Why Are So Few Dealers Adding F&I to Their Digital Storefronts?

Many dealers today are struggling to build a decent online storefront. They know that consumers do research online before they begin actively shopping for a car. They know that many car shoppers even choose their vehicles online before they venture into the dealership. They check reviews, they ask friends and family for recommendations, and they compare models and packages.

The dealer online storefront seems to reaching limitations, however. Few dealers have put the finance and insurance (F&I) process online, and it’s a sticking point with customers, according to a recent Wards Auto article. It’s also an unnecessary roadblock.

“After a long day, haggling over terms and prices is an unnecessary stress point, especially if it can be done ahead of time,” wrote Wards Auto’s Bob George. “Bringing F&I online dramatically reduces the paperwork. The latest Cox study shows negotiating and completing paperwork online has the single-greatest impact on reducing a customer’s time at the dealership.”

So why wouldn’t dealers want to bring the most tiresome, least exciting part of the vehicle buying process online?  After all, it would reduce paperwork, cut the amount of time each salesperson needs to spend with buyers, and even (according to the 2019 Cox Automotive Car Buyer Journey study) cut about 45 minutes out of the average F&I process. It could also boost dealer profits.

“F&I is a key way for dealers to increase profits,” wrote George. “Highlighting aftermarket services and products, such as pre-paid maintenance plans, extended service contracts and accessories drives consumer interest to these F&I products.”

At the very least, dealers should be looking to put a payment calculator on their web sites that will provide shoppers with estimated monthly car payments that include all taxes, fees, trade-ins, discounts and incentives. This up-front tool can help improve the transparency of the process and prevent sticker shock in shoppers.

Dealers should also consider bringing F&I fully online and allowing shoppers to apply for financing right from their web sites. According to Ward’s Auto, only 16 percent of dealers are currently offering F&I tools in their digital storefronts. There is no shortage of these tools, with everyone from CDK Global to Roadster offering online solutions and even mobile apps for consumers to find the best financing deal.

Why are so few dealers offering online F&I? It may be because they fear losing traditional revenue streams like the dealer reserve. But customers are demanding these tools and withholding them is hurting dealers’ potential earnings.

“Dealers need to get moving to create mobile apps to let customers handle their financing needs,” Jim Houston, senior director of auto finance with J.D. Power, told Automotive News. “Those are customers who are saying they do not want to sit in an F&I office. Yet when they can do it themselves, they have a high level of satisfaction. It’s a new opportunity for F&I managers to sell their products. But they need to do it on the consumers’ terms.”