Deal Structure
A deal structure refers to the specific combination of pricing, incentives, cash down, trade allowance, financing terms, and product selections that form the foundation of a vehicle transaction. It defines how the customer will pay for the vehicle and how the dealership will recognize its revenue and profit. The structure is agreed upon before final documents are generated and serves as the roadmap for the entire Sales and F&I process.
Purpose of a Deal Structure
The purpose of structuring a deal is to:
- Create a financial package that meets the customer’s needs and lender requirements
- Align the terms with OEM incentives and dealership profitability goals
- Give all departments (Sales and F&I) a clear guideline of what the customer has accepted
- Reduce the likelihood of errors or renegotiation after paperwork begins
- Support consistency and transparency in negotiations with customers
A well-built deal structure makes the customer more likely to accept the offer and allows the dealership to execute the transaction efficiently.
How It Works / What It Includes
Deal structure is usually built in collaboration between the salesperson and the F&I manager. A typical structure includes:
Vehicle Pricing Components
- MSRP
- Discount amount
- Applied rebates and incentives
- Trade-in allowance
- Cash down
Financing Components
- Lender
- Approved rate
- Term (months)
- Monthly payment
- Payment to trade-in lienholder
Product Selections
- Service contract
- GAP coverage
- Tire & wheel protection
- Maintenance plan
Deal Structure Formula
A properly structured deal is not finalized until all the financial inputs are aligned and mathematically validated. To avoid errors and re-negotiation later in the process, dealerships use standardized formulas to calculate the correct finance amount. This allows both Sales and F&I teams to confirm that the numbers add up before contracts are generated.
Example:
Selling Price = $30,000Rebates = $1,000Trade Allowance = $5,000Add-On Products = $2,000Cash Down = $3,000
Finance Amount = (30,000 – 1,000 – 5,000 + 2,000) – 3,000 = $23,000
Importance of Deal Structure
The deal structure plays a major role in the success of the transaction because it acts as an agreed financial blueprint. Once the structure is confirmed between the customer and dealership, every downstream activity (credit approval, funding, product registration, contract generation) is built on top of it.
A clear structure eliminates confusion and prevents last-minute changes.
- It sets expectations for both the customer and the dealership early in the process
- It ensures departments work from one set of numbers
- It aligns the deal with lender requirements (preventing funding rejections)
- It helps maximize gross profit by building product revenue into the structure
- It eliminates last-minute surprises, which improves customer satisfaction and trust
Example of Deal Structure
A customer negotiates a price of $35,000 for an SUV and agrees to apply a $4,000 trade allowance and $2,000 down payment. The F&I manager presents products, and the customer elects to add a $1,500 service contract. The agreed deal structure is entered into the system before contracts are printed:
Both the Sales and F&I teams work from this structure to execute the rest of the deal.
Important Considerations While Implementing a Deal Structure
- Accurate Incentive Application: An Incorrect rebate application can derail the structure
- Customer Qualification: Structure must match the customer’s credit profile and lender criteria
- Collaboration: Sales and F&I must share information to avoid miscommunication
- System Configuration: DMS methods need to be set up with approved lender programs and product pricing
- Change Tracking: Any modification to the structure must be logged and approved before contracts are reprinted
ATN provides dealership teams with practical training to build consistent and profitable deal structures.
Contact ATN today to streamline negotiations and improve your deal workflow.