Now that consumers are shopping for auto loans online in the same way they shop for cars online, the F&I pricing model is changing. Internet shopping is ushering in a new level of competition, comparison-shopping and transparency for auto loan deals.
The auto finance track at next week's Consumer Bankers Association conference in Austin, Texas, promises a heavy emphasis on the online channel.
More customers are walking into showrooms with a strong preference for a particular lender or with finance approval already in hand. That presents a new set of challenges for dealerships, which rely on negotiating indirect loans for a great deal of their F&I profits, not to mention overall profits.
Meanwhile, at other recent auto finance conferences, auto lenders have said they're taking more and more credit applications online. A lot of those loan applications will get switched to indirect loans when customers actually enter dealerships, but some lender-direct loans are bound to stick.
That means F&I managers have a real fight on their hands.