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You’re almost at the end of your car buying odyssey. You’ve read the
reports on your target vehicles and selected a model. You’ve spent hours
haggling with a salesman. You’ve settled on a color with your spouse and
on a price with the salesman, and you think you’ve got a good deal
wrapped up.
So you start to relax and reflect on how clever you are.
Then they take you into the F&I office, and all of a sudden you’re
agreeing to overpriced undercoating, extended warranties, credit
insurance and other extras that end up turning a good deal into a
fleecing
Beware the extras in the F&I office.
That’s car-dealer lingo for the finance and insurance manager’s
office, and it’s where many car buyers agree to deals they regret later.
It is an on-going challenge for the consumer, because those of us who
worked hard to negotiate a price start to let our defenses down and
often don’t realize that when we get into the F&I office, that’s a whole
new opportunity to sell. We are tired and can easily agree to pay for
things that we really don’t want or need just to get the process over
with.
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GETTING YOUR BEST DEAL
Here are ways to protect yourself in the F&I office:
• Get pre approved for a loan before going into the dealership. That
way, you can bargain on the price of your vehicle instead of on your
financing. And you can challenge the dealer to beat you pre-approved
interest rate
• Don’t buy products or services you don’t need. You can always walk
away from the deal i you’re not totally comfortable with it.
• View the purchase of a vehicle in total instead of just focusing on
the price alone.
The F&I office is where the purchase contract is drawn up and where
loan financing is negotiated. But it’s also where you might be offered
paint protection, fabric protection, rust protection, special waxes, and
alarm system, credit insurance, satellite radio and free oil
changes--everything but the kitchen sink.
Now, more than ever, you must be on guard. With dealers in trouble
and very attractive pricing an rebates, the F&I office is carrying the
profit ball, so to speak
You may get a good deal on the showroom but they are going to grind
on you in F&I.
Now that dealers have less profit in the contract, they have a much
stronger incentive to sell you a special type of financing, floor mats,
and extended service contracts at overblown prices. Most F&I peopled are
paid commission by how much they can boost up the bottom line price of
that vehicle |
Watch the Warranties
Finance managers don’t make any money unless they sell
something.
One of the biggest profit generators is extended warranties.
It happens very often nowadays that consumers spend hours arguing
over the price of the car, and they spend $2000 for a warranty that’s
probably not worth more than $500.
It is usually a waste of money to buy an extended warranty. The
coverages are complex and there are many ways that the warranty company
can deny claims.
If you must buy a warranty, buy the factory extended warranty.
All in all I would be very skeptical of most anything offered to me
in the F&I process.
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Do You Really Need It?
A lot of the products offered by F&I are things you can take
care of yourself, if you think
you need them. For example you can apply the fabric protection to
your seats.
You might be offered Guaranteed Auto Protection, or GAP insurance,
which covers the gap between actual cash value settlement from you
insurance company in the event of a loss and what you owe on your car.
Not everyone needs GAP insurance. If you paid a substantial down
payment, you might not be faced with that problem in the event of a
total loss of your vehicle.
Likewise with credit life insurance. It’s supposed to pay off your
loan if you die or become disabled. Some cover loss of job. There are
less expensive alternatives such as term life insurance and regular
disability insurance.
Some legal issues have arisen involving credit life insurance.
Here in Texas our Attorney General reached a settlement with two
insurance companies that failed to refund premiums to customers who paid
off their loan ahead of schedule.
Privately, dealers acknowledge that F&I is one of the most difficult
pars of their business to do well. Salesmen seeking commissions have
been know to bend the dealers own rules in the F&I room. They realize
that that they have to stay on top of the F&I department. F&I is the
aggressive part of the sale where abuses can take place. |
Don’t Forget the Door
Remember, the F&I office does have a door. You can always walk away
from the deal if it doesn’t suit you, and you can negotiate the price of
the products and services the F&I office offers.
If you want an extended warranty, think about it first and make sure
you will keep the car long enough to justify it.
Always ask yourself, "Have I thought through what I am doing, and
what do I really need?" Most consumers are educated about the price and
equipment on the car they are interested in. You need to think about the
purchase of a car in total instead of just focusing on the price of the
car.
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