Interpreting Financing Options to Your Advantage
You’ve done your homework on your new car: you’ve read all sorts of reviews online, weighed the pros and cons of its closest competitors, and have an exact sense of what packages and trim you want on your next vehicle so as not to be persuaded into something frivolous. Furthermore, you are no spring chicken: you’ve been to the dealer before and maybe even actually befriended a sales representative who won’t give you any guff. Yet, there’s one department in which you could be getting the ‘amateur’ treatment and not even know it. It’s the finance department, also known as F&I. These folks can turn a great deal into a deficit without you knowing, and without recourse to the sales representative you have been working with.
F&I: Looking Out For the Basic Tactics
Although the majority of their role consists of dealing with loan servicing & banks, the finance team still has a strong element of sales. Hence, it is very important not to go on what sales people call a ‘yes streak’. In other words, once you have said yes to a vehicle, they find it easier to get you to say yes to an extended warranty, or lower trade-in value, and the like. Don’t let the excitement of a deal overtake you on the floor or they will take advantage of it behind closed doors.
Yet, the most important tactic to be wary of is the padding of the interest rate on your loan or lease. Dealer F&I departments get access to wholesale rates from lenders and create profits by increasing them on-site. The best way to avoid this unnecessary interest inflation is to know your credit score like the back of your hand, and to have done research with other lending institutions as to the actual rate you qualify for on certain sums. This is much easier than it sounds; don’t get caught thinking your credit score only merits the rate the dealer suggests – you would be surprised the discrepancy between a dealer’s rate and a bank’s for even a low credit score.
The Honest Car Dealer has a lot more to say on this, since indeed I was once in charge of my own F&I department. Check back with us as often as you can to avoid unnecessary strain on your wallet in the future.
July 26, 2012 by Jamie Rettig