A Peek Into the Future for F&I... Buckle Up

What does the near future hold for F&I? There is no crystal ball to forecast what is to come but there are some early indicators the industry needs to watch.

‍Repos Are Coming

‍Lenders are concerned about the next few months as more people emerge from forbearance programs. There is palpable worry about overall losses and though delinquencies remain historically low for now, COVID-19 resurgence in what public health organizations are calling the ‘second wave’ is starting to spook markets. TransUnion is estimating that if employment numbers do not rebound strongly and soon, there will be a significant peak in delinquencies as we move into Q4. Many were hoping for the passage of a new stimulus bill to help stem that tide with another round of direct checks to borrowers but it’s looking unlikely now.

‍Riding the Wave in F&I

‍No one knows more about how to get a deal done than the F&I staff. They know the ‘bankers’ and they are on the front lines of this turbulent time in lending every day. It’s all about being prepared for changes in lending standards and being sure to stay in communication with preferred banks to be able to adapt quickly. Knowing that lenders are more likely to ask for POI now, have F&I ask for it upfront as a way to be prepared. Maybe the lender asks, maybe not but better to be ready for quicker approval.

With aftermarket and ancillaries, lenders seem to be holding fast on allowing them especially now that buyers need all the protection they can get against unexpected mechanical breakdown or cosmetic issues. Whatever saves these borrowers and keeps more money in their pockets is going to be approved. It’s clear lenders are not in the same place they were during the Great Recession but it doesn’t mean that the economic effects of COVID-19 have not spooked them. Make sure F&I is prepared to get the best approvals they can by being dialed into the changing state of lending. The rest of 2020 and into 2021 will be a bumpy ride.

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