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Preventive Medicine

“Congratulations! You’re going to love your new phone plan,” the salesperson told me. “If you have any problems, don’t hesitate to call. We’re here to help.”

I was all smiles after spending nearly two hours at my friendly neighborhood mobile phone store. I really had been among friends, because many of the employees have purchased cars from my dealership. I was sure they had solved my issues with dropped calls. They even upgraded my phone and plan. Everything was good until the first bill arrived.

My eyes just about popped out of their sockets as I scrolled through my 14-page statement, which outlined the terms of my two-year commitment. I recounted in my head the conversation I had with the salesperson as I drove back to the store. I recalled the sales manager reviewing several options with me. He explained the best plan to me in layman’s terms, much like I did when he purchased a service contract from me last year. What had I missed?

The manager was busy when I arrived, so another salesperson jumped in to explain the new agreement and the other options that were available. In retrospect, I probably would’ve chosen another plan, but it was too late. But after a long conversation with the salesperson, I left a little calmer than I arrived. My new plan, I learned, did offer some pretty nice benefits.

The experience got me thinking about disclosures and customer satisfaction in F&I. You see, customers and sales staff want everything we do to be quick, smooth and trouble-free. I guess that’s why we must be experts at what we do. Not only do we need to answer questions without hesitation, we must explain what our products do in a way the customer understands.

Unfortunately, customers are so excited about getting behind the wheel that many of the details we discussed are forgotten. That’s why it’s critical that the customer understands what they’re buying before they commit. Nothing is more nauseating than getting a call the next day from a customer who is upset about the coverage or terms of a product. To help, I’ve put together some recommendations that will help you head off buyer’s remorse.

Product Knowledge: You can’t expect your customers to understand products if you don’t. Thoroughly read every line of the description and make absolutely certain you understand the contents. Do the same with the coverage provision. Also learn the difference between “wear and tear” and “breakdown,” because not all service contract providers define those terms the same way. Also be sure to pay special attention to the sections dealing with exclusions and noncovered items. For GAP, make sure you know the difference between a waiver and an addendum, as some providers offer additional benefits such as deductible coverage.   

Contract Knowledge: Read the various installment sales contracts you execute and get clarity on items you don’t completely understand. For example, various contracts will have exclusionary language regarding early payoffs and penalties. Don’t assume they’re all written by the same legal departments, because they’re not. Yes, LAW contracts are pretty well accepted by most finance sources, but some lenders will employ their own versions. So familiarize yourself with the differences to avoid any future misunderstandings.

Disclose, Disclose and Disclose Some More: Let’s start with finance contract disclosure. If you’re not completely familiar with Regulation Z and the Truth In Lending Act, I suggest you start studying the “CARLAW F&I Legal Desk Book” written by the attorneys at Hudson Cook LLP. It’s an excellent resource that breaks down the laws in clear terms. Remember, there’s more to disclosure than those five boxes at the top of the contract.

As for product disclosure, to avoid premature cancellations, review your service contract’s “stated coverage” section and disclose the coverage items line by line. Remind your customers what the deductibles are and that they are responsible for any diagnostic shop bill until the covered part is authorized to be fixed. As for GAP, make sure your customers know they are responsible for making their monthly payment until the claim is paid. The same goes for credit insurance.

Just remember that we do this stuff every day, while our customers do it every few years or so. So don’t assume they can read your mind or that they will read the documents after the fact. Take responsibility by making sure your customers are as informed as they can be. Good luck and keep closing.


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