How to Fix Common Problems in Your F&I Department (Do It Now While Times Are Good)

Dealerships across the country are enjoying record profits in F&I with average PVR holding fast at almost $2000. Even in the midst of inventory shortage and rising interest rates, most would agree it’s a good time to be an F&I manager.

But even during the good times, it’s important to keep an eye on the overall health of the F&I environment. And a good director knows when things are going sideways and moves quickly to fix the issues. 

In fact, when times are good as they are now in the market, this is the best time for F&I directors to take the pulse of the department, see where improvements can be made, and lean into polishing processes and procedures to help weather economic storms on the horizon.

Let’s take a closer look at the signs of a dysfunctional F&I department and how to constructively use this more profitable time in the market to help correct them so that if the economy turns sour as many financial experts have predicted, your F&I department is ready to adjust and correct issues immediately.

Red Flags & Fixes -

  1. Teamwork is Non-Existent - Everyone is out for themselves and there is no sense of teamwork at all. This becomes a problem when egos run rampant and personalities just don’t gel. Most F&I managers will always have different personalities or approaches to some degree but when it causes friction and is allowed to run unchecked by the Director, it can cause huge problems. 

The Fix - Address this by working with the manager both individually and as a team. Encourage interaction either in the form of training or meetings where they can learn from each other. Organize offsite meetings if possible or a social activity for the managers to get to know each other at a more personal level. 

Fostering an environment of teamwork will help the department continue to make healthy profits now and in the future. No economic downturn will break a truly strong and supportive F&I team. 

  1. Increase in Chargebacks - If too many chargebacks are hitting month after month, that usually signals a disconnect with ethical selling within F&I. No F&I department ever succeeded with staff short-selling or payment packing. This red flag could signal the need for either better interview/screening of staff or it’s time to clean house.

The Fix - This is tricky. If you suspect an F&I manager of intentional fraud, there is no fix other than immediate termination. However, if you have a rookie in the box that may have been shown some shortcuts and unethical practices by a vet, this issue can be fixed. Working one-on-one with them to show that the chargeback rate is increasing and pinpointing where these deals are falling apart is the first step to see if it’s another’s influence causing the issue.

The second step is to push all F&I managers back into refresher training on sales and compliance. It’s never a bad idea to do this on a regular schedule anyway but this can help reduce chargebacks almost immediately. Staff will (hopefully) see where they can improve in the sales process to make sure customers buy products with confidence.

  1. Turnover on the Rise - If F&I staff are leaving at a rate higher than usual for your store, this is a sign something is wrong with the department culture. Some may leave for better compensation plan, of course, but if no clear reason is given, it may be something more serious than can be corrected. Harassment, poor management, or an overly competitive environment can all be enough to make a good F&I manager look elsewhere. 

The Fix - Turnover can be a result of a few things but it can be handled easily by simply asking why staff are leaving. If you are able to find out why, then you have a better chance at fixing the issues in the environment. If at all possible, have your management or HR staff for a candid assessment of the department. Maybe the employee will say something, maybe not but it’s worth trying to figure out what the issue is. 

Some companies do ‘exit interviews’ and while that may not be something readily associated with dealerships, maybe it’s time to try if there is an abundance of F&I turnover. Move quickly on issues like the ones mentioned above…weed out the bad apples, ramp up quality training to give staff the knowledge they need to be successful, and be sure your Director is up to the task of managing differing personalities to help get the best from everyone.

All is not lost…if even one of these signs is popping up at your dealership, it’s not too late to identify the issue and address it before it has a more far-reaching effect. Don’t be afraid to dig deep and be willing to make the hard decisions…your dealership will be better for it now while the good times roll and down the road if things get tougher.

Not happy with your current F&I provider? Maybe it’s time for a true F&I partner instead. TruWarranty is here to help give your profit margin the boost it needs…reach out today for a demo and see why more dealer groups are making the switch.

date published
November 18, 2022

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