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OK, you’ve finally gotten through the front end part of buying your car. You have worked hard done some tough negotiating and feel like you have negotiated a good and fair deal on your car purchase and trade-in. Now it’s time to head into the dealer’s F&I (finance and insurance) department and go through the formality of signing the financing paper work on the back end of the deal.

You may have noticed a couple of terms: front end and back end. I used these terms to illustrate a point to you. From a car dealer perspective there are two distinct parts (profit centers) to each deal. The front end of the deal is the new car price, your trade in, any dealer add on’s that they got you to buy with your new car, etc. All of this, most everyone is indeed familiar with. The second part of the deal, the back end, is not a place to let your guard down. The back end is the F&I department. The F&I manager is every bit as responsible for making sales numbers and profit margins as everyone else at the dealership and they are sales people NOT financial advisers and their purpose is to help maximize the profit on the deal.

Don’t assume that you are going to be offered the best possible interest rate you can get by the F&I manager. Quite the opposite! Adding a point or two (or more) to your contract interest rate above what you qualify for is a serious profit maker for the dealer.

Also keep in mind that all of your hard work negotiating your deal on the front end has been by in large verbal and perhaps a handshake. True, as a result, you may have a signed buyers order or worksheet that the salesperson and or manager have signed off on, but it is in the F&I department where all of this gets put into contract form.

Stay focused. Some dealers and salespeople may even imply that in order for the deal to get approved, you have to finance through their finance department. You don’t. In fact, if you have done your homework and found a better financing offer, you should take it. At the very least, you know what numbers you qualify for, and as such you should ask the car dealership to try to better what you already have.

Read the contract. Sound so basic, but most people don’t. Don’t just assume that everything that you negotiated with the dealership on the front end will make its way to the back end of your car deal. If you’ve had a long day negotiating to get the price you want, don’t give it all back in the F&I department by getting lazy at this very crucial time.

Without question, the single biggest mistake car buyers make is failing to prepare. That, and setting your expectation that car buying and the negotiating process within can take at best several hours to accomplish. Know that you are going to be at the dealership for a while can help you stay energized and focused. Do your homework. Know your credit score. Get your financing pre-approved and see if the dealer can beat what you already have. Be familiar with all the areas of potential sales and profit that the dealer can potentially land. Know what extras (if any) you will and will not pay for. Make sure the contract in the F&I department reflects all the negotiations that you have worked to accomplish before hand. Then, finally, remain on your toes and don’t drop your guard once in the F&I department.

Jeff Neilan worked for many years in the automotive industry as a salesman,
finance manager, new and used car manager, and sales manager. With Jeff’s working knowledge of car dealerships you’ll find his articles on getting your best car deal insightful and rewarding when purchasing your next car. Visit (http://www.acarbuyersguide.com)for the complete car buying process.

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I had what I thought was an interesting question sent in to me the other day and that is the topic of this article. The question asked was essentially; out of all of the car buying tips, the car deal negotiating tips, and out of all the do’s and don’t do’s when you are car shopping and ultimately buying, what is the single most important area to have under control as the buyer.

I had to preface my answer by saying that in order to get your best deal when buying a car, there are many pieces to the car buying puzzle. They are all individually important because when you put all the buying processes together they make up your deal. And all of these car buying puzzle pieces are what dealerships are all about. They each represent an opportunity to sell you something and therefore make a profit on that sale.

Having said that, this is a great question and you would probably get many different answers. But, since you asked and I have pondered I’ll give you my thoughts.

I would have to say financing. You must take the time to do such things as:

Get and understand your credit report.

Shop around for your financing options and ultimately get yourself pre-approved so you will know the amount, the interest rate you qualify for, and the length of your loan.

If you don’t get your financing questions answered and in order, you can literally cost yourself thousands of dollars. So, while all of the other aspects of buying a car are indeed important, such as the price of the new car, what you get for your trade, and all of the research that goes into these areas; you can literally give it all back and much more in the dealer’s finance department.

“If I get all my financing lined up ahead of time, why would I even bother with the dealer’s finance department?”

A Good question; and there are a couple of aspects to the answer. First, once you know what you qualify for (a bird in hand), you can then give the dealer’s finance manager the opportunity to do even better for you. Secondly, even if you have no intention of using the dealer financing option, you’ll still have to have a seat in the finance office just to sign all the paperwork. Which means the finance person will do their best to “sell” you their financing package. So being prepared is the best answer.

If you have your financing in hand and know all your numbers ahead of time, you’ll be able to fend off the monthly payment approach by the car dealer’s sales person. Buying a car based on monthly payments is good for the dealer; bad for you.

Also, your financing homework becomes even more important if your credit is less than grade ‘A’. Be mindful that just the difference in just a couple of percentage points on your interest rate can represent over a thousand dollars to you during the life of your loan. And if your credit score leaves a little to be desired by potential lenders, you will probably see a wider range of qualifying quotes that you get back. So it is even more important that you get your car financing house in order before you head out to the dealership.

Certainly, financing is but one piece of the car buying puzzle. But, it’s a big piece. And you can rest assured it’s a big piece (for potential profit) for the dealer. Many people don’t realize that this is yet another area at the dealership that you can and should try to negotiate on the road to getting your best car deal.

If you have done your research and homework to give yourself the best possible chance on the front end of the car buying process (new car & trade-in), don’t give it all back on the back end of the deal (financing & insurance - F&I) by not knowing what your financing numbers and options are.

Jeff Neilan’s many years in the automotive industry as a salesman,
finance manager, new and used car manager, and general sales manager, will provide you with insightful tips and car buying advice that will help you save money and frustration on your next car buying experience. Go to getting your best car deal for more of Jeff’s articles.

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