Featured F&I Product: Extended Service Contracts

Extended Service Contracts have long been the key products in every F&I menu. They create a valuable source of F&I department income and an even more valuable source of service income. From a customer’s viewpoint, they also provide an important service that rounds out the customer experience, turning a service bill into a bill stamped “paid” with very little coming from the customer’s pocket. As Finance Managers, we can rattle off the features of the extended service contracts that we sell. Are we getting the point across to the customer? It’s important to remember that customer’s don’t purchase cars every 5 years. So to make sure your customer is hearing what you think you are saying, follow these suggestions: 1. Make sure the customer knows what he has from the manufacturer. Take a few minutes and put it into the terms of their driving habits. 2. Slow down and explain what your ESC covers. Mention parts and labor, wear and tear (if it covers it), where the customer can take it for repair, what they are responsible for maintaining. Pick some common, average cost repairs and talk about them. 3. Use current repair orders from your service department to allow the customer to see that real customers do buy it and use it. 4. Your ESC covers rental cars, and most likely, travel expenses. That’s an important benefit that needs some explanation. 5. Get your dealer’s labor rates over the past 5 years to show how they have increased. Having an ESC price-protects them from future labor rate hikes. 6. Don’t underestimate the value of the insurance that is backing the ESC; it goes to the strength of the product. 7. Offer the best coverage/term/mileage option for the customer’s driving needs. You knew all of this, didn’t you? If you make sure that your customers also know it, you’ll sell more Extended Service Contracts.