The F&I office
After you agree on a price, a finance manager offers optional products. Some can make sense, at the right price.
After you agree on a price, you'll usually meet the finance and insurance manager, often called F&I. Their job is to complete the paperwork and the loan, and to offer optional products. Those products can be a meaningful part of what a dealership earns on a sale.
The common ones:
- Service contract (extended warranty): pays for certain repairs after the factory warranty ends
- GAP: covers the difference between what insurance pays on a totaled car and what you still owe
- VIN etching, nitrogen tires, paint and fabric protection: small extras, often priced well above what they'd cost elsewhere
- Tire and wheel, key replacement, prepaid maintenance: sometimes useful, depending on your car and habits
Products are usually presented as a monthly amount, which is where the math gets slippery. A $2,000 service contract rolled into a 72-month loan at 7% adds about $34 a month, and you'd pay about $2,455 for it in the end, because you pay interest on it too. Ask for the total.
GAP deserves a fair hearing. With little down or negative equity rolled in, you might owe 110% of the car's value, and a total loss could leave you paying for a car you no longer have. GAP can be worth having then. Your own auto insurer or lender often sells it for less, so price it there first.
These products are optional. If anyone says one is required for your loan, ask to see that in writing from the lender.
Where it fits in the method
Related in the method
- Out-the-door is the only number
- The first pencil
- The walk line
- Disclose the trade last
- Why they go to down payment first