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Edmunds.com - Confessions of an Auto Finance Manager

25 messages,  Last post on Apr 23, 2013 at 11:23 AM

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Confessions of an Auto Finance Manager - In this four-part series, written by veteran auto finance manager Nick James, you will learn the F&I man's tricks and how to avoid them. When you're done, you'll be ready to safely navigate this crucial part of the car buying process, and the F&I man will never work his "magic" on you again. (more)

Messages Page 3 of 3

#16 of 25 Re: The OTHER side of the F&I Manager's profits [mwa1] by tallman1

Sep 06, 2010 (10:26 am)

Replying to: mwa1 (Sep 06, 2010 7:38 am)
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.

#17 of 25 Re: The OTHER side of the F&I Manager's profits [tallman1] by micosilver

Sep 06, 2010 (12:31 pm)

Replying to: tallman1 (Sep 06, 2010 10:26 am)
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...

#18 of 25 Re: The OTHER side of the F&I Manager's profits [micosilver] by tallman1

Sep 07, 2010 (10:35 am)

Replying to: micosilver (Sep 06, 2010 12:31 pm)
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.

#19 of 25 Re: The OTHER side of the F&I Manager's profits [tallman1] by mwa1

Sep 08, 2010 (9:18 am)

Replying to: tallman1 (Sep 07, 2010 10:35 am)
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.

#20 of 25 Re: The OTHER side of the F&I Manager's profits [mwa1] by fezo

Sep 08, 2010 (9:37 am)

Replying to: mwa1 (Sep 08, 2010 9:18 am)
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.

#22 of 25 Re: The OTHER side of the F&I Manager's profits [mwa1] by sandman_6472

Dec 18, 2011 (7:28 pm)

Replying to: mwa1 (Sep 06, 2010 7:38 am)
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

#23 of 25 Recent F& I experiences by cadillacmike

Dec 22, 2011 (12:46 am)

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 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.

#24 of 25 Re: Recent F& I experiences [cadillacmike] by sandman_6472

Dec 23, 2011 (10:46 am)

Replying to: cadillacmike (Dec 22, 2011 12:46 am)
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

#25 of 25 Re: The OTHER side of the F&I Manager's profits [mwa1] by ken117

Apr 23, 2013 (11:23 am)

Replying to: mwa1 (Sep 06, 2010 7:38 am)
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.

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