Cap on FI products

Aaron Berg

With the current scrutiny from the CFPB and various federal and state law makers, should stores impose a maximum price charged for various insurance products in the finance office?

Bob Parrish

This is a great question and one I'd like to see a lot of feedback.  In our store we only sell GAP insurance so my comments will be limited to only that product.

The limit in our state, (Washington) is $795.  One of the first questions I had when I began doing F&I was, "Is that a fair price?"  Last month I purchased a new car, financed it through a credit union and got a notice in the mail thanking me for my business and offering me GAP insurance.  The benefits of their insurance was identical to ours and the price was $550. 

So what gives?  Are we too high or is the credit union too low?  And if I discount the GAP insurance am I opening up the dealership to a lawsuit by charging some guests full price and other less? 

I wouldn't have a problem with maximum prices.  With information easily obtainable the average customer will know what a fair price is anyway.  I've had plenty of people say that their auto insurance company provided GAP and in some cases was as low at 265 for a 6 year loan.  Or it's five bucks a month, or whatever. 

I'm lucky.  I work for a dealership that embraces long term relationships and they are all about doing the right thing for our guests.  Our prices are fair; both for the cars and the backend. 

Thanks for posting,


Ron Settlemire

Bob, we too have a cap on GAP, and sometimes simply disclosing that the price on that item is limited by another authority can put a client at ease, removing the spectre of "inflation" by the dealer. 

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