By Jared Zimlin, Director of Business Development, Elite Recreational Finance, an MRAA Education Champion
You’ve likely faced some tough challenges in F&I that directly dampen your sales potential. These hurdles, from limited lender options and higher interest rates to tightening guidelines and aged inventory being devalued, are difficult to navigate alone. Let’s take a closer look at these pain points and explore some steps to take to help your dealership.
Bolster Your Chance for Success
What can you do to overcome these challenges in F&I to thrive in the current economy?
The answer is surprisingly simple: It all comes down to the lenders in your F&I toolbox. Do you have the right mix? Are you utilizing their programs to the fullest? Are there other lenders you can add to bolster your chances for success?
- Address Your Current Lender Mix
• Review Rate Sheets: Examine all your lenders’ rate sheets to understand their rates, terms, advance guidelines and age limits. Some lenders consider 2023 models as new, have debt-to-income limits of 50% instead of 40%, offer rates starting in the 6% range and address other challenges.
• Communicate with Lenders: Call your lender representatives and some underwriters. Discuss recent deals that were declined or received unfavorable terms. They may have solutions not listed on the rate sheet.
• Expand Your Lender Network: Sign up with more lenders to fill gaps in your current mix. The National Marine Lenders Association is a great resource for finding marine lenders and service providers. (Use NMLA Lender Search)
• Leverage F&I Providers: If you work with an F&I provider, they are likely NMLA members and have access to these lenders. Call them, review your portfolio and ensure you have the right mix for the collateral you sell (new, pre-owned, consignment, small ticket, large ticket, prime and sub-prime). - Structure Your Deals for Success
• Understand Loan to Value (LTV): The best rates typically depend on a combination of credit score, amount to finance and LTV. Calculate LTV by dividing the amount the customer is financing by your invoice cost with discounts added back in. For pre-owned boats, refer to J.D. Power and follow the lenders guidelines to see if they accept wholesale, retail and how that value options. Compare this to the lenders’ rate sheets. Learn how to make LTV work for you.
• Prepare Customers for Down Payments: Inform customers about the impact of down payments on rates. Get deals approved with both the down payment they want and the down payment needed for the best rate. Present both options and let them choose.
• Consult Your F&I Manager or Service Provider: Your F&I Manager or service provider should know all this. Discuss LTV when submitting a deal and get guidance on the right down payment for the best rates.
Build Your Lender Portfolio
Regardless of whether you handle F&I in-house with a full-time finance manager, work with an F&I service provider, or use an all-hands-on-deck approach, no sale can be made, nor any backend profit earned, on a deal that gets declined or a customer who walks due to unfavorable terms. Reviewing, improving and leveraging your lender portfolio will help you get more approvals, earn more sales, generate more revenue and create more happy customers today and for your future boat sales.
About the Author
Jared Zimlin is the Director of Business Development, Elite Recreational Finance, Education Champions with MRAA. He draws upon his two decades of business development experience solving problems for manufacturers, distributors and dealers across multiple industries with comprehensive retail finance, equipment finance and inventory finance solutions. A University of Florida alum, Zimlin is an avid cyclist and Club President of Gearlink Racing Inc.
