Edmunds.com - Confessions of an Auto Finance Manager

Karen_S · December 2008

"Congratulations, you're getting a great deal!" the car salesman says, pumping your hand. "Let's sign the paperwork and you'll be on your way in your new car!"

At first you're relieved  the negotiating is over. But then the salesman walks you down a back hallway to a stark, cramped office with "Finance and Insurance" on the door. Inside, a man in a suit sits behind the desk. He greets you with a faint smile on his face. An hour later you walk out in a daze: The whole deal was reworked, your monthly payment soared and you bought products you didn't really want.

Post your comments about the article here!

Confessions of an Auto Finance Manager

joel0622 · December 2008

The whole deal was reworked, your monthly payment soared and you bought products you didn't really want.

Then you are a fool who obviously requires adult supervision and probably should not be behind the wheel of an automobile in the first place.

I don't wear a suit

My office is not cramped

It is not in the back

It is not stark

My smile is not faint

I run a fully disclosed office.

The process takes about 20 minutes from the time you sit down to the time were done.

Kirstie_H · December 2008

Obviously not every shop is run like the one in the article, nor like yours. But if you think it doesn't happen like this in some places, you haven't been vehicle shopping much.

Last time I bought a vehicle, everything was going great (salesperson was great) til I got to F&I - they had the contract printed when I walked in, and the guy had added every single aftermarket product (I put down 20% of the price in cash, and he added gap insurance???), then acted mortally offended when I told him to remove them all... sighed and made out like it was going to be a HUGE inconvenience for him to re-print the contract. It was as if I'd asked for those products, then changed my mind.

However, I no more believe that all F&I offices are like this than I believe that none of them are like this.

jipster · December 2008

I believe the objection from joel was due to the lead in post from Karen, which does not paint a balanced picture of F&I. To garnder attention (i.e readership) the quoted material in Karen's post was quite inflamatory and negative towards F&I departments. Once you get into the article though, it is a more balanced account of how F&I works... nothing though in the article is as negative as what happened to you during your experience, that I can recall.

ProfitDrivers · January 2009

It's very sad to hear miserable stories about bad experiences customers have in the F&I office. The good news, there is a transition in motion, it just takes time to weed out old practices. Having said that, there is a very positive side to the F&I Manager's job. I have worked in that position for ten years and pride myself on ethical conduct. At the same time, I am required to sell products for the dealership. It's very satisfying as a F&I Manager, to get a customer with poor credit financed, particularly when the vehicle is very important for their family needs, whether it means getting to work, driving the children to their activities and to visit with friends, or perhaps to taxi aging parents to their appointments or take them on errands. Furthermore, it is satisfying as a F&I Manager to hear the gratitude from customers who purchased an extended warranty that saved them a several thousand dollar repair bill, or the family who has unexpectedly lost a loved one and the deceased's vehicle will not be a financial burden at an already difficult time, because the loan on the auto was life insured. I could go on with a number of great stories. Never mind, the many gifts customers would give as a token of their appreciation for the way they were treated by the F&I Manager. The point here is, the products offered in the F&I office are legitimate with tremendous value.

I believe it's important to hear ALL sides of these stories.

oldfarmer50 · January 2009

"...the products offered in the F&I office are legitimate with tremendous value..."

Legitimate? Yes, anything that you want to try to sell is legitimate as long as you sell it by honest means. Tremendous value? I don't know about that one. Warranties might or might not be worth the peace of mind but for me they weren't. The glorified wax jobs for $800 are not worth a tenth of their price in my opinion.

When I last bought the presentation was pretty low-key. The woman only tried a little bit of the 'ol scare tactics. She asked if I was planning on keeping my car for very long and when I answered "Yes" she told me that I "better protect it" with the mop & glo. She also pushed the extended warranty but not too hard.

She was so nice about it that I didn't have the heart to turn her down cold. I pulled the old "I'll have to check with my wife" dodge. At delivery she only gave me a small scolding for not calling her back.

Now if they had a bank stick-up artist or a porn star working in F&I I might have bought something.

euphonium · January 2009

from a Ford dealer in the University district. The F & I guy said they would not sell the car at that price unless he also bought the Extended Warranty. (They intimated it was the only part of the deal where the house was to make a profit.) So he bought the EW, the cost of which was added to the payment contract with Evergreen Bank.

Remembering, the EW was a separate Insurance Contract, my son returned the Warranty and said to cancel it FLAT the next day.

F & I said they could not cancel the EW because it was part of the payment contract. That's when they found out their customer was an insurance agent and knew they were bluffing. They rewrote the finance agreement while grumbling and who cares?

ProfitDrivers · January 2009

oldfarmer50, I must say that in my lifetime of experience, not all products and services being sold are legitimate. Particularly, I can remember a rather recent story of an investment advisor that swindled millions of dollars from clients. He fled the country and now resides in another North American country, unscathed! It's never good when someone feels that they purchased something that was not worth it's cost, whether it's $800, thousands, or millions. Typically we hear so many nasty stories, that I thought it important to inject a flavour of some positive ones. Maybe you didn't like the wax job for $800 but a senior couple who are meticulous about their vehicle and too old to upkeep it themselves may love the product. On the other hand, if you had a porn star F&I manager to visit at the dealership every 2 years or so to have the "mop & glo" reapplied at no additional cost, you may have enjoyed spending the $800.

In every industry, there is something for everyone and in some cases, there may be nothing that fits at all. It's the good stories that support the value of the products offered in the F&I office. I hope you went back to the dealer that sold you the $800 mop & glo and gave them a chance to remedy your dissatisfaction!

mwa1 · August 2010

There are more ethical dealers now than ever as the industry gets more organized and FTC is involved. If someone had a bad experience at a dealership then you didn't do your homework. I have been in involved in the car bsuiness for almost 7 years now and we have more repeat customers than most. There is a reason people appreciate the "...the products offered in the F&I office are legitimate with tremendous value..." because at some point it saved them much more money. In reply to oldfarmer50, you would probably buy a $500 computer and buy a $200 service plan on that but the truck or car you would pay $20k or more for is not worth the $1500 or so!!!! People like yourself realize the need when you actually need it. I am a believer in everything that is presented in the FNI office because I get them on my personal vehicles, you don't have to agree with me, but I do. Its 21st century people, open your eyes, do some research and buy from good dealers. Unlike this UNETHICAL NICK JAMES the SO CALLED FINNACE GURU who probably spoke from his own unethical personal experiences.

deltheking · August 2010

The problem is that most of the things added on in the FIN dept are totally unnecessary. Yes,the manuf ext warr is an absolute must in my opinion for today`s cars but other than that -- rustproofing,fabric protection are all not useful and are extremely overpriced. Even the ext warr is at a very inflated price. You can buy any manuf warr online from any new car dealer in the country till the manuf 3yr/36k mile warr expires . :shades:

And yes ,it`s the 21st century where folks like me buy cars online!!

jipster · August 2010

If someone had a bad experience at a dealership then you didn't do your homework.

Not everyone has the powers of "The Amazing Kreskin" to know 100% which dealerships and salesmen are good or bad. Referrals and complaint boards can only do so much. If having a bad experience at a dealership... just take a walk to the next one.

ken117 · August 2010

Sorry but only a fool would buy things in the F&I office. Virtually every consumer advocate advises against buying anything in an F&I office. Anyone thinking about an extended warranty would do better simply putting the money in the bank or, if they really want one, going on line (read posts on Edmunds). Most of the other stuff pushed on tired customers in the F&I office is simply worthless and overpriced. The only truly worthy item is GAP insurance, and then only in certain instances. Even GAP insurance can be bought elswhere for less money - though the difference is usually only a $100 or so. Oh, I doubt many savvy consumers would pay 40% of the price of a computer for a service plan. Would you?

isellhondas · August 2010

So, do you buy Paint & Fab?

mwa1 · September 2010

Yes, I have bought and will continue to buy paint, leather and fab prot. I have it on both, my wife's and my car. If you are a smart buyer, you will buy such protection that is backed by a third party insurance so if there is a problem, they pay for it without any deductible.

mwa1 · September 2010

"Oh, I doubt many savvy consumers would pay 40% of the price of a computer for a service plan. Would you?" Answer to that is that people like you would bcz your brain sees value in that but i would not. Are you kidding me when you say put your money in a bank and pay for your own repairs??? Why don't you do that with your car insurance and health insurance??? The reason is because you are REQUIRED to otherwise you are the one who would tell people to bank your money and pay for your hospital bill outta your pocket. You are also the one who would be in front of the line to file for Chapter 7 also. You know in my career, I had many many customers appreciate the fact that they had mechanical prot on their veh bcz it paid for way more than what they paid for it... BUT there are some like you who think that they are the smartest when it comes to car shopping so keep believing it my friend bcz you aint and you are corrupting the rest by your ignorance.

tallman1 · September 2010

IMHO, there is a big difference between health insurance and extended warranties. In general, health insurance helps more as you age. Extended warranties run out as your car ages.

I knew a dental hygienist who dropped dental coverage for her and her husband and put money into savings instead.

Collision and comprehensive auto insurance wouldn't be a big deal on older cars but not many would want to go without liability... and yet there are plenty of uninsured motorists out there, even if it is illegal in my state.

That being said, many people like the peace of mind that an extended warranty provides. Many others have no trouble taking the gamble on today's products.

Ken does make some solid points by saying that many consumer groups point out that extended warranties are not worth the money... and you are in a huge minority if you say that mop and glo is worth the money.

It is also true that dealer prices for extended warranties, etc. provide for huge profits. I have no problem with dealers making a profit... just stating a fact.

micosilver · September 2010

I knew a dental hygienist who dropped dental coverage for her and her husband and put money into savings instead.

Is it possible that this dental hygienist dropped her coverage because she has access to cheap or free dental work?

Here is a simple rule of thumb: you should have insurance for things that you might not be able to replace out of pocket. Good examples are:
1. Health - if anything happens - it will cost you thousands in medical bills.
2. Auto - if your car is totalled - you most likely will not have the money to pay off the loan AND to buy a replacement.
3. Auto repair - if your car that is just out of warranty needs a new transmission or engine - you will not have the thousands to fix it, and you will not be able to get rid of it if it is financed.

We see those people in service a lot - 8 year old car that they bought used, the loan balance is $7K, the car is worth $6K - if in decent condition, and the repair bill is $3K. Coulda shoulda...

tallman1 · September 2010

Is it possible that this dental hygienist dropped her coverage because she has access to cheap or free dental work?

I was surprised to learn that wasn't the case. Not a gamble I was willing to take but she did... and was a little embarrassed to bring it up.

you should have insurance for things that you might not be able to replace out of pocket.

You'll get no argument out of me about that, especially when it comes to health and auto insurance. Extended warranties (auto or other stuff) are a decent gamble if you get something with a good reputation. Of course, anything can break, but the odds are in your favor and usually the costs can be covered if the gamble doesn't pay off. I would have lost money on anything I've ever purchased with an extended warranty... but that's just me.

I really have no problem with extended warranties on cars. If that gives someone peace of mind, that can be a good thing. I just recommend that people do their homework on prices though.

mwa1 · September 2010

I really have no problem with extended warranties on cars. If that gives someone peace of mind, that can be a good thing. I just recommend that people do their homework on prices though.

In this day and age, every smart buyer gotta do their homework. Like some people in this forum who keep blaming the dealer, well they have no one to blame but themselves. Don't close your eyes and then start bad mouthing everyone without thinking about it. Do your research and become a better buyer bcz there are plenty good dealers out there.

Any retail business is setup to make profit and so are the car dealers like any other business as long as it's in an ethical way. Every consumer has choices and there is a reason those products are offered in the dealerships bcz there are many customers who appreciate having them.

fezo · September 2010

Of course working at the dealership your mop and glo and such would be somewhere around dealer cost. Last time the dealership wanted to sell me that junk it was priced north of $1,200. The salesman was down to $200 dealer cost on it when he gave up on me buying it. I didn't regret that at all.

Warranties are another story but I'd not buy one while buying the car because the dealership you are buying the car from is invariably the highest cost for the same warranty you can buy a week later elsewhere.

When I had my 02 Ody I bought the warranty from a Honda dealer in Baton Rouge. Never been to Baton Rouge but the warranty worked just fine up here.

Sandman6472 · December 2011

Why say what you did in the last paragraph? Just because he has a different opinion, why get negative? If that's your mo at work, glad I don't do business with your organization. And had the same snarky response from the f & i person last time we bought. Turned nasty when we politely refused all the add ons...now what was the point of that? Just left a bad taste which was reflected in the survey I did...gave the salesperson high marks but trashed the f & i guy. So before you insult someone, think before the words spew forth.

The Sandman :sick: :shades:

cadillacmike · December 2011

In March i replace my wife's 2005 CTS with a 2008 model. Since it was CPO and carried over 3 years remaining factory warranty any extended warranty was out of the question. I financed with USAA which included GAP ins in the rate (3.4% if i remember). This dealer didn't play the mop n glo game, so that was good.

The only thing presented to us was a tire & wheel "replacement plan" that cost more than a new wheel and when i read the fine print (and i do read it all the time) i noticed that it did not cover curb scrape incidents, which is the ONLY time i ever messed up a wheel (and i have messed up wheels on curbs before...) It basically only covered blowouts, pro-rating the tires of course, which is what the tire mfr warranty will cover also. IF i blew out and trashed the wheel - not likely unless i were to drive on it - then my USAA ins would cover the wheel damage which they have done in the past.

So I passed on that., and he didn't even bother trying to match my USAA rate on the finance. Not too bad, but then again, i try to come prepared when i'm buying a car.

Fast forward to Nov 2011.

This time i'm looking at a V8 STS for me. Didn't have the wife with me, she was not happy about me even looking for what turns out to be our 4th car, but hey...

Anyway, i ended up getting a Platinum ed V8 STS. very rare cars. I had a pre-approved 3.4% USAA financing, but the sales mgr who was also the sales person, it was a late afternoon, early evening session, mentioned that Ally (the new GMAC) was offering 0.9% APR on this car. I thought that only applied to 2010 or later, but nope this car with only 11,000 mi was eligible. I gave him just my info since my wife was at home in Tampa (I was in Pompano - no V8 STS anywhere near Tampa!!) He told me it took an entire 5 seconds for Ally to approve me at 0.9%, so i tore up the USAA draft.

No mention of mop n glo gap, or anything else. He even orffered and i took him up on reimbursing me for the rental car drop fee (I rented a car to go there - didn't want to put 500 mi on my Fleetwood to go look at a car), and my gas.

Too bad i blew that with a speeding ticket driving back :mad: That car is a rocket!

While the items can be a benefit to SOME people, this is NOT KNOWN in advance, and the actuaries have it all priced out so the house (seller) never loses, so i generally don't take these up. The one time i bought a GMPP for a car, we never used it and i ended up turning it in for a pro-rated refund when we traded the car.

Again individual experiences cannot be predicted, but I firmly believe in Cadillac CPO cars with their 6 yr 100,000 mi warranty. We have done well by them the past 7 years.

Sandman6472 · December 2011

Live just west of Pompano and have heard good things about that Caddy dealership. Car sounds like a winner but a speeding ticket? Guess the cop had no sympathy when you told him you just purchased this puppy!

Enjoy the ride!

The Sandman :sick: :shades:

ken117 · April 2013

Seems I struck a cord as few sales folks enjoy having their profit sources questioned.

Neither insurance for a $40K vehicle nor health insurance can be compared to overpriced extended service contracts peddled by F&I managers. To imply such is simply a straw man argument. The vast majority of folks need both but not so many actually need the extended service contract.

I am simply knowledgable about finance which is what I do for a living. Paying for an overpriced service contract is almost always a bad way to spend one's money. Seriously, I doubt many folks would knowingly give hundreds of dollars in profit to a F&I manager. Mwa1, perhaps if you are an F&I manager you can start a new practice of disclosing to car buyers the actual profit you make for each F&I product sold in the Box. Wouldn't that be refreshing?

I really doubt I will ever file for bankruptcy considering all the money I have saved over the years from not buying overpriced F&I products.

stever · June 2013

Are you a Southern California resident who recently (within the last 6 months) financed a new car purchase for more than 72 months? We're interested in learning more about your experience. Please drop us a note at pr@edmunds.com by Friday, June 14 2013.

isellhondas · June 2013

How much profit a merchant makes on the products and services he sells is NONE OF YOUR BUSINESS!

If you feel the product or service being sold is a good value, then spend the money. If not, decline whatever is being offered!

karhill1 · June 2013

Some of us understand the F&I office is where a dealer hides its most effective sales person with the intent of earning thousands in profit. Dealers are fully aware their F&I offices remain the one area within which they can continue to earn huge profits.

It is not the value of the F&I product which is a concern. It is the deception employed by car dealers to sell such products at inflated prices which is MY BUSINESS.

Much to the chargin of car dealers, astute buyers can research the invoice cost of vehicles along with the various incentives available. A buyer can shop the various dealers to locate the best value on the purchase price of the vehicle.

Such information is not so readily available for F&I products. Products sold in an office occupied by people who are continually trained on the necessary steps, which skirt the legal requirements, to deceive people to buy mostly worthless products which are marked up by hundreds if not thousands of dollars over actual cost.

Anyone interested should search F&I games or F&I scams on the internet. A real eye opener.

What concerns car dealers, F&I managers in particular, is customers are finally understanding the truth about the F&I office. This along with the scrutiny dealer F&I practices, particularly with regards to dealer reserve, are receiving has caused dealers to recognize the days of them earning thousands in the Box is coming to a close.

As always the only words a customer should say in the Box is hello and NO.

ken117 · June 2013

Anyone who is not concerned about the profit a dealer makes in the Finance and Insurance office is a sales person's delight, a home run just waiting to be hit. That person will pay thousands to enhance the dealer's profit magin as well as to increase the commission for the person who sells the Honda.

Clearly there is a reason people who sell the Honda get concerned when we buyers inquire as to the profit a dealer makes on the various products or helpful services he, or she perhaps, sells to consumers. Profit is a great motivator.

Perhaps someone who sells the Honda could justify the reasonableness of the $500 or more dealer documentation fee service, or is it a product, so many dealers now kindly provide to we customers? Is this an item which is NONE OF OUR BUSINESS?

Or perhaps the person who sells the Honda could defend the reasonableness of dealer reserve, which occurs when a customer qualifies for a certain interest rate and the dealer kindly marks it up a couple of points, thus increasing the poor dealer's profit without informing the buyer! Is this one more product or service which is NONE OF OUR BUSINESS?

What else is NONE OF MY BUSINES?

billy3554 · June 2013

If a dealer's profit is none of my business, perhaps we should do away with the state franchising laws which protect the auto dealer method of selling vehicles. Just have the manufacturers sell directly to the customer.

Go Tesla!

Think of the money that would save the customer. No more profit layers, profit to the manufacturer, to the sales person, to the dealer. We could buy on line directly from the manufacturer and pay just one profit.

Work out a few matters such a trade vehicles, financing, etc. Do away with the F&I office crap, another win for the customer.

What is not to like?

ltllady · June 2013

One of the major national car dealer organizations announced it earned a healthy $1,250 in F&I profits during 2012 for every vehicle sold. Clearly, we consumers need to be as concerned about a dealer's F&I profits as we are with the selling price of the vehicles we buy.

Considering this $1,250 amount it is true even the best sales prices can quickly be undone during the in the time we spend with a slick F&I person. Really is it any wonder car sales people are so adamant in their belief we consumers have no business being concerned with a dealer's profit?

ken117 · June 2013

I do agree I, as a buyer, need not be concerned about the profit a dealer makes on the sale of a vehicle. In fact, I am only concerned about the price I pay for that vehicle. If I get my price, I really have no business with the dealer's profit or loss on that sale.

What I and other buyers, as exhibited by some of the posts on this topic, need to be concerned about is the somewhat deceptive practices dealers use to increase those profits in the F&I office along with any lowball price a dealer may try to pay for any trade vehicle I have.

It would be remiss of us, as buyers, not to make such activities our business.

Edmunds.com - Confessions of an Auto Finance Manager

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