Hudson Cook partners Patty Covington and Eric Johnson are among the keynote speakers on the docket for a two-day online series hosted by Chernek Consulting titled, “F&I Master Series Online Forum — The Digital Age.”
Beginning on Wednesday, Covington, Johnson and more than two dozen other experts will be discussing trends and sharing best practices involving topics such as:
• Customer engagement
• Dealer talk on digital retailing
• F&I fundamentals and why the basics are important
• Turnover and how to mitigate it
• F&I candidates and how to grow your team
• Tackling the blind spots and getting your people trained
• Data security breaches and fraud
• New finance options for independent dealers
• Credit pulls — presale and after-sale
• Bridging the gap between finance and service
• Embracing change
• Empowering others, women make great F&I candidates
Registration for the event can be completed on this website.
In a conversation recorded during NADA Show 2022 in Las Vegas, Paul McCarthy of AUL Corp. shared recommendations for dealers to help them keep the strong profit momentum they’re currently enjoying in the F&I department.
The senior vice president of agency and dealer sales talked with senior editor Nick Zulovich before news surfaced that AUL Corp. is set to be acquired by the parent company of Protective Asset Protection.
To listen to this episode, click on the link available below, or visit the Auto Remarketing Podcast page.
Download and subscribe to the Auto Remarketing Podcast on iTunes or on Google Play.
The industry has seen more than its fair share of changes since the beginning of 2020. With much of the country on lockdown early in the pandemic, dealers were forced to expedite their digital retailing operations, enabling consumers to not only research for a new vehicle from the comfort of their home, but also have the power to secure financing, protection programs and complete transactions of the purchase without leaving their home.
This brought about great changes in the way people conducted research and made selections of the F&I products they chose for their new cars. When factories shuttered, placing disruptions to the supply of new cars and trucks, millions of people turned their attention toward used vehicles, making the selection of F&I products such as vehicle protection plans even more important.
Continued challenges for the industry
Now as the industry finds itself speeding toward the final months of 2021, many challenges continue to exist. While the promise of vaccinations has eased the fear of the pandemic, consumers, retailers and lenders continue to build on the momentum of digital retailing, especially with the threat of the Delta variant growing each day.
Further supply challenges for new vehicles from semiconductor chip shortages as well as other critical parts and supplies have also continued to place a strong emphasis on used vehicle inventories throughout the year.
Different vehicles on the lot mean different F&I needs
These continued changes have further reshaped not only the way people shop for vehicles, but also the type of vehicles they’re shopping for. As a result, the type of F&I products they’re seeking out at the dealership have also undergone a shift, and dealers need to realize how these changes in preference reshape which F&I products they carry in their portfolio.
In a recent survey to more than 2,000 F&I managers and dealership executives, approximately a quarter of respondents said the sale of F&I products to customers has increased between 5% and 10% so far in 2021 compared with 2020.
The pandemic created an opportunity for dealers and their F&I departments to offer more digital tools when customers are researching and selecting F&I product options for the vehicles they are shopping for. Forty-five percent of dealers now make F&I product information available online, followed by financing options/loan application online (35%), and F&I product selection and pricing online (33%).
Other key highlights of new F&I product trends:
• 44% say the ability to adjust products offered based on a customer’s needs are most needed to sell F&I products online; followed by the ability for customers to select product and coverage options (41%), and online tools like videos to explain product benefits (38%).
• 42% say increased coverage for existing protection products such as VSCs would be the most impactful to improving F&I product sales; followed by a more diverse set of F&I product options (41%), and more F&I products designed specifically for used vehicles (37%).
• 38% say selling F&I along with increased transaction prices represent the biggest opportunities in selling F&I products today versus pre-pandemic; followed by longer loan terms (37%), and more EV/plugin sales (36%).
Most F&I products have remained somewhat stable in terms of the breakdown of what was sold pre-pandemic versus today. However, the largest jump since the pandemic began has been identified in theft-deterrent systems. Twenty-one percent of dealers reported selling these systems prior to the pandemic, and today this number has jumped to 31% of dealers. This is mostly because many cars, even after purchase, are remaining parked at home as more people work from home today or continue to work in hybrid home/office settings and seek extra security for their vehicle
Digital retailing also reshapes the F&I lineup
Along with these changes in F&I product focus, a greater emphasis on digital retailing, online shopping, used vehicle and EV/hybrid product sales, means a larger number of dealers are looking for ways to maximize their opportunities in offering F&I products that cater to these shopper needs. Expanded F&I product lineups, customized product offerings and additional F&I product education for both the dealer and their customers are all growing in importance for today’s transaction-focused environment.
America looks vastly different today compared to just a few short years ago, especially with the way we shop for everything — including cars and trucks. Because of this, consumers have quickly adapted to the new ways in which they customize their vehicle purchase and that includes the F&I options they select on their vehicles during the shopping phase. As more dealerships embrace this change and leverage flexibility, agility and a changing F&I product makeup, they will not only sell more vehicles but they’ll also sell more F&I product options that truly satisfy their shoppers’ needs.
Travis Wools is vice president of marketing for Protective Asset Protection. A marketing and communications veteran, Travis has 14 years of automotive industry marketing experience, as well as background in market research, digital media and advertising. For more information, visit www.protective.com.
An expert from outside of the auto-finance industry offered three recommendations that could help F&I professionals work with potential customers who are not sitting in person across the desk from them in the finance office.
InQuasize president Michael Reddington is a certified forensic interviewer and leadership expert who runs a company that integrates the key components of effective non-confrontational interview techniques with current business research for business leaders and sales executives.
This week, Reddington shared three components of what he called the “Disciplined Listening Method” to provide sales executives, business leaders and business development professionals with the skills and perspectives they need to “use the truth to their advantage and get clients to say ‘I’ll buy it.’”
Reddington provided his top tips for successful negotiation in the age of Zoom:
It’s all in the attitude
“Clients have learned that they have the right to remain silent because anything they say will be used against them by the salesperson — especially in a digital age where time is even more limited,” Reddington said.
Reddington explained that sales professionals can benefit from embracing their perceived weaknesses to prepare their negotiation approaches by answering the following three questions:
— Why shouldn’t my customer purchase my products or services?
— Why hasn’t my customer already purchased my products or services?
— What does my customer need to experience to commit to purchasing my products or services?
Be strategic about word choice
Reddington pointed out that sales professionals can significantly increase their influence and decrease resistance by choosing their words strategically.
“This becomes even more important when prospectus calls are done via Zoom,” he said. “For example, limit how often they say the word ‘you’ and reference titles or groups their prospects and customers like to be associated with or frame their messages around universally accepted concepts.”
Don’t just ask questions, ask the right questions
Reddington acknowledged that questions can be perceived as invitations or attacks.
“Sales professionals will experience far more success when they illustrate their understanding of their prospects’ and customers’ situation prior to asking their questions and are more persuasive when they ask fewer, well thought out questions than when they ask too many questions,” he said.
More strategies can be found at inquasive.com.
With seven months of 2021 already completed, AUL Corp. senior vice president of strategic product development Jason Garner identified five key F&I tips to help dealerships and finance companies be even more successful during the remainder of the year.
Garner collaborated with his team at AUL to compile these tips using feedback from agents, dealers and consumers.
The five points include:
1. Ensure your technology-focused vehicle service contact or ancillary product includes an unlimited mileage provision.
“Consumers understand that their vehicle’s technology systems are not subject to miles-driven wear and tear,” Garner said. “Make sure your technology products cover these systems for the duration of term, regardless of how many or few miles driven.”
2. Review your F&I policy coverages to ensure they align with your vehicles.
“Today’s vehicles include many more features and amenities than in years past, including technologies such as lane assist, assistive braking, rear view cameras, etc.,” Garner said. “Be sure your F&I policies cover the systems your customers rely on most.”
3. Be sure to introduce your F&I offerings to the consumer as early as possible.
“With the rise of digital retailing, providing this information on the front-end allows the consumer to explore the policies they need/want prior to the sale, making the ‘yes’ that much easier,” he said.
4. Provide unlimited term options in all your policies.
“In these days of work from home, where we are driving considerably less, an unlimited term will provide coverage for the full mileage of the policy and provide peace of mind to the consumer,” Garner said.
“Further, it takes out the mental math of calculating how long 50,000 miles will last during the sales process. Unlimited terms have been delivering 10-15% greater sales success,” he added.
5. Use the OEM warranty.
“Disclosing coverages in the OEM warranty is an opportunity to build value in a VSC,” Garner said. “For instance, does the vehicle come with a different term of coverage for audio/entertainment than the basic OEM coverage? What is the definition of failure for the hybrid battery?
Garner went on to say, “As batteries lose capacity over time is the battery considered failed when capacity is less than 75% of the original or when 25% of the cells are no longer working?”
For more information about AUL’s offerings, visit www.aulcorp.com.
Weltman, Weinberg & Reis Co. and DRN are joining forces for a free, two-part educational webinar in an effort to help the entire repossession and recovery industries prepare for what might be coming down the default pipeline this year.
In the first session of this two-part, complimentary series, Weltman’s collateral recovery, compliance and collections team will answer some of the most frequently asked questions about the early stages of recovery.
Shareholder Scott Weltman will moderate the session featuring Weltman shareholder Amy Holbrook, Weltman attorney Stefanie Collier and DRN executive vice president Jeremiah Wheeler.
The webinar is scheduled for 2 p.m. ET on May 5.
The companies said these experts will share their recovery expertise on how to improve operational efficiencies and recoveries in a compliant manner at every turn on the road to recovery.
Other top takeaways set to come from the opening segment include:
— The benefits of utilizing data analytics to locate vehicles
— Learn vital repossession compliance and communication guidelines
— The pros and cons of the replevins legal route and why it’s important to use this tool.
“With defaulted auto loans expected to be on the rise as a result of the COVID-19 pandemic, it’s important to make sure your recovery engine is running on all cylinders,” event organizers said. “The road to recovery is full of twists and turns. The auto recovery process is anything but easy to navigate. Strict rules control what a lender can — and can’t — do if a customer fails to make timely payments, insure the vehicle and/or interfere with repossession.
“It’s critical that you understand recovery compliance, plus how to leverage data solutions and legal remedies that can drive your success,” they went on to say.
Registration for the webinar can be completed on this website.
The American Recovery Association’s relationship with its newest industry partner recently produced more fruit to help members.
Through its latest industry whitepaper, ARA highlighted that Bassford Remele takes a closer look at problematic provisions in a boilerplate clause, including:
• Indemnification clauses
• Limitation-of-liability clauses
• Dispute resolution clauses, including fee-shifting provisions, choice-of-law- provisions, choice-of-venue provisions and arbitration or mediation provisions.
“We are honored to present our latest industry White Paper addressing contracts that are being presented to our industry for our consideration,” ARA officials said. “While these points are not specific to any one contract, they address the terms that are in most of them.
“As noted in the whitepaper, these points or comments are not legal advice for your company but guidance for you to consider and consult with your attorney,” officials went on to say.
The whitepaper can be downloaded on this website.
Defaults are a bad outcome for both lenders and borrowers, and research shows that the mismatched timing between a person’s income and their bills is one of the most common reasons for these financial shortfalls.
A new behavioral science experiment conducted by Duke University’s Common Cents Lab with customers of Beneficial State Bank (BSB) shows a simple, creative way that banks can reverse this trend and reduce defaults by eliminating mismatches.
Target smaller, more frequent payments
While banks cannot influence borrower externalities like the loss of a job or a medical emergency that might lead to a missed payment or default, they are better positioned to address income and expense mismatches.
Auto loans in particular can be challenging for income flows because the default monthly payment date is almost always the day a vehicle is purchased. And while loan payments are due on a specific date every month (e.g., the 15th), many people are paid on certain days of the week (e.g., every other Friday).
To help close this gap, a text-able recurring payments form was designed for BSB borrowers so they could sync the autopay of their loans with their income. The experiment randomized over 1,000 new BSB auto loan customers into either a control group or an experimental group. During BSB’s required welcome call for new loan recipients, the experimental group was texted a recurring payments form to help them sync payments with income. The control condition did not get the form.
The form made it easy to make multiple payments because smaller payments often help with budgeting. For example, if a monthly auto loan payment was $397 (the average in the U.S. for a used car), a borrower could choose to do two smaller payments of $198.50. Since millions of people get paid weekly, they could even split it into four weekly payments of $99.25.
Faster, cheaper payments with no defaults
Importantly, while both the control and experimental groups reported high interest in the program, those in the experimental group who received the enrollment form were 2.3 times as likely to enroll in automatic payments. The members of this group were also more likely to divide their payment into smaller sub-payments that synced with income.
As a result, the experimental group performed far better in terms of defaults, on-time payments, and total payments. None of the members in the experimental group defaulted on their loan while 17 members in the control group defaulted. The synced group also paid sooner — an average of 1.4 days before the due date compared to 2.75 days after the due date for the control group – which meant fewer late fees. And by the study’s conclusion, the experimental group had paid 100% of their loan payments while the control group had paid an average of 94.2% of their total loan payment.
The big opportunity for banks
Small changes in an approach like this — rooted in natural human preference and inclinations — are a highly effective way to positively impact people’s lives. For someone whose income is tight, knowing there will be money in the bank when a loan payment is due makes it easier to confidently sign up for autopay, which can then have additional long-reaching impacts.
When even a single late payment on your car loan can result in late fees and damage to a credit score, autopay can be a tremendous advantage. Not to mention the worst-case scenario of repossession, which can jeopardize a person’s ability to work and earn an income.
At the same time, beyond avoiding missed or late payments, syncing payments can also help to pay off an auto loan faster, a win-win for both the borrower and the lender.
The great news is that building a program to time loan payments with income is an easy one to institute for most banks and lenders. It requires a minimum of time and investment, can be rolled out across multiple loan types and platforms, and produces immediate and obvious bottom-line benefits.
Ultimately, implementing behaviorally informed solutions like these are simple, effective ways to produce good outcomes for everyone involved.
Richard Mathera, Lindsay Juarez, and Kristen Berman are part of the Common Cents Lab at Duke University.
Thousands of individuals are getting their COVID-19 vaccinations daily, and business activities are gradually getting back toward what they were previously.
However, for auto finance companies, there still is not a single anecdote to cure all of their risk, making mitigation of it all the more important.
Rick Vanko, product manager for iLien Motor Vehicle for the Wolters Kluwer Lien Solutions business, joined the Auto Remarketing Podcast to discuss strategies finance companies can employ to create effective risk mitigation and more.
To listen to this episode, click on the link available below, or visit the Auto Remarketing Podcast page.
Download and subscribe to the Auto Remarketing Podcast on iTunes or on Google Play.
Handling personal property left in a repossessed vehicle is one of the most difficult industry challenges. It’s one that can result in significant consequences if not completed properly, as highlighted by a consent order made public in October involving the Consumer Financial Protection Bureau (CFPB) and Nissan Motor Acceptance Corp. (NMAC).
To help repossession agents, finance companies and other operations involved in repossessions, RISC recently generated a free report in partnership with Hudson Cook that summarized the details of personal property laws on a state-by-state basis.
Part of a commentary compiled by RISC president Holly Balogh and sent to SubPrime Auto Finance News, the company tried to illuminate the complex situation by taking a pastime path many people enjoy — trivia.
Balogh asked, “What do the states of Alaska, Arizona and Alabama have in common?” She then replied, “Besides starting with the letter A, they do not have any specific laws for how to handle personal property. Therefore, federal law must be adhered to.”
She had another one.
“What state requires a notification that the repossession agent is in possession of personal property? If you guessed Indiana, you got it right,” she said.
And then Balogh offered one more.
“What state has a requirement for special treatment for medical devices in the vehicle? If you guessed Maine, you would again be right,” she said.
While trivia certainly can be enjoyable, maintaining compliance with this aspect of repossession certainly is not time for playing since part of that $5 million consent order involving the CFPB and NMAC dealt with personal property in repossessed vehicles.
“Education is paramount to protecting yourself from liability in several different areas of the repossession process. When it comes to personal property, the rules vary by state and some states have specific regulations. Unfortunately, lenders may unknowingly put themselves at risk for fines if they are unaware of these unique laws,” Balogh wrote.
“As you can see from these few examples, some states, nine in all, have very unique and specific personal property requirements. RISC has taken a key step to support the industry and help all parties understand what rules must be followed,” she went on to say.
The RISC report can be found on this website.
