clearly, thanks to the nationwide campaign against payment packing that began more than a decade ago, that is no longer an option. Another challenge was mounted by class-action attorneys who went after dealers for failing to refund the premiums to customers who canceled their credit insurance policy or traded their vehicle.

“A lot of them just didn’t do it,” Hetland says. “The class-action attorneys went after lending institutions and insurance providers. What they found is the lenders would not let the insurance company — because of privacy laws — tell them when cancelation took hold. Now the language has changed to say it is the responsibility of the policyholder to notify the insurance company.”

As indications that the Consumer Financial Protection Bureau (CFPB) will attempt to regulate the sale of F&I products continue to pile up, our experts said, credit insurance — with its state-mandated rates and commissions — stands out as an F&I product with a rock-solid pricing structure.

“You really hedge your bet against the CFPB with credit life on the menu,” Hetland says. “How can they say the state is wrong? And you can justify loss ratios because a lot of the ancillary products don’t have high loss ratios.”

“The way the CFPB is trying to back-door dealers, when you look at most of the products, they’re being insured based on debt protection like GAP. It’s a debt waiver,” Holloman adds. “If a dealer is really worried about compliance and the financing arms of their operations, credit insurance is one of the natural ways they can improve income on each vehicle. With credit life, you have a product that is out of the reach of the CFPB from that standpoint.”

“Price controls may become a reality with other F&I products,” Braganini adds. “If that happens, those who are positioned to execute an effective credit insurance strategy will have an advantage over those who cannot or will not.”

Crisorio remains unconvinced. “Here in Florida, almost all our products are regulated by the state. The only ones that aren’t are paint, GAP and key, which our dealers regulate internally. It’s in the operations manual.”

The Value Proposition

Asked whether demand from dealers would change his mind, Crisorio says he’s simply not aware of any. The only dealer on his roster who sells credit insurance was already doing so when UDS captured the business.

“There are certainly parts of the U.S. where credit insurance is viable, and there may be small pockets where we operate,” Crisorio says. “But it’s not rewarding enough to pursue.”

Those who remain in the credit life and disability business say the rewards are better framed in terms of the dealer’s value proposition than income potential. As Kizer points out, protecting the customer’s financing ensures future business.

“We feel this protection is very important and should be offered. You’re protecting the life and health of your customer,” he says. “Isn’t that more important than key replacement or dent and ding?”

Holloman points to a 2012 study by Thomas Durkin and Thomas Miller that made the case for credit insurance, particularly among older borrowers who are underinsured, and stressed the need to allow consumers to make their own decisions.

“The individual should have the opportunity to decide whether they want to purchase it or not,” Holloman says. “They don’t want it? So be it. But if you look at the Durkin study, they see the value and would purchase if they were offered it.”

“Credit life and disability is an exceptional value to the customer,” Hetland adds. “It’s good underwriting because the dealers are in reinsurance. And it really helps safeguard against the CFPB. We can’t knock that. It’s a good value.”

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The Agent’s Guide to Hiring Effective F&I Managers


Among the many facets of the value proposition agents bring to dealers is their ability to help recruit F&I managers. But this is no small task. Real talent is hard to find, and the agent should also therefore ensure that new talent is not wasted or lost by a dealer not having a process in place to train and continually motivate new hires.

To learn more, we turned to the experts. Shelley Boggan-Kirchner of GSFSGroup, Great Lakes Companies’ John Braganini, Brian Crisorio of United Development Systems Inc. (UDS), Harlene Doane of DealerStrong and Automotive Development Group (ADG)’s Bill Kelly all weighed in to help answer three key questions: Where should agents look for candidates, what attributes should they look for, and how can they help put them on the path to success?

1. Where to Look

Most of our experts agreed that although the traditional path from the sales floor to the finance office continues to yield excellent results, agents and dealers would be remiss in failing to expand their search. With that in mind, we discussed a few primary sources to focus on, each with its own pros and cons:

  • Internal candidates: Do not overlook the employees already working in the dealership, particularly especially those who make known their intentions to move to F&I. In fact, this remains one of the best sources to start with, the experts say.

“Top-producing salespeople and sales managers are good candidates,” says Braganini, principal of Portage, Mich.-based Great Lakes.

“We always like to look within the organization first, as there are often a number of qualified candidates itching for their shot at being the almighty F&I Manager,” says Brian Crisorio, vice president of marketing for Clearwater, Fla.-based UDS.

In fact, Crisorio adds that he advises dealers to invest in F&I training for promising salespeople — even before a job becomes available. This strategy demonstrates a commitment to the individual on the dealer’s part, giving them a clear path to advance. It also creates a roster of qualified workers who can step in when needed, be it for a particularly busy afternoon or on a more permanent basis.

  • External candidates: Agents should be constantly on the lookout for experienced F&I managers who may be looking for a change of scenery. One good way to do that is to make sure every dealer client has a career portal on their website. But Shelley Boggan-Kirchner, the executive in charge of the Hiring Winners platform for Houston-based GSFSGroup, says dealers may want to make their intentions known in a number of ways, including asking customers for candidate referrals and conspicuously posting recruiting materials in the store.

“When we go into a dealership, we bring in marketing and recruiting materials,” Boggan-Kirchner says. “We give them signage they can put up — be it at the receptionist desk or customer waiting areas — saying, ‘This is just to inform you we’re always looking for great people. Feel free to visit our career portal.’ We also give it to them electronically. So if they want to take that link and attach it to a community job board, they can market it directly to community colleges and vocational schools.”

This strategy allows the dealership to constantly evaluate and recruit new talent, she adds, so there is never a crisis when someone decides to move on to another opportunity.

  • Outside-the-box candidates: Our experts agreed that smart, ambitious, hard-working professionals in other fields can become effective F&I managers — if you can find them. For all the time and money dealers spend marketing to find new customers, for many, the idea of creating a similar campaign to find outside-the-box candidates remains foreign. For dealers who are focused on the day-to-day operations, taking the time to actively and continuously recruit can be a daunting task. Agents who can weed through and identify the next potential stars — of F&I, sales, customer service or any other part of the dealership — can become invaluable partners. They just have to know where to look.

“Qualified candidates can come from a variety of sources, and those sources often vary from market to market,” stresses Harlene Doane, COO of DealerStrong, based out of Evansville, Ind. She also notes that other sources, such as local job boards, and social media sites like Facebook and LinkedIn are also good places to hunt for candidates.

From traditional sources, such as the local newspaper, to online resources like Monster, CareerBuilder and Indeed, dealers have a number of opportunities to advertise their stores as friendly, productive work environments with the potential for a six-figure income. The downside, of course, is managing a presence on multiple job sites and sifting through the reams of applications that result.

“You will have to look at many more candidates and applications if you’re only recruiting via the Internet than you will if you’re collecting referrals,” Boggan-Kirchner notes.

Agents can help by managing this process on their dealers’ behalf and making sure the ads paint a realistic picture of life in the box, including the long hours and weekend shifts. That description can prove attractive to graduates of colleges and technical schools, who may be willing to sacrifice personal time in order to enter the workforce in a high-paying position.

Of course, like other outside-the-box recruits, recent grads will come in without the benefit of relevant training and experience. That’s where screening for aptitude, ambition and a willingness to learn and follow a process take on added importance.

“What we look for are people that have certain characteristics that we feel will be the most successful,” says Kelly, a partner at Bloomington, Minn.-based ADG. “Oftentimes, they are people with a proven track record, but sometimes we do come across the right individual that we believe we can train on our trademarked Proactive Selling System.”

2. What to Look For

It is not enough to simply look for any candidate that walks through the door. It takes a certain blend of skills and attitude to be a great F&I manager, so agents focused on helping dealerships recruit the right people need to ensure they are identifying certain key traits.

  • Coachability: One of the first traits to look for is a willingness to learn the F&I process and stick to it. Every dealership will have its own set of rules and procedures that F&I managers will be expected to follow. New hires need to be willing to learn and adapt to that process, whether they are green peas or seasoned professionals.

“With all of the compliance laws and moving parts, a business manager has to have structure and be able to work in a very structured environment,” Kelly stresses. “We are not looking for an individual to go out and create their own way. When the proven path is followed, we have the best results.”

  • Professionalism: Even the most knowledgeable F&I manager will struggle if they do not look, walk and talk the part. They need to be able to put consumers at ease and be capable of guiding them through the entire process. If the F&I manager doesn’t inspire trust, they will not get very far.

“We are always looking for someone that not only possesses the general knowledge, but also has the look,” explains Crisorio. “The ideal F&I manager will present himself as a trusted advisor who is qualified and prepared to help the customers navigate the details of a vehicle purchase. They should also demonstrate a team-first attitude and strong leadership qualities.”

  • Intelligence: F&I managers must build a working knowledge of terminology, deal structure and federal, state and local regulations, often in short order. Does your latest recruit have the brainpower to guide customers through the F&I process and keep the dealership out of trouble?
  • Character: F&I managers assume a powerful position in the dealership. They will regularly face situations that will test their ethics, and ensuring their level of morality matches that of the dealership is a key trait. This can be screened for with examples of real-life situations that came up in the hiring dealership, and then having the candidate explain how they would have handled it. This gives a good baseline for how well they will fit into the dealership’s expectations of its F&I managers.

“Some dealers are more comfortable with the gray lines than others, so the character needs to be in the same circle as the dealer’s expectations,” notes Doane. “Character also comes out in reference checks, if conducted properly.”

  • Chemistry: This is perhaps the hardest trait to screen for. The F&I manager will be working with every member of the dealership staff on a daily basis, and it only takes one bad apple to disrupt the entire culture. Agents rarely have the opportunity to work with new personnel on a daily basis, so the dealer’s expectations must be perfectly clear. The dealer principal should have the final say in all new hires, and, assuming the agent has brought them all highly qualified candidates that meet every other criteria, this should be the one trait they focus on the most when making the final decision.

“You want to be sure the person you’re hiring is oriented to the culture,” Boggan-Kirchner says. “You’ll get a lot of information about their character during the due diligence of the hiring process. But once the dealer has made that decision, the work they do needs to be reflective of the culture. I think it’s important that, from the moment people enter into the dealership, it should be emphasized that it’s a career, not just a job.”

One thing all of the experts agreed on was that, while finding someone with previous F&I training is always a good thing, it isn’t necessarily a requirement. Many of them stressed that either going the internal route, hiring experienced sales people who are looking to move ahead at the dealership, or young graduates just out of school who are blank slates, can both be very compelling options. The first comes with knowledge of the industry, the vehicles and the customers that the dealership serves, putting them one step ahead of other candidates. And hiring graduates means not having to undo training or bad habits picked up somewhere else. They can be taught exactly how this dealership does it, right from the start.

“I like both,” says Boggan-Kirchner. “If you hire experienced personnel, that usually means less down time and acquiring a person with a proven track record. Hiring inexperienced requires utilizing broader recruiting methods, having a commitment to training and utilizing performance assessment tools like Hiring Winners.”

Crisorio agrees, noting that an openness to training is, in the long run, more important than previous F&I experience. Although, he says, having automotive experience of some sort can certainly help. “The experienced individual must prove to be coachable in order to adapt to the processes and procedures that a dealer group has in place. Someone new to the F&I office must share the same trait and welcome the guidance that a reputable F&I company and dealership management will provide. That will give them the best chance at a successful career.”

“We all want to think we’ll get the guy who’s going to come out and run $1,200 per copy,” says Boggan-Kirchner. “But what are the characteristics that will make that person able to do it? You want somebody who’s got drive and ambition. You want somebody who’s motivated by their own performance.”

3. How to Prepare for Success

It doesn’t matter if it is the perfect candidate, or whether they are brand new to F&I or seasoned pros, every F&I manager should get the education they need to start strong and commit to regular, ongoing training to ensure they always perform at the top of their game.

Braganini might look for candidates who have a proven track record in either F&I or automotive sales, however, he notes, that doesn’t stop him from training them. “Both [experienced and new hires] need to complete our basic and advanced FSM schools, complete a development specialist assignment with one of our trainers and maintain strict adherence to our sales process and core competency system.”

“An experienced F&I manager must become familiar with the products being offered, as well as the selling system utilized to offer those products, so menu training and product knowledge training is a must,” stresses Crisorio. “Regarding the inexperienced F&I manager, additional training would be necessary in the areas of compliance, lender relations and objection handling, to name a few.”

“You are never too experienced to receive training,” says Kelly. “We emphasize weekly training for everyone. Someone that is newer to the job will require offsite, multiday F&I development training. All of the offsite training is followed up with in store one-on-one and online classes. Every week, the best business managers make time to improve themselves.”

It is important for the dealership to set expectations early in the relationship, and then give the F&I manager the tools and knowledge they need to meet and exceed those goals. It is not, however, enough to simply have a list of vague statements that are only pulled out when it’s time to do the annual evaluation. “Once the expectations are set and goals are formed, a daily action plan needs to be followed and a six-month trend report should be implemented to track the progress,” Kelly says.

“It depends on the store and market, but goals should all be written, tracked and have consequences,” agreed Braganini. “Assigning a development specialist to the store to ensure performance compliance will ensure the candidate can succeed.”

It is important for agents to manage the dealer expectations, as well. No matter how experienced a new F&I manager might have been before joining the team, there will be a learning curve when it comes to the exact processes and products the dealership uses. This is another area where training will make a big difference. If the dealer is willing to let the agent get the new hire all the training they need prior to their first day in the office, the chances of their success — and the dealer’s — goes up exponentially.

“While it may be understood that a learning curve will exist, especially with someone new to F&I, the targets established are, well, the targets,” notes Crisorio. “As the chosen F&I partner to our clients, we accept the challenge to ensure an individual is ready to succeed on day one. Realizing success immediately is certainly not guaranteed, so I would encourage any dealer to lean on their F&I company to provide dedicated support, giving that new manager the best chance at success.”

In fact, Kelly believes agents play a critical role in this entire process. “Be a coach and always have a game plan when working with a finance manager,” he advises. “Set the objectives and always bring something of value to each session. I very much believe that it is an agent’s responsibility to develop the finance managers. Contract count is nice, but PVR is the measuring stick.”

The further an agent is willing to go to help dealers find effective F&I managers, Boggan-Kirchner says, the more valuable they will become.

“I think that it behooves everybody for the agent to be involved in the recruiting, hiring and training process,” she says. “I think agents should act as consultants to the dealer for anything F&I-related. I also think it’s a selling point for the agency to have good F&I manager development. And I think that when you have an agency that does that, it stands out.”

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‘Processes and Controls’ Panel Members Named


AUSTIN — Organizers of Texas Compliance Summit have announced that “Where the Rubber Meets the Road,” a panel discussion led by Brian Crisorio of United Development Systems (UDS), will include experts from the dealership, technology and products space. It will be the third panel of the event, which will be held Nov. 16–17, 2015, at the Hilton Austin Airport Hotel.

“Brian has assembled a panel representing three important facets of regulatory compliance,” said David Gesualdo, show chair and publisher of Auto Dealer Today and F&I and Showroom. “I can’t wait to hear what they have to say.”

Crisorio, who serves as UDS’s vice president of marketing, will be joined by Alessandro Meloni, a finance manager at Transwest Buick GMC Isuzu in Henderson, Colo.; Karen Klees, credit compliance specialist for EFG Companies; and Brian Reed, president and CEO of F&I Express.

“I’m excited to have Al reporting from the front lines and Brian and Karen adding their perspective from the technology and product sides,” Crisorio said. “Our multipronged attack on compliance issues will prove invaluable to the audience.”
The panel is part of the “Easy-to-Implement Processes and Controls” part of the agenda and will begin at 4:35 p.m. on Tuesday, Nov. 17.

More information about Texas Compliance Summit, including registration, can be found at the event’s website. Attendees who register on or before Oct. 26 will enjoy a $100 discount. For sponsorship and exhibition opportunities, contact Eric Gesualdo via email or at 727-612-8826.

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As Leasing Grows, So Does F&I Opportunity


In a report released this past summer, Experian Automotive noted that new vehicle leasing had risen by 12.5 percent this year to date – it hit a record high since the firm started keeping track of the statistic in 2006. According to the report, leasing now accounts for as much as 27.5 percent of new vehicle financing in the first quarter of 2013, up from 24.4 percent in the same quarter in 2012.

At the same time, the report noted that lease payments were down – at an average of $459, down from $462 in 2012. That comes with longer loan terms for lease deals – 65 months in the first quarter of this year.

For dealers and agents, these numbers represent an opportunity. While there have always been successful exceptions, the majority of dealerships tend to focus their F&I efforts on finance deals, with leasing customers getting little-to-no attention. But these numbers demonstrate that lease customers are a large and growing segment of the population, and contrary to popularly held beliefs, F&I products are as relevant to them as to the finance customer.

“Leasing has certainly grown and continues to grow every month,” said Brian Crisorio, vice president, United Development Systems (UDS). “Some stores are going from one a month to 12 or more; in some stores leasing is just huge. Sure there are a couple of makes or models not as focused on leasing, but it seems like across the board everyone is in the leasing game.”

What products should dealers be focused on? The consensus was that many F&I products have a place in a lease deal. John Vecchioni, national sales director, United Car Care, noted that any wear and tear product is a good fit for a lease, as is any interior/exterior protection plan, key replacement or tire and wheel. He also noted, surprisingly, that GAP is a potential lease product as well.

Tony Dupaquier, director of F&I training, American Financial and Automotive Services, also put GAP at the top of his list. “Not all leases have GAP,” he noted, “that’s one of the things everyone keeps forgetting. You have to pay attention and make sure the lease has GAP in it, and if not, sell GAP. Most leases do have GAP in them, it’s built into the lease, but you sporadically find leases that do not come with GAP, and the business managers don’t even know it. They have to make sure GAP is included, and if not, sell GAP.”

Wear and tear or appearance protection plans – both interior, with chemical protection, and exterior with dent and ding – and tire and wheel, were the top ancillary products all three agreed that F&I managers need to be presenting to every lease customer.

“Any appearance product is typically a good one for the lease customer,” noted Crisorio. “Protecting the exterior finish as well as the interior from rips, tears and burns keeps the vehicle looking great. Paintless dent repair does much of the same thing – if it’s turned in with dents and dings, they get a bill. Keys are getting more expensive every year, so key replacement is becoming more important – a damaged or missing key when you turn in the car will be expensive. And tire and wheel is also a big one.”

Vecchioni noted that he sees more products being sold into leases as a bundle, rather than individually. “Bundling saves time, and that savings allows you to capitalize on features and benefits of the products along with the impact it brings that particular customer. Wear and tear protection along with an appearance package go together. You can bundle almost any product, just keep in mind they have to have some similar advantages that make sense.”

“A case could be made that there’s an advantage to selling a multi product versus selling individual products,” said Crisorio. “A lot of it depends on the approach of the F&I manager – train on the process regardless of the deal. Focus on options, rather than individual products, and give them the best protection for that customer.”

Dupaquier noted that he teaches his F&I managers to always start off with the lease products in a bundle. “If customer doesn’t want a package for whatever reason, they’ll typically go back and pick up an individual item,” he said, “so start with all of them packaged together. The most successful F&I departments I’m seeing, they’ll put together a lease package that will have all of them.”

The exceptions to the bundling rule seem to be two: prepaid maintenance and key replacement. All three agreed that those are great lease products, but are easier to sell as stand-alone products. It is harder, they noted, to build value for maintenance or key replacement. Dupaquier noted that in many cases, customers argue that they’ve never lost a key, so they don’t see the value in key replacement, and he sees prepaid maintenance as more of a customer retention tool than anything else. The trick on that, at least, is to price it effectively.

“A lot of business managers go with scheduled maintenance as their number one hit,” Dupaquier noted. “The only cautionary piece is your price point on it – on a lease, the product price is divided by the term of the lease, unlike a traditional finance deal, which is divided by 72+ months in some cases. So scheduled maintenance that is $400-$500 changes the lease price by such an amount of money it turns people off. When a dealership tries to make too much money on it, the customer goes away, since they can go get the services done cheaper elsewhere. And on the lease, the likelihood is that the customer is coming back to that dealership anyway because of the lease, so you have built in customer retention. So dealers should put the focus on the ancillary products, for the items customers are responsible for.”

At the end of the day, selling products into a lease deal should be no different than selling them into a financed deal. Other than specific objections that might come up, the approach should be exactly the same.

“The training for handling a lease customer is similar to training for a traditional finance deal or cash deal,” said Crisorio. “Much of our training is process related, and doesn’t change if the product does. Only some of the word tracks might change to fit that customer. The approach is identical. The important part is to build value in the products you’re presenting.”

“I would explain the conditions of the lease,” Dupaquier noted, “as part of the way they start off conversation. Make sure the customer is aware of their requirements as far as vehicle condition is concerned – the same type of disclosure as how many miles the vehicle can have. Things like windshield has to be 100 percent; any door dings they’re responsible for; no mismatched tires –they have to make sure they have four of the same; any paint fading or interior staining they’re responsible for, etc. So educate them on that, then it’s easy to generate demand for the product. Don’t approach it any different; work it similar to a finance deal, with the same basic approach.”

Vecchioni summed it up with a few tips for agents to bring back to their dealers. “1. Present every product to your customers; wear and tear products, appearance products, key replacement, and tire and wheel protection are products that make sense. 2. Ensure every regulation is complied with, going over every lease agreement and the customer’s obligation to the lease – it helps set up product.”

At the end of the day, all the forecasts show leasing as increasing in the near future, with more customers seeing it as a solid financial alternative to financing, especially with so many people taking credit hits in the last few years. Agents should be stressing the importance of those lease customers to their dealers, as it is a trend that isn’t going away any time soon, and it’s a profit opportunity that shouldn’t be missed. “Agents should embrace leasing as additional opportunities that earn money,” said Crisorio. “They have to support the dealer, and support the trends in the industry. There is nothing an agent can do to stop it, so embrace it, support it, and be a true partner to your dealer and help them in any way you can.”

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