After Negotiations

After you have completed negotiations with the saleperson, in many cases you are ushered into the Finance and Insurance department or the “business office” to complete the paperwork.

It is at this point, where as a buyer you need to be aware that you don’t give back any of the cost savings you have negotiated in the showroom.

The key thing to remember is that the F & I department is a profit centre for the dealership, so anything they sell you here, generates a profit which is at least equivalent but more likely at a higher margin than the car itself.The typical things they try to sell you on fall into 2 categories:

Aftermarket add-on parts and services
Peace of Mind / Warranties

Aftermarket add-on parts and services are generally available at a lower price from other retail stores and outlets. In general, the work is not warrantied by the dealer despite the perception. In fact, in many cases, the work is sub contracted to other third party retailers. Examples of this include, spoiler, sunroof, security system, etc…

Peace of Mind / Warranty type products are sold based on fear of some type of negative event in the future that will require a significant cash outlay. The high profitability of these products to the dealer is due to the following reasons:

the likelihood of the negative occurrence
the price charged by the dealer relative to a competitive market price
the likelihood that the dealer will have to honor any future claims based on the terms and conditions of the offer

Some of the common examples of this include:

Life Insurance

This insurance pays the remaining payments left on your loan / lease, should you pass away. The cost of this insurance is priced based on your original loan amount, whereas, the payout is based on the remaining balance at tie of death, likely a lower amount. Also, consider, that in case of death, is the failure to make car payments really a significant issue? What is the purpose of the car, after your death. Generally speaking, those who need life insurance have other life insurance which is purchased based on an assessment of need. The additional life insurance for the car loan is redundant.

Rustproofing

All new cars are built with rust-resistant galvanized steel (or aluminum or fiberglass) and treated with a rustproofing agent at the factory. Experts say dealer-applied rustproofing is unnecessary, at best. Do you have history of cars that have rusted out on you, either based on climate or the length of time you plan to keep your vehicle? Have you read the conditions of the warranty. If your vehicle does eventually rust, will it meet such conditions. Most rustproofing warranties require that the rust start from the interior and perforate outward and there can be no prior damage to that area of the vehicle.

Paint Protection

With todays technology, if factory paint is applied and sealed properly, it will last the life of the vehicle. The dealer applied “sealant” is simply redundant. In fact, you may not based to tell if the dealer has applied the extra “sealant” or not. A coat of wax from your local store should be sufficient.

Fabric Protectant

Scotchguard or like fabric protectant products are generally available at your local stores for a mere couple dollars. These products can be quickly and easily applied by yourself. There is no secret “car fabric protectant”. These are the same products used to protect various fabrics around your home.

In a worst case scenario where a stain does permeate your fabric, consider whether the cost of steam cleaning exceeds the cost of the warranty. As much as dealers say it, they likely have never and will never replace your whole car seat.