How to Increase Dealer Profitability Through Outsourced F&I
It’s a fact that margins on inventory are not where the real money is in running a boat, RV, camper, or trailer dealership. Your financing and insurance department is the true profit center, but most dealerships don’t have the infrastructure set up correctly to maximize gains. Here, we’ll explain why outsourcing your finance department is an efficient way to increase profitability.
Outsourcing Your Finance Department
Outsourcing your financing can lead to as much as a 20% increase in gross revenue on every unit sold. More money in your pocket offers not only a better financial situation for you personally but also greater flexibility for the entire dealership.
Not only can you increase your gains, but an outsourced F&I solution also reduces your overall costs. In the end, this all really comes down to staffing. When you’re trying to hire and maintain an internal staff, you have recruiting costs, salary, benefits, training, retention, and more to worry about. Not only are you taking a risk with internal staff and incurring more costs, but they also are generally not as experienced as an outsourced professional operation like Finance Solution.
Dealer Financing vs. Bank Financing
There are two conventional approaches to financing a new boat or RV purchase. First, the salespeople, an internal F&I manager, or dealership administrator handles the financing directly. Not only does this represent more staffing costs, as discussed earlier, but it also takes time away from what they do best (in the case of a salesperson, especially).
Second, a customer works directly with a bank to secure financing. This can either be based on a referral from the dealer or an independent search by the customer. Either way, they are unlikely to secure the best possible rates and are even less likely to get access to other related services like warranties.
There is a third way, though. Outsourcing virtually guarantees that a customer is going to get the best rate possible. It allows you to offer a more comprehensive, seamless process and generally improves the customer experience. All of this reflects back on your bottom line.
Features of Outsourced F&I
The sole purpose of an outsourced F&I firm is to move your units and sell F&I products to go along with them. So as long as your sales staff is equipped to get customers to sign, the experts at Finance Solution will increase your margins through a wide range of products like insurance and warranties.
Some of our benefits include:
Seasonal Services – Everyone knows that boat and RV sales are one of the most seasonal businesses out there. When you have an internal F&I department, they’re working (and getting paid) year-round regardless of how many units your salespeople are pushing. Finance Solution can work on an as-needed basis. Whether you need us year-round or just during the season, we’ll provide the same level of service.
Wide Service Offering – We’re providing warranties, insurance services, ensuring liability is transferred correctly, and more to create a truly end-to-end process. This helps simplify things for you, of course, but also creates a painless process for the buyer.
Reliable Expertise – Our team has years of experience, undergoes regular training on the latest developments in the industry, and has built up relationships with lenders that allow us to secure the best rates for your customers.
Outsourcing your F&I is a clear-cut way to boost bottom line profits, reduce extra unrelated work on your salespeople, improve the customer experience, and move more units.
No, outsourcing your F&I services isn’t free. Nothing is, you know that, but it’s best to play the comparison game here. Instead of spending money on staffing only to get inferior results, divert that money to your bottom line and spend a great deal less on an outsourced solution.
It’s unlikely that you are going to move many units if you leave customers to their own devices when looking for financing, so let’s leave that option off the table.
In-house F&I might seem like the logical choice when you’re going for that image of a one-stop shop, but this is an illusion. In fact, dealerships that work with Finance Solution tend to get better customer reviews precisely because customers had a better experience. Experiences where the process was smooth and seamless and where the adventure wasn’t held up by financing hurdles.