Finance and Insurance (F&I) Income When Buying an RV Dealership
Many RV buyers finance their purchase, and many also buy service contracts, protection products or insurance at the time of sale. The dealership’s finance office arranges these transactions and earns income from them. For some dealers, RV finance and insurance income is an important part of overall earnings. For buyers, it is also one of the areas where earnings can be hardest to verify and where compliance history can matter a great deal to the deal.
This article explains how buyers and lenders may evaluate the finance office of an existing, operating RV dealership. It does not provide income benchmarks or penetration figures, and it does not offer guidance on consumer lending, disclosure, insurance licensing or other compliance requirements, which vary by state and should be reviewed with qualified counsel. Nothing here is legal or regulatory advice.
Where Finance Office Income Comes From
- Finance reserve: compensation a retail finance source may pay the dealer for arranging a contract
- Service contracts: extended coverage for the unit’s systems and components
- Protection products: products such as tire and wheel or appearance coverage, where offered
- Insurance-related products: products that may be subject to state insurance licensing
Chargebacks and Reserves
When a customer pays off a contract early, cancels a product or defaults, part of the income may be charged back to the dealer. Buyers should review chargeback history and whether the financial statements account for expected chargebacks. The purchase agreement should address who is responsible for chargebacks on contracts written before closing.
Product Provider and Finance Source Relationships
Agreements with retail finance sources and product providers may not transfer automatically. Some may require a new application from the buyer. Participation or reinsurance arrangements, where they exist, should be reviewed with qualified accountants and attorneys, since their ownership and treatment in a sale can be complex.
Compliance Review
Because the finance office deals directly with consumers, buyers should ask counsel to review policies, disclosures, deal files, complaints and any past examinations or inquiries. Issues found in the finance office can affect value, the purchase agreement and lender comfort. Buyers should not rely on the seller’s assurances alone.
Staff and Key Person Risk
A skilled finance manager can have a noticeable effect on results. If finance income depends on one person, buyers should consider how to retain that person and how results might change if they leave. Compensation plans and any retention arrangements should be reviewed with qualified employment counsel.
How Buyers and Lenders View Finance Office Earnings
Buyers frequently look at finance income over several years and in relation to unit sales, because it tends to rise and fall with volume. Lenders typically base decisions on documented cash flow and may look closely at how dependent earnings are on finance income. Our guide to RV dealership valuation explains how department earnings fit together, and our article on RV dealer loan requirements covers the documents lenders request.
Connection to the Service Department
Service contracts sold in the finance office lead to claims handled by the service department. Buyers should understand how claims are submitted and paid. See our article on RV warranty work.
What to Request in Due Diligence
- Finance office income by product and month over several years
- Chargeback reports and any reserve accounts
- Agreements with finance sources and product providers
- Written policies, sample deal files and complaint logs
Our RV dealership due diligence checklist covers the broader review. Sellers preparing for a sale can review our guide on how to sell an RV dealership.
US Professional Funding helps buyers finance the acquisition of existing, operating RV dealerships based on documented cash flow. Learn more about our RV dealership acquisition financing.
