Wheelin and Dealin
Which two laws regulate what must be disclosed to a buyer during either a finance or a lease deal?
Regulation M
Regulation Z
Page 67
A manager is working with a subprime customer. What options might he/she suggest to the customer in order to help them get financed?
Adding a co-buyer
Increasing the term
Increasing the rate
Changing the vehicle
Suggest the bring a co-buyer
Suggest the buyer put more money down
Take a loss on the deal
Page 61
Jessica just got a raise, yay! The pay change wasn't huge, but it is enough that her budget has changed. She can now afford to spend 20% more a month on her car payment. The timing is great because she's been in the market for a new car. What type of buyer is Jessica?
Jessica is a Difference Buyer
Page 30
Who are the three parties involved in a Lease Deal?
The Lessee (the buyer)
The Lessor (the bank)
The Dealership
Page 72
Max, the Finance Manager at Jones Toyota worked 112 deals last month. He sold Service Contracts on 84 of them. What is Max’s penetration rate for service contracts?
84
--------- = 75%
112
Page 66
If your dealership typically closes 20% of their customers each month, and your goal is to sell 300 vehicles this month, how many appointments need to be set during this time to help you meet this goal?
600 Appointments
Page 45
Gross Profit - Pack - Holdback - Adjustments = ?
This is the formula for calculating Commissionable Gross Profit
Page 63
Peter has a very specific monthly budget that he sticks to very carefully. He is ready to purchase a new vehicle but knows that he can only spend $300 a month on a car payment. What kind of buyer is Peter?
Peter is a Payment Buyer.
Page 30
What is included in Capitalized Cost?
Cap Cost includes, selling price of the vehicle, capitalized sales tax, insurance, DMV fees, options, accessories, and warranties.
Page 77
Do all manufacturers have the same requirements for their dealership franchisees?
No - different OEMs have different requirements of their dealerships.
Page 9
What can be considered Cap Cost Reduction?
Trade-In Equity
Cash Down
Rebates
Page 77
How do you calculate the Residual in a lease deal?
Residual value is calculated as:
(MSRP + Residualized Options)
x Residual %
- Excess Miles
-------------------------
Residual Value
Page 77
Timothy has put a lot of new stuff into his car since he bought it a few years ago, it has a new speaker system and new rims and he's taken super good care of it. He's getting ready to buy a new car and he knows those extras should help him have some better value for his trade in. What kind of buyer is Timothy?
Timothy is an Allowance Buyer.
Page 30
What is Holdback?
Money held back by the OEM to act as a bit of a forced savings account for the dealership, being paid back periodically to the dealership and allowing them to sell vehicles at or near invoice price. Holdback is calculated based on an OEM determined percentage of the MSRP or Invoice Price of the vehicle.
Page 23
Of the following job titles, which one may not exist at a dealership?
Salesperson
General Manager
General Sales Manager
Receptionist
Finance Manager
Sales Manager
General Sales Manager
Page 12
What are some advantages to the buyer when thinking about leasing a vehicle?
Better Tech
Lower Payments
Lower Down Payment
Consistent Vehicle Upgrades
More car for less money
Page 73
How do you calculate gross profit?
Sales Price
-Cost
+/- Over/Under Allowance
----------------------------------
Gross Profit
Page 63
Rebecca has had a rough day and now, on her way to drop her paperwork off with the finance office, she has dropped EVERYTHING. She needs to re-organize her forms before dropping things off at the end of the day. Which of the following forms would she classify as "Internal"?
Commissions Forms
Insurance Contracts
Power of Attorney Forms
Title Applications
Buyers Orders
Invoices
We-Owe Forms
Deal Recap Paperwork
Commissions Forms
Invoices
Deal Recap Paperwork
Page 69
What is Floorplan?
Floorplan is how dealerships finance their vehicles. They use this because they wouldn't be likely to have the funds sitting around to purchase hundreds of vehicles at a time. Instead, they use floorplan loans from financial institutions. These loans must then be repaid within a specified period of time after the vehicle is sold.
Page 21
What does a Finance Manager do?
Advise customers of their financing options
Sell insurance
Sell warranties
Sell aftermarkets
Process a lot of paperwork to maintain compliance
Ensure customer satisfaction
Control and secure the sale
Build customer loyalty
Page 55
What are some of the big benefits to the dealer when it comes to leasing to their customers?
It is easier to finance week buyers
Long term repeat business
Easier to hold gross on a deal
Good pre owned inventory later
Page 75
A customer is trading in their Toyota Sequoia. If the formula below assumes A is what the vehicle is worth, B is what we are giving the customer, and C is the difference between A and B. What are A, B, and C called?
$22,000 (A)
- $15,000 (B)
-----------------
$7,000 (C)
A = Actual Cash Value (ACV)
B = Trade Allowance
C = Over/Under Allowance
Page 62
Fiona and Jason have both worked at a few dealerships and are debating the difference between an Internet Department and a BDC Department - what is the difference?
Simply put, the BDC sells appointments, the Internet Department sells cars.
Pages 43-44
What is the residual value?
The wholesale value a of the vehicle at the end of the lease term.
Page 77
How do dealerships get new cars?
Ordering and Allocation.
Allocation is the most common method.
(sometimes dealer trades too)
Page 18