Operating The Best F&I Department Means
Never Saying The Word Best

by David N. Robertson

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What the F&I person believes is the best rate and what a regulator, reporter, or a plaintiff’s attorney believes is the best rate are two entirely different things. To anyone outside the car business, the best rate is either the dealer’s buy rate or the lowest rate known to man. To the F&I person, it’s the buy rate plus x number of points. Any reference to the APR being the best rate available will be seen as a deceptive act on the part of the F&I practitioner.

Bear in mind, there is nothing illegal, unethical, or immoral about a reasonable markup of the buy rate. The F&I practitioner, on behalf of a funding source, is competing with other funding options for the business, negotiating mutually acceptable terms, preparing the necessary documentation, and conducting the required disclosures. As such, he or she should be fairly compensated for providing these services. Even the most rabid opponent to in-store funding will grudgingly concede this point; however, the practice somehow slides over to the Dark Side with the use of the word best.

A greater effort might be mounted in defense of the practice if an acceptable solution wasn’t so readily available. The simple response to a best rate inquiry is, “If you wish to finance here, this is the rate that’s available” – and nothing else. Any further explanation may create a legal liability.

If the customer persists by asking again, the response is, “Since I have no way of knowing what funding resources are available to you, I can’t make any judgment about what your best rate might be. You are free to explore your options, but if you wish to finance here, this is the rate that’s available.” This is a true statement; the customer’s brother-in-law might be the local banker, so who knows at what rate he can borrow money.

As a quick caveat, stay away from discussions that tie, directly or by inference, the quoted APR to the customer’s credit history. Keep your responses simple and to the point. Any embellishments may imply that you are calling the credit – personally making a credit decision as it relates the customer’s creditworthiness.

Statements such as “the APR is based on your credit history” are only partially true because the finance charge also includes the dealer markup.

Keep your statement simple and direct to-the-point and free from any statement that might make the customer less inclined to seek a competitive comparison – as would be the case if the word best is used. This type of response satisfies both the legal and moral obligation to fully and accurately disclose the APR or money factor to those who take advantage of the funding options offered by the selling dealer – and may help keep you or your dealer out of the courtroom.

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