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 and 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.
An F&I Manager is responsible for the finance department of an automotive, power sports or RV dealership.
Approximately 85% of new vehicles purchased in the United States are 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:
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:
Once all documents are signed, the F&I Manager will authorize the vehicle for delivery. This means that the customer will receive their keys and may drive home with their new vehicle.
The average salary of an F&I manager is $132,786 according to a study conducted by the National Automobile Dealers Association.
Keep in mind that this is an average, and the actual amount that an F&I Manager will earn depends on:
Top F&I Managers earn significantly more money than the average. It is not uncommon for top F&I performers to exceed $200,000 per year.
In fact, 58% of F&I Directors, which is the next step up from F&I Manager, earn more than $151,000 annually, according to a poll by Finance Manager.
Top F&I Managers are highly skilled and take continuing education very seriously.
The majority of F&I Managers are commission-based employees paid via a pay plan.
A pay-plan details the methodology and numerical goals on which an F&I Manager will be paid.
This is typically a mixture of salary, draw, demo car allowance, and commission.
Here is an example of an F&I Managers pay plan. Please keep in mind that pay plans will vary between region and even dealership or brand.
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:
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.
The F&I career path typically starts as a salesperson in a dealership.
The quickest and most convenient way to become an F&I Manager is by enrolling in an F&I School.
An F&I School will enable you to drastically decrease the deep learning curve that most salespeople will experience when transitioning from the sales floor to the F&I Office.
For decades, enrolling in an F&I School meant getting on a plane, flying to another city, staying in a hotel for up to a month, and sitting in a classroom.
Today, some F&I Schools offer 100% online training, which allows those who want to become an F&I Manager to do so from the comfort of their home.
F&I Training ranges from $297 per month with Finance Manager Training's online education platform, up to $15,000 for some F&I Institutes in-person classrooms.
Since "F&I is F&I" regardless of the price you pay, many students choose the more affordable F&I Manager training offered by Finance Manager Training.
F&I Certification is available online by enrolling in a licensed F&I School that allows online education. We are one of those schools!
Our world-class F&I Training can help you learn completely online and from the comfort of your phone.