What the Consumer Doesn’t Know: Demystifying the F&I Department

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Bruce Newmark has spent decades in the auto finance industry, coming into the industry through a finance and insurance (F&I) department role before progressing into sales and eventually becoming the partner of a major Ford dealership in the Los Angeles area. From there, Newmark became the Head of Marketing at Westlake Financial during the company’s national expansion from two to 40 states. Since then, he has served as the president of multiple auto-finance companies, including Mark One Holdings and Westlake Financial.

How does an F&I department work? How do you differentiate the products sold?

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F&I is shorthand for a finance and insurance department at a dealership. Drivers deal with these professionals to arrange a loan, structure their vehicle finance package, and add supplemental products to their purchases. What’s important for consumers to know is the difference between hard costs and cancellable products. Hard costs are items that are purchased upon sale and not cancellable (paint sealant, window etching) whereas cancellable costs include the warranties, waivers, and extras that are offered, like GAP.

How do providers, dealers, and consumers interact when it comes to a GAP redemption or refund? What may they not know?

GAP stands for Guaranteed Asset Protection and is a product that consumers pay into to protect them from owing more on their auto loan than what the car was worth at the time of a total loss. What the consumer needs to know, and why dealers or providers are being increasingly scrutinized, is more about how valuable GAP could be. For example, if the driver has made a meaningful downpayment on their loan, the loan value reduces the value of a GAP. Regulators are spending more time reviewing if loan administrators and dealers are infringing on Unfair, Deceptive, and Abusive Acts or Practices (UDAAP) regulations relative to this.

What are drivers entitled to in terms of the GAP refund communication and payment?

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Once the loan term is extinguished, that refund is immediately due. Many regulators think that the moment of payoff is when the refund should be applied to the account balance, which is more proactive than what the industry standard has been in the past. The question is who refunds it (whether it’s the dealer or the lender) and when. For the consumer, the standard timeline is 30 days, but modern digital payments have also been helping providers expedite the communications and time to receive funds.

How does the speed of the payment relate to liability?

From a best practices standpoint, satisfaction is related to speed when sending funds to a customer, regulators are looking at responsiveness to a customer. The best standard is that cancellation should be as seamless as it is to buy the product, and refunding with digital payments can make the experience faster for a consumer.

About Onbe

Onbe is a fintech that enables auto lenders and financial institutions to reduce B2C payment costs and modernize payment experiences, while maintaining full regulatory compliance. Onbe’s team of experts and technology platform offer clients a turnkey solution for GAP refunds, loan and lease overpayments, and auto sales incentives. Backed by top-tier investors, Onbe delivers on today’s consumer expectations for instant, digital and seamless payments. To learn more, visit www.onbe.com and follow us on LinkedIn.