I have just wrapped up design work on a web service to cancel and refund F&I product contracts. Whether a refund is owed to the customer, from an early termination, or to the lender as recovered funds, it is in the provider’s interest to support an efficient automated process. On the lender side, it is also a compliance issue.
This job was rewarding for me because it completes the lifecycle I began automating, ten years ago, with electronic rating. MenuVantage was a leader in rating and originating product contracts, and many providers adopted our model specification.
I then did related work at GMAC Insurance, which was to include claims processing. Sadly, the crash of 2008 ended that project. GMAC also had the bright idea to check for an earlier contract, and apply the refund to the results of the rating call.
The industry has been developing web service support piecemeal. First, there was a need for rating and contracting, supported by companies like MenuVantage. Now, there is financial and regulatory pressure to automate terminations, supported by companies like Express Recoveries.
In hindsight, a savvy provider would have looked at the core processes and developed web service support for the whole lifecycle. It would look something like this:
- Dealer and vehicle information ⇒ Return customized rate structure
- Deal information with chosen rate ⇒ Originate contract
- Form request ⇒ Return contract as PDF
- Form with digital signature ⇒ Store in secure archive
- Blank form request ⇒ Return blank form
- Void request ⇒ Void contract, if eligible
- Remittance query ⇒ Return remittance log
- Remittance notify ⇒ Post pending payment
- In-force query ⇒ Return contract data
- Claim diagnosis ⇒ Verify coverage
- Claim estimate ⇒ Approve/deny claim
- Claim entry ⇒ Issue payment
- Vehicle data from contract ⇒ Return cancellation quote
- Contract data plus authorization ⇒ Cancel contract, issue refund
You could do one big API to manage the product from cradle to grave, and build provider portals and such on top of it. This would have the usual benefits of decoupling the back-end from the presentation layer, and it would facilitate integration with dealer and lender software.
Whenever I design a menu system, I always include a second finance term that defaults to the base term plus six months. When I did the first menu system for AutoNation, I was coached on this by Arthur Knosala who learned it, I believe, at JM&A.
We had an object lesson when I was working on Route One’s menu. The team was just getting into this requirement when the product owner happened to buy a new car, and took the term bump. She was able to maintain the agreed payment, and still buy some good products. Even a three-month bump is significant.
My spreadsheet, below, shows how this works. The idea is to goal-seek the amount of product that maintains the original monthly payment, at the longer term. The input values are blue. Everything else is calculated. This allows the possibility that the APR may be higher with the longer term.
If your menu system won’t do this, you can download my spreadsheet. It automatically calculates the finance amount which, with the term bump, results in the same payment. Remember, only type in the blue cells.
Magic tricks are easy once you know the secret — Marshall Brodien
When I was at MenuVantage, one of the guys put together a demo in which he used the term bump to sell a raft of products, and then a biweekly payment program to ratchet the term back down. It was like a magic trick. Same payment, same term, and presto! He pulls two thousand dollars’ gross out of his sleeve. Dealers couldn’t sign up fast enough.
Automotive News reports the success AutoNation is having, selling F&I products in the service lane. I thought MenuVantage dominated service-lane selling, and I was dismayed to see AutoNation using a different system. I am not with MenuVantage anymore but – old rivalries die hard.
What caught my eye was the point about service-lane buyers needing a way to finance their service contracts. I have a few words to say on this point – Service Payment Plan. My pal Bob Hymen offers zero percent financing, and a complete selling kit for the service lane.
Service Payment Plan is integrated with a number of menu systems including MenuVantage. The F&I Manager can create a finance contract for any of the leading providers, as shown here:
After that, the system prompts for a credit card or bank account, and then generates all the required paperwork.
Automotive News reports that Group 1 has suffered a nine-percent drop in F&I gross, and is hiring regional directors to bring it back up. I certainly agree with this approach. It worked for us, when I was at AutoNation. We called them “district finance directors” back then.
Group 1 CEO Hesterberg says tighter lending limits do not allow much for F&I product sales. Since Group 1 is a MenuVantage user, they can address this problem using the system’s goal-seeking feature, as shown here:
This helps the F&I Manager to sell products up to the full amount authorized.