F&I Compliance Tip: Save and Store Your Pencils
A pencil is the proposal a salesperson uses with buyers to outline deal scenarios – on the way to the final agreement. Your desking solution should automatically save a record of pencils in every customer’s deal jacket.
Why it Matters
In terms of compliance, saving pencils matters because it could prevent misunderstanding, and may be helpful in terms of showing an auditor, regulator, or plaintiff’s attorney how a deal progressed. It’s essential since the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) emphasized the need for transparency in consumer financing of automobile purchases and leases. Follow these best practice tips to help ensure compliance:
Best Practice Tips
- Consistently use a first pencil. A typical first pencil would be a hypothetical payment and rate sheet reflecting the average financing terms for most customers, before any customization of the pencil based on the buyer’s actual credit and lender responses.
- Be transparent. Make sure a deal jacket contains a record of pencils and a copy of every document given to or received from the consumer. That should include all “four squares” and other informal documents illustrating how the deal was formed. This sort of approach shows how the deal unfolded and is an important step towards transparency.
- Put all the deal information in one searchable and secure location. It’s more than just convenient. Being consistent in storage and security provides peace of mind and creates efficiencies just in case auditors do come calling.
To learn more about the importance of monitoring dealership activity, gain access to the free 2018 Dealertrack Compliance Guide by clicking here.
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