Congratulations On Buying Your New Car
Now the real work begins! One of the most common mistakes customers make is assuming that once they agree on a price for their new car with the sales person they think they have completed the car sale. Unfortunately that’s not the case!
Since January 2005 all car dealers must comply with the Financial Services Authority (FSA) Regulations. They have to do this by law. However, they use this to introduce you to the F&I (Finance and Insurance) manager or Business Manager. They will either do this at the sales desk or take you to the F&I office. This gentleman has only one thing in mind to get as much money out of you for the dealership and his commission! You can quickly loose hundreds of pounds. The F&I department is one of several under-the-radar profit makers for the dealership, and has been for decades.
The FSA questions are loaded, and it doesn’t matter what you say they will always come up with the same recommendations for additional products like Guaranteed Asset Protection (GAP), Paint Protection, Extended Warranties, Tyre Protection, Service Plan just to name a few. He has to give you a hard copy of your answers and a copy of the recommendations and must tell you that the additional products are not compulsory, or they will be breaking the law! They must treat all customers fairly! They don’t!
The F&I manager is focused on generating income off of you in a couple of ways: Making money off you by selling you GAP and extended warranty. Extended warranties can be a very good idea if you are planning on keeping your new vehicle for a number of years. The problem with buying either of these Insurances from a dealer’s F&I department is the cost. If you are willing to do as little research on the internet for either of these types of Insurance you will find coverage as good if not better than the dealer’s at hundreds of pounds less! The F&I manager is looking at making at profit of at least £150 - £250 profit on each Insurance. More profit will be made if the car is dearer, because he will increase the price of the insurance. However, the dealer only pays one price to the insurance company.
They will also make money from you if you are using finance, by bumping up the finance rate. They will offer you a good rate process your application bump up the rate! Then tell you that you have been approved for finance but your payments have gone up! Don’t le this happen. Smart Customers know what rate they can get before buying a car. Shop about, that way the F&I manager can only improve his finance rate not make money off it if he wants your business.
The F&I manager will ask “ How are you paying for the car” you say “I’m paying cash” he will then ask “His that from savings or have you got a loan in place” . Whatever you say he will try and talk you into borrowing the money from them. You see the F&I manager is a very lucrative profit maker! Very often they make more from the F&I side of the business than they do from the car sale itself! So be prepared there is no avoiding the F&I manager/ Business Manager.
The banks will pay commission to the car dealership. The higher the rate the more commission paid. This means that on £20,000 loan the dealership could be making £2,000 commission, and guess who's paying that extra £2000?
Compare rates and grab the best loan deal from the internet. But beware sometimes the advertised rate is not what you get so be careful and read everything twice.