Issue No. 14 | July 7, 2026

Intelligence for F&I agents, administrators, and dealership finance professionals.

THE VEHICLE MARKET NUMBER: 7.52%

Federal Reserve G.19 data puts the average new car 60-month loan rate at 7.52% as of February 2026, meaningfully above the floor that conditioned both consumers and F&I desks through 2020-2022. At current rates, consumers are more payment-sensitive than they were during the low-rate years, which means the term, price, and down payment structure on the VSC itself has a greater influence on cancellation timing and long-term contract persistence.

That’s a shift from how VSC economics were often evaluated during the low-rate years. Deal structure at the point of sale now has a more direct line to what the contract ultimately returns over its life.

THE F&I ANGLE

The combination of term, monthly payment, and down payment on the VSC paper your store generates helps determine whether it produces a profitable outcome or a loss ratio problem down the line.

DTC VSC marketers run segmented cancellation curves by down payment tier because that relationship is measurable: a $200 versus $400 down payment can produce different cancellation timing even at the same total contract price, and a lower monthly payment can reduce early churn while increasing mid-term cancellations. The same dynamic applies at your desk. Which combinations of term, payment, and down payment produce the best retention outcomes on the paper you write?

That question has a data-driven answer, and at 7.52% financing, it’s a more consequential one than it was when rates sat near the floor. As payment sensitivity rises, structuring a VSC without considering the buyer’s affordability increases the risk of cancellation over the life of the contract.

FROM THE BLOG

How Cancellation Curves Help Marketers Optimize Vehicle Service Contract Pricing

Cancellation curves let VSC marketers measure how down payment, term, and monthly payment influence cancellation timing. At the F&I desk, those same variables are part of every deal you structure, making the framework just as relevant to dealership performance. The framework replaces assumptions about what buyers can sustain with direct, cohort-level measurement.

THE DESK STAT

A $200 down payment and a $400 down payment can produce different cancellation timing on an otherwise identical VSC, even when the total contract price and coverage terms are the same. At 7.52% financing, which of those structures are you using most often on your average deal this week, and do you know what it’s doing to your stick rate?

Until next Tuesday,

Reply and tell me which down payment structure you’re using most often in your VSC presentations right now. I read every response.