Confessions of an Automobile Finance Manager

[Jestjoan]

http://www.edmunds.com/advice/buying/articles/125308/article.html

If you haven't read Confessions of an Car Salesman previously, you can access it from the lower right hand corner.

 

[Wonka]

Sad..., but true

I was aware of all these tactics, so I was surprised by any of the article. However, most folks aren't. This is very good reading for most people, especially first-time automobile buyers, Seniors, and lower-income folks that are being taken advantage of.

 

[nightnurse613]

The last time we bought a new car, my husband went to the Credit Union and arranged for the financing ahead of time. When he finally got to the finance office he was prepared to tell them he already had arranged financing when they showed him an APR that was a quarter of a point less (with no prepayment penalty). Of course, the things they tried to do BEFORE he finally got their, NOW that's what this article is talking about. His elderly father bought a car from a dealer and the dealer add on invoice had pin striping, Scotchgard and a AM/FM Cassette radio. Needless to say, the car in his dad's driveway had none of those things and you wouldn't believe how snotty the owner got with him! Bring it down and we'll put it in! :annoyed: Send us a check and we'll take our business elsewhere!

 

[AwayWeGo]

Pre-Owned All The Way.

Not getting tangled up in all that stuff is just 1 more fringe benefit of not buying new cars, of paying cash in full, & of not buying cars on the never-never plan.

True, if I buy a used car I'm buying somebody else's problem.

The dirty little secret is that if I buy a new car I'm also buying somebody else's problem -- but for lots more money.

So it goes.

Full Disclosure : The Chief Of Staff 1 time bought a brand-new car from a dealer -- a cute little straight-shift midline 1963 Chevy II blue 4-door with heater & push-button AM radio. She got taken to the cleaners so bad when she sold it off in 1967 that she vowed never again to spring for a new car.

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​

 

[Lawlar]

They Make Big Money

I represented an "F&I" lady many years ago when I did a bankruptcy for her [Its not how much you make, its how much you spend.].

I was amazed. She made over $200,000 a year! The fees she got for selling extras made the car salesmen look like paupers. [She was very sexy - I would have been fleeced if she got her hands on my car purchase.]

A tip: I "helped" my wife buy her last car. I had her get an extended warranty to defray future expenses. Afterwards she cancelled the insurance and bought an extended warranty from an independent company (my wife works for a large insurance agency so she knows about these products).

So if you want an extended warranty - get a quote from your insurance agent.

 

[Wonka]

I represented an "F&I" lady many years ago when I did a bankruptcy for her [Its not how much you make, its how much you spend.].

I was amazed. She made over $200,000 a year! The fees she got for selling extras made the car salesmen look like paupers. [She was very sexy - I would have been fleeced if she got her hands on my car purchase.]

A tip: I "helped" my wife buy her last car. I had her get an extended warranty to defray future expenses. Afterwards she cancelled the insurance and bought an extended warranty from an independent company (my wife works for a large insurance agency so she knows about these products).

So if you want an extended warranty - get a quote from your insurance agent.

Good advice on the extended warranty. I purchased a 2005 PT Cruiser Convertible last year from a private party. It had 4500 miles on it, and was already two years old. So, I decided to buy an extended warranty. First, I stopped by a local FL dealer, then I go on the internet. I checked with the factory, dealers, and independents selling extended warranties. I found a dealer in Chicago that sold me the factory extended warranty for 1/2 the cost. So, it's good advice to shop around.

Two days ago, I did the same thing on my boat engines. I have two outboards and am just starting the second year of a 3-year Mercruiser warranty. I had a minor engine problem that last time out...one of the engines stuck in neutral until I reversed. Then it was ok (after limping back to port on one engine...whew! It sure does compromise the speed). When turning into port, I tried reverse then forward and everything was ok. We haven't been back since. Anyway, I had received cards from Mercruiser on extending the warranty. A 1 year extended warranty for each engine was $1000, 2 years $1900, 3 years 2800 (yes...each engine). I tried independents...about the same. I called the MI dealer I purchased from (I'm in FL). The cost was $2175 for both engines. for 6 years. So, I got an extra year for a much lower cost than the other plans.

Why on earth would I buy an extended warranty anyway? Boat engine repairs can be enormous. Each engine is worth about $14M. On the auto, I just wanted the peace of mind since I was buying a 2-year old car.

A long story supporting the good advice already given...check with others and on the internet before buying anything from a dealer.

 

[Rose Pink]

My dd just got scammed by the finance officer at a dealership. She told them she had already been approved by her CU for x amount of dollars and that she did not want anything added to the price of the car. The scumbag then proceeded to add packages and insurance to her contract telling her that if the CU didn't approve that amount they'd just remove it. DD must have been so confused by this point that she signed the contract. In the week since, DD has been trying to find out when payments are due, the CU said they'd not received any paperwork from the dealership and would not approve the increased amount, cut her a check for the pre-approved amount to take to the dealership. DD seems to have three contracts: one from the CU for the loan, and two from the dealership--one for the orginal price and one for about two grand more. I am so confused at this point. DD is in a panic. Both the CU and dealership have sold her gap insurance. I'm feeling murderous at this point. The finance officer never seems to be in when dd calls and her phone mail box is full. The contracts have different interest rates although financed through the same credit union (but different branches?) and both are at least 1.5 points higher than she could get at my CU.

How do these people sleep at night? Have they no conscience at all?

Do loan officers at CUs and banks earn commission?

 

[pcgirl54]

Good article. I know interest rates before I walk in the door and car prices.

Also try to get a lot of those extended non brand warranties serviced at another dealer.

Years ago I bought a Ford LM car and non Ford Warranty as the car had 55kmi and Ford covered 50k in theirs. Another Ford dealer closer to home let me know how hard it is to get reimbursed from the generic warrantys as so many things get declined when it is not the brand name. So I paid $1500 for nothing. Not sure if this has changed in the interim but I wish I knew that ahead of time.

 

[dougp26364]

Since 1982 almost all my car purchases have been new cars. I can't say that I've ever had an F&I man increase the price or re-work a deal I've struck. But then again, once I've settled on a price, that's the price I'm going to pay. I don't want nor do I accept any extra's or add on's when I'm signing the papers.

I have struck deals and then walked away when the F&I guy wouldn't come through with the deal I had struck. There are a couple of dealerships in town I don't bother with anymore. I once drove 200 miles and purchased a Toyota for my daughter because she was getting jerked around by the local Toyota dealer. I've also driven out of town to buy a Buick and walked away from a deal to buy two cars at once from an Oldsmobile dealership in town when the F&I guy ventured upon insult before I even sat down across the desk.

Lately we've been shopping for new cars again. Our present vehicles have lease agreements that expire in March of next year. So far there have been two lots that won't see me walk through their doors again but, that's been related to the salesmen. We did allow two salesmen to work up deals for us if we terminated our lease early but both were so ridiculous that they didn't stand a chance. Easiest out I've ever had because they wanted to give us $5,000 less than buy out on our lease when all I have to do is wait 6 months and walk away from the cars if I don't want to keep them.

I know most people will buy used cars and that's fine. I've just had to many bad experiences with used cars becoming fix and repair daily vehicles. With the new cars I know what's been done to them, know who's fixed them, know that the routine maintenance has been completed (I still know people who don't even change their oil) and I know they haven't been in an accident or are a repo from someone who couldn't afford the payments let alone maintain the vehicle.

 

[MILOIOWA]

I work for a dealership-I am a parts manager-but I have a great understanding of how sales, F&I, service, etc work. I will agree that the F&I folks are paid well to try and get your business. I don't agree that they are all out to get you, but I can see where possibly the majority of them will take advantage when given the opportunity. Also, as for "aftermarket" extended warranties, I see it every day where they want you to use salvage parts, or aftermarket parts, etc. They market them often as "bumper to bumper" coverage when in fact there many times are lots of loop holes on the coverage. I would personally stay away from them. The F&I people can charge whatever they want for the factory extended warranties so i would try and talk them down, or try another dealership and see if they will beat the price, but definately stay with the factory warranty. Your best bet in any situation though is to research and know every angle of every dangle of the process before you ever set foot in the dealership. if you do this, and still get shafted then you have only yourself to blame. Just my .02.
Also if looking for used cars, scope them out after hours, and watch the lot to see if it looks like they are busy, or not selling much that particular month. They will re-arrange the lot weekly or even daily to make it look like they are doing business. The rule of thumb is to never have any given car on the lot for more than 90 days. If you see a particular car has been there 90 or more days, those are usually the ones you can wheel and deal on.

Sorry for rambling. If I think of anymore tricks of the trade I'll share.

 

[Mosca]

I've been an F&I Manager for 20 years. I don't even have to read that (but I will). There are enough sharks out there that I wouldn't EVER tell anyone to let their guard down in the finance office.

Everyone is different. How another person conducts themselves behind the desk, that is out of my control. All I can do is conduct myself professionally. I try to conduct my business in a way that wouldn't embarrass my family, if they were sitting in on the delivery, and I think I make a pretty good living at it. Remember that what is represented here on this forum is far from a cross-section of the car buying population. F&I products are not for everyone, nor should they be. However, there are people whom they benefit. My job, as I see it, is finding those people and offering them those products.

I'm lucky; it's not all that hard a job, I get to sit in a nice air conditioned office, and I get paid to do it. I don't have to wear a neck tie. The downside is that I put in a lot of hours. But, I like people, nd I like talkming to them, so it's a pretty good match I guess. It beats doing a lot of other things. Or not working at all.

One thing: State laws very. what MILOIOWA says is true in some states, not true in others. In many states the price of F&I products is capped; in some states, it is actually fixed and mandated (service contracts in Florida). One thing that he says that is absolutely true, do your research. Knowledge is power, and the more you know, the more you can make the decision that is right for you.

 

[MILOIOWA]

I've been an F&I Manager for 20 years. I don't even have to read that (but I will). There are enough sharks out there that I wouldn't EVER tell anyone to let their guard down in the finance office.

Everyone is different. How another person conducts themselves behind the desk, that is out of my control. All I can do is conduct myself professionally. I try to conduct my business in a way that wouldn't embarrass my family, if they were sitting in on the delivery, and I think I make a pretty good living at it. Remember that what is represented here on this forum is far from a cross-section of the car buying population. F&I products are not for everyone, nor should they be. However, there are people whom they benefit. My job, as I see it, is finding those people and offering them those products.

I'm lucky; it's not all that hard a job, I get to sit in a nice air conditioned office, and I get paid to do it. I don't have to wear a neck tie. The downside is that I put in a lot of hours. But, I like people, nd I like talkming to them, so it's a pretty good match I guess. It beats doing a lot of other things. Or not working at all.

One thing: State laws very. what MILOIOWA says is true in some states, not true in others. In many states the price of F&I products is capped; in some states, it is actually fixed and mandated (service contracts in Florida). One thing that he says that is absolutely true, do your research. Knowledge is power, and the more you know, the more you can make the decision that is right for you.

I'm glad you pointed that out-What I meant by "they can sell warranties at whatever price they want" was that they could sell it for less than the initial asking price. Not that they could jack the price up. Sorry for the confusion there.

 

[Mosca]

I'm glad you pointed that out-What I meant by "they can sell warranties at whatever price they want" was that they could sell it for less than the initial asking price. Not that they could jack the price up. Sorry for the confusion there.

Hey, in some states they can jack it up as high as they can... and they do.

Like I said, there are way too many crooks that I would never tell anyone to be anything other than wary. However, after having read the article, I think that there are some serious exaggerations. It is almost impossible to make $8000 in back end, for example; to make that much profit, the change in payment would be on the order of $400/mo! Think of that for a moment; a customer's payment would have to go from $400 to $800.... ain't gonna happen.

Elsewhere, the author states at the beginning of the article that he never knowingly lied or cheated a customer; but at the end of the article he states that he told sub-prime customers that service contracts were required by the finance source. That is absolutely underhanded, illegal, and unethical. In another instance, he states that when presenting a menu, the customer is led to believe that he HAS to make a choice... but the menu system is expressly designed to allow the customer both the knowledge of the initial terms and that any extra products are OPTIONAL. If he conceals the second clause of that statement, he is again acting unethically.

The thing is, there is no need to do anything like that; the only reasons someone would act that way would be either 1) they don't believe in what they are doing, or 2) they are lazy and don't want to do the work necessary to close the sale on its own merit. Since the author clearly states at the beginning that he never had any intention of making a career in the automotive business, I would say that it is both. Unfortunately, there are plenty more like him, not just in the car business but in many walks of life. I'm on the edge of my seat for Confessions of a Home Improvement Contractor, Confessions of a Subprime Mortgage Loan Officer, Confessions of an Insurance Salesman, etc etc etc. Point being, always be aware.

 

[Joshadelic]

If any of you need advice in this area, I am an F&I Manager at a large new car dealership. I'd be more than happy to answer individual questions.

~Josh