Financing and F&I

What is chargeback?

A chargeback is F&I income clawed back when a customer cancels a product or pays the loan off early, after you already booked the profit.

Reserve and product commissions are usually earned over a period. Early payoff, refinance or cancellation returns a prorated share.

A lot that recognizes back gross at delivery and ignores the reserve for chargebacks will look more profitable than it is, and will be surprised in month four.

Related terms

Back gross

Back gross is the profit from the finance and insurance office: lender reserve plus what you make on service contracts, GAP and other products.

Reserve

Reserve is the dealer's share of the finance charge when a retail installment contract is assigned to a lender, the difference between the buy rate and the contract rate.

General information for US dealers, not legal advice. Rules change and vary by state, so confirm specifics with your state agency or counsel.