Financing and F&I
What is reserve?
Also called: dealer reserve, participation
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.
It is legitimate compensation for arranging financing, and it is disclosed. It is also subject to chargeback if the loan pays off early.
Rate markup has been a regulatory focus for years, so a consistent, documented policy is worth more than squeezing an extra point on one deal.
Handle this automatically
Loturn tracks every cost against the VIN and shows live profit on every car, with real dealer accounting built in.
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.
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.
General information for US dealers, not legal advice. Rules change and vary by state, so confirm specifics with your state agency or counsel.