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What to Expect in the Dealership’s Finance and Insurance Room

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Think haggling with the car salesman and getting the price you like for the car are all you need to do at the dealership? Think again. If you will be getting financing at the dealership, you must know that negotiating successfully on the lot is half the battle. There is a bigger challenge ahead, and this is negotiating in the dealer’s Finance and Insurance room. This is where the hard sell happens and where you should stand your ground in order to go home with a great deal.

You can only emerge victorious in the F&I room standoff if you know what to expect prior to entering it. Listed below are the things that will be discussed in the said room:

Loan details

Because you will be financing the car through the dealer, you and the sales manager need to discuss specific details such as interest rate, loan term, down payment, monthly payment and rebates (if applicable).

The interest rate is most important. Dealers are notorious for inflating rates, and you shouldn’t just accept whatever rate they will give you. Check not only the average interest rate of new and used cars in Houston but also in the entire country. Know your credit score beforehand and find out what rates you qualify for. Bring a copy of your credit rating to the F&I room so you have proof.

Focus on the overall loan cost, and not the monthly payment. You can get a low monthly payment with a longer loan term, and in turn pay more for financing. Read all documents and make sure there is no ‘subject to approval’ or ‘subject to financing’ statement anywhere in the contract.

Extended warranty

The sales manager will surely offer you extended warranty on your vehicle. It may or may not be necessary—the need for it depends on certain factors. Considering the fact that new cars are built better and come with long-term original warranties, an extended warranty is usually not needed. If you are sure you don’t need it, refuse outright. If you think you do, you should consider several things before you take such warranty.

The first thing is the price. You can get extended warranty somewhere else for a much better price. If you do get it from the dealer, you will be paying more for it as well as the loan because dealers often add the warranty’s cost to the loan. If you want to buy it from the dealer, negotiate on the price the way you did with the car and ask that the cost be separate from the loan. Another thing is coverage. Extended warranties are not made equal. Read the fine print to know what is and what isn’t covered.

Protection services

In the F&I room, the sales manager is bound to offer you all kinds of service contracts, if not protection aftermarket products. These include rustproofing, paint protection, fabric protection and undercoating. These may seem like a good idea, but these are unnecessary because the car already have these. They are also costly, offered to further inflate your loan price. Your new car wouldn’t need rustproofing because it already has corrosion protection warranty and paint protection from the manufacturer. Even if it didn’t, you can do the rustproofing yourself. The same thing applies to fabric protection. As for undercoating, this can block water drains and speed up rusting.

Theft deterrent accessories and services

The sales manager will also offer you an alarm system as well as window etching services. You should say no to both. Even if you want to prevent your brand new ride from being stolen, you need not pay a fortune for it. You can purchase an alarm system and have it installed for a cheaper price. As for window etching (the act of etching the Vehicle Identification Number on all the windows), you can do it yourself as well. There are window etching kits available that you can purchase for less than $30.

Insurance

Sales managers almost always sell life and disability insurance to car buyers. You may need this, but you surely don’t need to buy it from the dealership. Shop for insurance the way you would shop for a car: do your research, get quotes, then make a decision. This process takes time, and shouldn’t be rushed. You can get better rates at banks and credit unions, so start shopping there.

Before you sign the contract, make sure there is no insurance added if you refused to get it from the dealer. Also check for the other add-ons mentioned above.

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