Cars
These are the two methods by which dealerships acquire their new vehicle inventory.
Vehicle Ordering
Vehicle Allocation
True/False:
Finance and Insurance Managers have many responsibilities including negotiating the deal numbers with the customer.
False
Maria is shopping for a new car. She has crunched the numbers and knows that she can afford a vehicle that keeps her payment within about $50 of what she pays now. She is hoping to find something that gets great gas mileage and is safe enough for her kids and her dogs. What kind of buyer is Maria and what is her primary motive?
Difference Buyer/Peace
What is GAP insurance?
In the event that you total your vehicle, GAP covers the difference between what your insurance company agrees to pay and what is left on the vehicle loan. See page 57.
What are the 4 sections in a Four Square?
Trade In
Cash
Vehicle Price
Payment
Name four methods by which a dealership acquires their used vehicle inventory.
Wholesale, Trade In Vehicles, Auctions, Program Cars, Dealer Trades
What is menu selling? Name a way that menu selling can be helpful to an F&I Department.
See pages 58 and 59 in the course guide
What are A, B, and C if a customer is trading in a 2014 Honda Pilot, where A is what the vehicle is worth, B is what we are giving the customer, and C is the difference between A and B?
$15,500 (A)
-$12,250 (B)
---------------
$3,250 (C)
A: Actual Cash Value
B: Allowance
C: Over/Under
This is how dealerships pay for their vehicle inventory. What is this and why is this necessary?
Floorplan
Necessary because dealerships don’t have the ability to pay millions for their inventory.
Which type of form is a We-Owe:
Miscellaneous
Government
Internal
Buyer
Buyer
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?
84/112 = 75%
Which two laws regulate what must be disclosed to a buyer during either a finance or a lease deal?
Regulations M and Z
Roger sold Mrs. Jacobson a Toyota RAV4. The MSRP of the RAV4 was $32,900, the cost was $29,500. Assuming Toyota uses a holdback percentage of 3%, what is the holdback on this RAV4?
$987
What is Holdback? Why is it helpful to dealerships?
Holdback is a percentage of the vehicle’s MSRP or Invoice Price that is held by the manufacturer. This amount is then paid back to the dealerships (typically quarterly) It is how dealerships make profit on new car sales. See page 23.
Maggie the salesperson earns 25% of the commissionable gross profit on every car she sells. If the commissionable gross profit on a deal is less than $350, she earns $350 instead of the 25%. What is this commission called?
A minideal
What are 2 pros and 2 cons to the BUYER when leasing?
See pages 73 – 76 in the course guide
Name the three parties involved in a lease deal.
Lessor, Lessee, Dealership
Miller Mazda wants to sell 75 cars next month. How many leads does the dealership need to work and how many appointments do they need to set in order to reach that goal?
150 appts and 300 leads
(minimum)
What is Cap Cost Reduction? Give 3 examples.
Cap Cost Reduction is money used to reduce the cap cost – to reduce the payment. Ex: rebates, trade equity, cash money.
Name 3 things a Sales Manager can do to help a customer with weak credit get financed.
Increase the rate, increase the term, add a co-buyer, change the vehicle, add more money down.
See page 61.
What are 2 pros and 2 cons to the DEALER when leasing?
See pages 73 – 76 in the course guide
What is included in Capitalized Cost?
The selling price of the vehicle that includes capitalized sales tax, insurance, DMV fees, options, accessories, and warranties.
Patrick bought a new Cadillac Escalade 9 months ago. 2 months ago, he fell off a ladder at work and he has been on disability. Patrick wouldn’t be able to make his monthly payments right now, but luckily he purchased _________ when he got his new car, so his payments are being taken care of during his injury.
Accident and Health Insurance
What is the Residual in a lease deal? How is it calculated?
Residual is the wholesale value of the vehicle at the end of the lease. It is calculated as:
(MSRP + Residualized Options) * Residual % - Excess Miles
See page 77
How is Net Profit calculated?
Sales - Cost of Sales - Expenses