Dealer Reserve
Definition for united kingdom automotive professionals.
Dealer reserve (also called finance reserve or dealer participation) is the profit a dealership earns from marking up a customer's interest rate above the rate a lender offers to the dealership. For example, if a bank offers to finance a deal at 5% (the "buy rate"), and the F&I manager presents the customer with a 7% rate, the 2% difference over the life of the loan is paid to the dealership as dealer reserve. Reserve is a significant component of back-end gross for dealerships with strong F&I penetration. Consumer finance regulations have increased scrutiny of dealer reserve practices in recent years.
United Kingdom Context
In the united kingdom dealer market, dealer reserve operates within the context of FCA motor finance regulation and Consumer Rights Act 2015. Dealerships running Keyloop, Pinewood, Dragon2000 encounter dealer reserve in their daily workflow. DealerInt captures the decision layer around dealer reserve that your DMS wasn't designed to track.
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