OPERATING THE BEST F&I DEPARTMENT MEANS NEVER USING THE WORD BEST
Next to, did I get approved?, the second-most commonly asked customer question is, is this the best rate available? Simply put, the word best cannot be used when discussing the installment sale finance charge or lease money factor with a customer.
What the F&I person believes is the best rate, and what a regulator, reporter, or a plaintiff’s attorney believes is the best rate are two entirely different things. To anyone outside the car business, the best rate is either the dealers buy rate or the lowest rate known to man. To the F&I person, it’s the buy rate plus x number of points. Any reference to the APR being the best rate available will be seen as a deceptive act on the part of the F&I practitioner.
Bear in mind, there is nothing illegal, unethical, or immoral about a reasonable markup of the buy rate. The F&I practitioner, on behalf of a funding source, is competing with other funding options for the business, negotiating mutually acceptable terms, preparing the necessary documentation, and conducting the required disclosures. As such, he or she should be fairly compensated for providing these services. The most rabid opponent to in-store funding will grudgingly concede this point- however, the practice somehow slides over to the Dark Side with the use of the word best.
A greater effort might be mounted in defense of the practice if an acceptable solution wasn’t so readily available. The simple response to a best rate inquiry is, if you wish to finance here, this is the rate that is available, and nothing else. Any further explanation will either create a legal liability or tip off the customer that there is something to be gained from pursuing the matter.
If the customer persists by asking again, the response is, since I have no way of knowing what funding resources are available to you, I can’t make any judgment about what your best rate might be. You are free to explore your options, but if you wish to finance here, this is the rate that available. This is a true statement- the customers brother-in-law might be the local banker, so who knows at what rate he can borrow money.
As a quick caveat, stay away from discussions that tie, directly or by inference, the quoted APR to the customer’s credit history. Keep your responses simple and to the point. Any embellishments may imply that you are calling the credit-personally making a credit decision as it relates the customer’s credit worthiness.
Statements such as the APR is based on your credit history are only partially true because the finance charge also includes the dealer mark-up at an amount based on the F&I persons discretion. Adding the qualifier tag line…and other factors when discussing the quoted APR, begs the question, what are the other factors? Again, keep it simple.
The statement if you wish to finance here this is the APR or money-factor that is available does just what it is intended to do. It is to the point and free from any statement made by the F&I practitioner that would cause the customer not to seek a competitive comparison-as would be the case if the word best is used. The aforementioned statement satisfies the legal and moral obligation to fully and accurately disclose the APR or money factor to those who take advantage of the funding options offered by the selling dealer.