When I began my career in the car business nearly 30 years ago, the position of F&I was, in my opinion, hands down the best job in the store. Sure, the general manager ran the dealership, but there was something so alluring about F&I. Becoming an F&I manager was my obsession and, in large part, my passion for much of my adult life.
Back then, finance directors sat in the back of the store, reviewing stacks of deals, crunching numbers, and talking with banks. As a young salesman, I would sit and listen to calls with buyers and marvel at how a short conversation about credit guidelines and deal structure could shift a decision from "declined" to "approved." I thought understanding how to "hang paper" was the coolest part of the job.
When F&I Had Real Power
Buyers and F&I managers were often friends who helped each other hit goals. Decisions were about program knowledge, how to make a deal "fit," and factors greater than just one transaction. As an F&I manager, I valued my buyers and wanted them to succeed. When I spoke with marginal or subprime customers who felt extra risky or displayed an indifference toward rebuilding their credit, I would place those loans with a finance source that would welcome the risk rather than one that wouldn't see it coming — even if it meant losing a few dollars. The relationship was simply more important.
I once watched a mentor send 70-plus deals to a captive finance company — not our normal practice — because his preferred source had refused to buy a deal he'd "spotted" on them. This may sound extreme, but it worked. It allowed us to roll 600 units a month with very quick transaction times before internet portals even existed.
It was impressive to watch the combination of leverage, finesse, program knowledge, and relationships that great F&I directors and managers had with their banks. They were more than "another closer" — they were the conduit between the dealership and the money. A quality F&I manager could not only add units and gross, they could literally change the entire culture of their dealership.
A Shift in the Balance of Power
An easy way to see who controls society is to look at who owns the biggest buildings in town. For thousands of years, cities were ruled by government buildings and churches. Today, the biggest buildings belong to banks. The banks control most of the money, and that money is a necessary ingredient for any successful F&I department.
True captives create space for dealers that often keeps competition healthy through programs specifically designed to move units. In 1919, General Motors didn't rely on outside banks — they formed General Motors Acceptance Corp. (GMAC), which drove GM sales forward for decades. In 1932, the Glass-Steagall Act was enacted to prevent another crash by separating investment and commercial banking. Unfortunately, Congress voted to repeal it in 1999. This allowed commercial and investment banks to merge — and eventually led to billions of dollars in pension and retirement funds being used for speculative investments, requiring the $700 billion bailouts of 2008.
The Portal Problem
With platforms like Dealertrack and RouteOne fully embedded in dealerships — and with constant pressure to reduce transaction times — sales managers began submitting deals directly at the desk. This practice, while intended to help transaction times, had an unintended side effect: it took structure and finesse out of the initial deal submission.
Rather than having sales review the deal with F&I and getting the F&I manager involved early, many managers just moved forward with whatever the bank was willing to give. The art of crafting deals, working relationships, and rehashing began to fade. Today, in many stores, it's effectively gone.
"Many deals are just cut by sales managers upon receipt of the first green checkmark or counteroffer — instead of actually working the deal."
For banks, it's now more about algorithms and formulas. This new auto finance model is also a very easy way to ensure they only get clean business — they can move specific parameters, at will, to achieve their goals. Asking a buyer to stretch on a deal is often met with, "I can't. The computer won't let me." And that may be the case — but not always.
The Portfolio Nobody Is Reading
If your loan portfolio is performing well, that's great for your source. But it also needs to be great for your store. Otherwise it's just a one-way relationship. Stand up and ask anyone in your store how your "book of business" is performing — by app count, volume, yield, or delinquency. They probably won't know. Many banks don't even want to discuss it unless things go wrong.
We know that lenders must expect some delinquency and some defaults. If the paper they're buying from your store is performing perfectly, that's actually a red flag. A perfect portfolio means the finance source could only be buying the good loans and passing on the marginal ones. This means that a certain percentage of the time, you're missing opportunities for approvals and more favorable callbacks. The downstream effect: lower unit sales, lower sales morale, lower F&I profits, lower customer satisfaction, and lower service department revenue.
Getting the Art Back
I suggest all dealers take a hard look at who is allowed to submit and rehash deals. If the "profit prevention manager" is calling in your paper, it will cost you significantly. Stores should routinely review their lending relationships — meeting with each source, asking questions about their programs, and finding out how your business is actually performing.
Learn which sources will partner with you to ensure your success. Who has flexibility built into their programs? Who will stretch for your deals when needed? It's never been more important to find where mutually beneficial relationships exist. Right now, too many dealers are fighting for profit while margins continue to shrink — not because F&I is dead, but because the art has been quietly handed over to an algorithm.
The F&I department, when staffed and structured correctly, remains the most profitable department in the store. But it requires human craft — the kind that can't be replicated by a portal or automated by a checkbox. That craft starts with knowing your products, knowing your banks, and treating the job like the profession it is.
