Dealership F&I Manager - Everything You Need To Know in 2024 (2024)

This article will answer the following questions: What is F&I? What is an F&I Manager? And what does F&I mean?

F&I is an acronym that stands for Finance and Insurance. Therefore, an F&I Manager is a Finance and Insurance Manager.

While there are Finance Managers in many industries, when you hear the term “F&I Manager,” you are likely hearing about an automotive F&I Manager that works in dealerships.

Quick Recap:

• F&I stands for Finance & Insurance.
• An F&I Manager is a Finance & Insurance Manager.
• F&I Managers work in dealerships.

Approximately 85% of new vehicles purchased in the United Statesare financed. This makes the Finance and Insurance Manager one of the most important people in a dealership’s operations.

In order to finance a vehicle, the purchaser must fill out a credit application. The F&I Manager reviews this credit application and then enters the information into special software that simultaneously speaks to multiple banks and lenders.

Before submitting the credit application to lenders, the Finance & Insurance Manager will examine the purchaser’s credit report. They will look for specific information to help them choose which lenders are most suitable for the customer.

Some of the information the F&I Manager will review, includes:

• The amount of debt on the purchasers credit report.
• The amount of income on the credit application, in relation to the amount of debt.
• Past auto loans. Were they paid on time? The amount of the loan. And the lender.
• Any late payments or deragatory credit remarks with lenders the dealership uses.
• Job status - Length of employment.

Did You Know?
Finance Manager Training is one of the only licensed F&I Schools in the entire world! FMT is licensed by the NYS Education Department (BPSS). When choosing an F&I program, check to make sure they are licensed before signing up!

Let’s talk about why the F&I Manager will examine these items and what they are looking for.

The amount of debt an individual has in relation to their income is called their DTI, which stands for Debt to Income. Banks and lenders use DTI as a factor when deciding whether to approve, decline, or counter a credit application.

Past auto loans are also important. It gives the F&I Manager an inside glance into which lenders the customer has a prior relationship with and the amount of the previously approved loan.

Let’s try an example: The F&I Manager reviews the credit report and sees that “Lender Z” approved the customer for a $25,000 auto loan only four years ago. They also see that their payments were all made on time, and they know from the customer’s credit application they have been at the same job and residence for over five years.

With a positive repayment history and the same qualifications (job & residence) as the prior loan, there is an excellent chance that Lender Z will want to do business with the customer again.

The length of time an individual has been at their current job is especially important for subprime F&I. Lenders like to know that they have steady and consistent employment and do not frequently move from job to job.

After reviewing this information, the F&I Manager will:

• Choose lenders to submit the credit application, based on his or her analysis of the credit report and credit application.
• Review the responses from each lender and choose the best option for the customer and the dealership.
• Present the loan terms to the customer for consideration and approval.
• Collects the downpayment and any lender stipulations from the purchaser.
• Explains valuable protection options to the individual and allows them to choose what is best for them.
• Presents all legal documents, lender documents, and protection documents to the purchaser for signing.

• What city and state the F&I Manager works in.
• How busy their dealership is.
• How good they are at their job.

• $400 per week salary.
• $600 per week draw.
• $300 per month demo car allowance.
• 12% of the back-end profit.
• Minus product cancellations.

Let’s examine each part of this pay plan.

$400 per week is the salary component. This money is guaranteed and never has to be paid back.

This F&I Managers draw is $600 per week. A draw is a pre-payment of commissioned earnings and allows the manager to pay their weekly bills without waiting until the end of the month for their commission check. This money is “paid back” by deducting from the 12% they earn in commission.

For decades, dealerships provided their managers with a demo car to drive. Today, insurance companies find that too risky. Instead, some dealerships offer a demo car allowance. This allowance is given the same way a salary would. It is a guaranteed payment that does not need to be returned.

Lastly, this fictional F&I Manager receives 12% of the profit they generate for the finance department, minus product cancellations.

Let’s look at how this pans out over a full month using typical dealership numbers:

• $400 salary X 4 weeks = $1,600
• $600 draw X 4 weeks = $2,400
• $300 demo allowance X 1 = $300
• $87,000 X 12% = $10,440

• Subtotal: $14,740

• Minus $2,400 Draw

• TOTAL INCOME FOR THE MONTH: $12,340

The F&I Manager had 75 deals and profited $1,200 per deal in this example. Therefore, they generated $90,000 in back-end profit for their dealership. But don’t forget about product cancellations!

After removing $3,000 in product cancellations, the F&I Manager is left with a net of $87,000. His portion of that profit is 12%, which results in a commission of $10,440.

Add in the F&I Managers salary and demo allowance, then subtract their draw. This brings the F&I Managers total net income for the month to $12,340.

On an annual basis, this would put the F&I Manager on pace to be just above the average F&I Manager.