HomeF&I GlossaryFinance Reserve

Finance Reserve

Definition

Profit earned from marking up the lender's approved buy rate before presenting the contract rate to the customer.

Why It Matters

Finance reserve is a significant profit center for F&I departments. Understanding rate markup regulations and maintaining compliance while maximizing reserve is critical for ethical F&I management.

Examples

  • If the buy rate is 5.0% and you present 6.5%, the 1.5% difference generates finance reserve
  • Average finance reserve ranges from $500-$1,500 per financed unit depending on term and amount financed