Definition
Finance and insurance (F&I) is the dealership department that arranges financing and leases for vehicle buyers, completes the sale paperwork and offers optional products such as vehicle service contracts and guaranteed asset protection (GAP). The F&I manager sends credit applications to lenders and presents the final contract to the customer.
Pasch Group Dealer Glossary
What it means for a dealership
When a dealer arranges financing, the customer signs a contract with the dealership, which typically sells it to a bank, finance company or credit union that collects the payments. The rate the customer pays usually includes an amount that compensates the dealer for arranging the financing, often called finance reserve.
F&I also offers optional products such as service contracts, GAP coverage and other protection plans. GAP covers the difference between what the buyer owes and what their auto insurance pays if the vehicle is stolen or totaled. FTC consumer guidance says buyers can decline add-ons and that dealers can’t slip them into a deal or misrepresent them.
F&I is where a dealership handles its most sensitive customer data: credit applications, Social Security numbers, income and bank details. Dealers that arrange financing count as financial institutions under the Gramm-Leach-Bliley Act, so the F&I process is where FTC Safeguards Rule security duties and GLBA privacy notice duties concentrate. Check specific obligations with your counsel.
Questions
Are F&I products required to get a car loan?
Generally no. The CFPB says buyers generally can’t be required to buy an extended warranty, GAP or credit insurance to get an auto loan, and that these products are usually optional. It tells buyers to ask where the contract says a product is required.
Sources
Updated October 11, 2026