Car Dealer
Finance, Loan & Insurance Department
Well you've
made it far enough along that you are about to head into the car
dealer finance, loan & insurance department. Or just for short
the F&I department.
Remember what you've learned so far.
The dealer finance department is just another piece of the buying a car puzzle that you have to
have fit.
The car dealer finance department is a separate piece that
you have to stay on your toes when dealing with. This is no time to
relax and let your guard down. There is still a bit of work yet to
do. You are only in this person's office because, evidently to this
point, you feel as though you have worked out acceptable numbers with
salesperson and sales manager.
Not time yet to grab your car and
go impress your friends and neighbors quite yet.
To relax and
not pay close attention now could mean losing a good bit of ground
you feel you have made to this point. In many cases the dealer's
finance person is the most experienced and skilled sales person you
will come in contact with.
With the various products the car
dealer's finance person will present to you, it could mean a very
nice profit added back into the deal. When you were hard at work
dealing with the salesperson, negotiating the price of the car and
your trade
allowance, refusing to pay for all those dealer add-on's,
this is known as the front end of the car deal.
The finance department
and all they have to offer.... er... sell you, is known as the back
end of the deal. You can see by this the dealer doesn't
consider 'the deal' quite over yet, and neither should you. This is
the final stop on the road to the deal, the last chance for the
dealer to make a bit more money, so you can bet the F&I person is
good at what they do.
There is
great incentive (and potential profit) for the dealer have you
finance your car using the dealer's finance department. This
is why it is extremely important that you know the interest rate
that you can qualify for outside the dealer's finance department.
The interest rate that is offered
to the dealer from the lending institution is known as the dealer
'retention rate'. You can rest assured that the dealership finance
manager isn't going to initially offer you up their 'retention rate'
as your interest rate.
This is tantamount to selling the car
for exactly what you paid for it. This is where knowing what you can
borrow the money for from your personal bank, credit union, or other
source, is of great importance. You can simply tell the finance
manager that you can get the interest rate from your bank at x
percent and that you would be willing to consider financing through the
dealership if they could beat that rate.
Also, keep in
mind that if you have no idea what type of interest rate you can
qualify for, and perhaps your credit is less than perfect, then the
dealer can mark up the interest rate to just about anything they can
get you to buy into. Especially if you are still comfortable with
those monthly payments! This can be a source of large profit for the
car dealer.
Along with
negotiating the interest rate the automobile finance department is
tasked with selling you the extended warranty and disability
insurance. Again these items make a very tidy profit for the dealer.
When it comes
to extended car warranties you do have option of getting the
coverage on your own and probably at a nice savings over what any
dealership is going to offer you. Here are extended
car warranty questions answered for you
and how you can get a free quote.
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