September 7

What Does F&I Mean for Cars and Why Is It Important?

Last Updated on September 7, 2023

The term F&I carries weight in the automotive industry. Those two letters stand for finance and insurance and they represent the back-end profit center in a car dealership. The very department responsible for selling finance and insurance products, and ensuring a seamless car buying experience. Boosting overall profitability and customer satisfaction means the F&I department plays an integral role in the industry.

Role of the F&I Manager

Within the finance and insurance department, the F&I manager is the person responsible for offering various products and services to customers, with an end result of improved customer loyalty. These professionals provide a broad array of add-ons including vehicle service contracts, GAP insurance, extended warranties, and connecting clients with loan options. They are also responsible for ensuring legal compliance, which helps to foster a trustworthy and reputable environment.

How F&I Impacts the Car Buying Experience

The F&I department’s role is to streamline the buying process and make it beneficial for both the dealership and the car buyer. They help with navigating financing plans through various credit unions and other institutions, guaranteeing the best possible deals. That takes into account not just available loans, but the best loan repayment options.

F&I products such as extended service contracts and GAP insurance also make the car purchase safer and more reliable for customers. For instance, vehicle service contracts can cover a wide range of maintenance services, including top-quality repairs and oil changes. These offerings save customers more money in the long run. And when appropriate, the department also aids in facilitating trade-ins. By doing their job well, the dealership will improve customer loyalty, opening up more sales opportunities in the future.

Vehicle Service Contracts

Dealers usually include a vehicle service contract as part of the F&I product lineup. The manager will present this option to customers after the vehicle purchase, adding an extra layer of security and peace of mind. Service contracts cover a range of possible car issues, guaranteeing top-quality repairs from the service department. Buyers appreciate knowing that their new vehicle is protected against unexpected repair costs.

Anti-theft Products

One popular type of add-on provided by F&I offices are anti-theft products. These range from VIN etching, which is engraving the vehicle identification number onto various parts of the car, to advanced GPS tracking systems. These products provide an extra layer of security and may also offer a potential discount on your auto insurance.

Wheel and Tire Warranties

Wheel and tire warranties are another popular choice, as they cover the cost of repairing or replacing tires and wheels that are damaged by road hazards such as potholes and debris. These warranties are especially useful for those driving in areas with known rough road conditions.

Extended Warranties

Extended warranties are another important offering from the F&I department, offering long-term protection for the vehicle, covering the costs of any unforeseen issues that may arise after the manufacturer’s warranty expires.

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GAP Insurance

Similarly, guaranteed assets protection insurance or GAP, protects customers in the event their vehicle is totaled or stolen and they owe more on the loan than the insurance payout. That way customers aren’t stuck with a hefty bill.

Key Replacement

Modern keys make for expensive technology, which is bad news when they get lost. You have the option of buying this add-on to get a remake of the previous device.

Product Bundles

Many F&I departments offer product bundles, which provide consumers with a package of several products and services at a discounted rate. For example, a bundle could include an extended warranty, wheel and tire protection, and a prepaid maintenance plan, all for one price.

Menu Sales Method

The menu sales method is a standardized approach to presenting F&I products and services to consumers. This involves showing customers a menu of all available products and options, often categorized into different packages. This method makes understanding the variety of offerings and their benefits easier for customers. The menu approach has been lauded for its transparency, allowing consumers to make more informed choices.

Enhancing the Dealership’s Profitability

While the F&I department’s primary role is enhancing the customer experience and satisfaction, it also greatly contributes to a dealership’s profitability. One report from Edmunds suggest that F&I is such an important source of dealership income that according to the NADA, that around 73% of used car and 90% of new ones are bought through a financing option or alongside a post-sale product, or did a combination of both.

Last year, Joe St. John, former vice president of StoneEagle F&I sat down for an interview and echoed these sentiments.

“Gross profit numbers in 2021, they’re just off to the races! You’re talking roughly 300 dollars a car, in F&I, more in 21 versus 20. And to me that is an unbelievable indicator in the profitability of dealerships. One that that is really interesting and tied to that is that isn’t just coming from an increase in rate spread and finance reserve. That number is coming from customers buying more F&I products.”

Selling F&I products like vehicle service contracts, extended warranties, and GAP insurance presents additional sales opportunities beyond the initial car sale. That includes the crucial role played by F&I managers who forge relationships with financial institutions and other lenders. They negotiate loan terms, thereby ensuring customers receive competitive financing options while also boosting the dealership’s revenue. By coordinating with other companies, the F&I department ensures a smooth transaction for every vehicle purchase, which pulls in more customers.

Legal Compliance

Legal compliance is a critical aspect of the F&I department’s operations. Managers must ensure that all transactions comply with local, state, and federal regulations. This includes adherence to fair lending practices, truth in lending laws, and other relevant regulations. The finance and insurance manager has to maintain transparency and integrity in all dealings, otherwise, the company’s reputation and business dealings are at stake.

How F&I on Customer Loyalty and Satisfaction

While the F&I office is the stomping ground for managers, it is the testing grounds for customers. F&I managers have the challenging task of providing clients with appropriate products and services while ensuring that the dealership maintains profitability. However, for some companies, the opposite is true.

Businesses can gauge customer loyalty and satisfaction through personal responses, reviews, and data detailing repeat and new customers. If dealers feel like they are lacking in anyway, they can then use customer critique as a means of developing. Improved customer services creates improved customer loyalty.

Whether you are currently or an aspiring F&I manager, there are paid and free lessons you can take from places like Finance Manager Training, which also offers an option for F&I certification.

Conversely, if you are a customer, you can make your thoughts known the aforementioned means, and through social media. Some people write reviews on businesses through websites like Trustpilot, or if you worked for the company, through sites like Glassdoor.

Frequently Asked Questions

What does F&I mean in automotive terms?

F&I stands for finance & insurance. It’s the department within a car dealership that handles the financing and insurance aspects of a vehicle purchase. The F&I department works with customers to secure loans, offer optional insurance products, and ensure a smooth car buying experience.

What does F & I certified mean?

An F&I certified professional has undergone specialized training and earned a certification in finance and insurance. This certification signifies that the professional has a thorough understanding of financial products, insurance regulations, and ethical practices in the automotive industry.


In conclusion, the F&I department plays a vital role in modern car dealerships, contributing to profitability and fostering long-term customer relations. Whether through the sale of insurance products, offering extended service contracts, or ensuring legal compliance, the F&I department enhances the vehicle purchasing process, making it seamless, transparent, and customer-friendly.

The next time you consider buying a vehicle, research the company’s reputation. See what other customers are saying. Or, alternatively, if you’re looking to procure a vehicle outside of a dealership and through a reputable organization, see what Municibid has to offer. Our catalog includes all things automotive, including cars, trucks, and even emergency vehicles.


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