Mini Financial sets one rate for every customer

A new program for Mini dealers sets a fixed interest rate for all finance customers. The result? Transparent advertising online and in-store, according to one dealer.

Under the program, implemented through Mini Financial Services, a subsidiary of BMW of North America and the captive finance company for Mini, customers are charged a set interest rate for financing and a separate set rate for leasing. Customers are either approved or not approved for a loan or lease. According to BMW, the program is meant to ease tension in the finance office and create transparency whether customers shop through digital storefronts or in brick-and-mortar dealerships.

Ian Smith, CEO of BMW Group Financial Services, said the role of the F&I manager is evolving. Setting fixed financing terms simplifies duties for the F&I manager as much as it simplifies the process for customers.

"In an environment that's rapidly changing, one thing for sure is that we need to continue to invest in our digital platforms and digital capabilities," Smith told Automotive News. "The F&I office is a major contributor to dealer profitability. Standardized offerings makes that role easier to execute, and we want to make that role more effective."

A pilot program began in July 2018 with 11 Mini dealerships nationwide, Smith said. Stores were added in waves through Aug. 1, 2019, when the last of Mini's 123 dealerships came on board.

Mini's small size and devoted following among consumers made the brand ideal for the pilot, Smith said.

"It was a perfect place from which to start," Smith said. "From a consumer standpoint, they can focus on what interests them. They can focus on the buying process."

Brian Peruggi, general manager of Mini of Warwick, in Rhode Island, is a fan of the program, which he joined five months ago. As long as customers qualify, they are treated more fairly, regardless of their credit history, Peruggi said.

"They totally changed the way the structure works so the dealers are still profitable in the F&I department," Peruggi said. "It's a win-win. It creates transparency. You go online — the rate's 4 percent. You come in the store — it's 4 percent."

The set rates will adjust periodically as market rates fluctuate, Smith said. Customers are free to shop around if they can find lower interest rates elsewhere. Smith said he believes the transparency of the program will drive interest in the brand.

Though financing is at a set rate for all customers, it doesn't mean Mini will take on more risk. The program allows dealerships to structure deals that fit the customer's credit profile. For example, if a customer qualifies for the set rate but has a higher risk of default, the captive finance company may approve them for a smaller loan amount at that rate, which would require them to make a larger down payment.

A marketing campaign for the set rate program will launch soon, executives said. There are no current plans to expand the program to other brands under the BMW Group banner.