What Happens in the F&I Office?

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Once you are ready to purchase a car you find yourself in the F&I office. You'll be offered lots of products and services. All will bump up your monthly payment. Do you really need all this stuff?
You are in the market for a new car. You've done your homework, shopped online, found the car you want at a dealership, taken it for a test drive, and have made the deal to purchase the vehicle. That means you have likely already been at the dealership for hours. Now the next step is that you find yourself in the Finance and Insurance office (F&I). What happens here and how can you be better informed and prepared about your options? Let's find out.

A Trip to F&I

You will probably spend at least a half hour to 45 minutes in the F&I office. The F&I manager will present you with the sales contract agreement for the vehicle you are buying, will go through it all with you before you sign anything, will work out the financing for the car, and will offer a number of products and services that you can add.
You may be unfamiliar with some of these products, and it is best to know ahead of time if you want to include some of them and what the prices are likely to be. By now you may be tired of negotiating and just want to get what happens in the F&I office over with.  But it is best to be focused and know what you are being offered so you can make an informed decision.
Obviously, the price for some of the services will drastically increase your monthly payment. It's best to be knowledgeable about the products being offered before you ever set foot in the F&I office, know what you will likely be interested in, and know what these products and services will cost if you decide to get them elsewhere or at a later date.

What Happens in F&I?

You aren't finished with the process of buying a new or used car until you have spent some time in the Finance and Insurance office. This is not only where you sign the sales contract, but also where you sign all the dealer and state-mandated legal forms to conclude the sale.

What are you signing?

The first thing you will likely sign is the Buyer's Order which is a summary of what you and your lender have agreed to. It includes the vehicle's base price, sales tax, registration cost, and dealer fees. It describes the year, make and model of the car, as well as trim level, color, and vehicle identification number (VIN).
  • Next up is the Bill of Sale. This is the official contract for your vehicle, and it is a binding contract between you and the seller. It includes all the specifics about the vehicle you are buying, your name and address, the purchase price, the seller's and buyer's signatures, and date. It is important that you review the Bill of Sale carefully to make sure it reflects exactly what you are agreeing to. This is the last chance to review the agreement before you sign. Once you sign it, the car becomes legally your responsibility.
  • Then the manager will provide you with the Title to your car. You and the manager will both sign the car Title, making you officially the owner of the car. Other forms you will sign include an odometer statement, a damage disclosure statement, and proof of insurance. The main thing is that you take your time reading through all the documents to make sure everything represents what you agreed to before signing.
The F&I manager will take your down payment check and make arrangements with your finance company to set up your monthly payment plan. If you've been preapproved for a loan by your bank or credit union, the F&I manager may ask you if he or she can offer you a better interest rate. Once all the financing has been arranged and the contracts have been signed, the F&I manager will offer you various products and services that can be added to your loan.
This is where the manager will explain each additional service and why it may benefit you to include it in your purchase. Be aware that these services allow the dealership to make a lot of extra money. F&I products generally have big profit margins and can add three million dollars a year to the dealership's coffers. So, it is important to understand what is being offered and if you can get the same products and services for less elsewhere. Keep in mind that the price on most of these products is negotiable.

What extras are being offered?

All new cars come with several warranties from the automaker. These include at least a three-year or 36,000-mile bumper-to-bumper warranty, a separate powertrain warranty, and some offer a three-year maintenance warranty. In the F&I office, you will be offered an Extended Warranty which is a vehicle service contract that continues after the original limited factory warranty expires. It is also one of the most expensive items to add to your purchase.
If you are interested in an extended warranty, only consider products from the auto manufacturer, and stay away from third-party extended warranties. Keep in mind that you don't have to purchase an extended warranty when you purchase the car, you can get one at any time before the original warranty expires. This can give you extra time to shop for a better price. A survey by Consumer Reports found that 55 percent of vehicle owners who own an extended warranty, have never used it for repairs.
  •  A Road Hazard Warranty may be offered that covers your new car's wheels and tires in the event of damage.

You will also very likely be offered a Maintenance Plan as a way to lock in the price on oil changes for the life of the car. The cost of these plans are generally just a few hundred dollars, and it is nice to never have to pay out of pocket for oil and filter changes over the life of the car. However, some of these plans may limit you to using the dealership you bought the car at for service. Make sure you know what you are getting before you buy such a plan.
Today's vehicles generally come with a car alarm or GPS locator or both. However, if you are buying a used car without Anti-theft devices, products such as Lojack may be offered to you. Some dealerships etch the vehicle's VIN number somewhere on the car to deter thieves and charge you for that service.
The manager may offer you Finish Protection for your vehicle's paint or upholstery. This comes in the form of a chemical sealant for the paint and/fabric or leather. They may also offer ceramic coating for the car that lasts for up to two years.
  • In areas of the country that experience harsh winters, some dealerships offer a coating or sealant for the undercarriage of the vehicle to protect it from corrosion and damage due to road salt, rocks, gravel, dirt, and moisture. This is called undercoating. You can research all of these sorts of sealants and prices and have the work done at any time after you buy the car.
  • Excess Wear protection is generally for lease cars and protects you from dents and scrapes on the body or upholstery stains when you return the car at the end of the lease.
Another option to consider if you lease a car is buying Gap Insurance. This pays off the difference between what the lease car is worth when new and what you would owe if involved in an accident or car theft. Gap insurances covers you if the lease vehicle is totaled.
(One last thing to consider is Credit Insurance which is payment protection in the event you lose your job or are disabled and can't make your car payments for a period of time.)

Let Lithia Help!

Before you leave the F&I office, you will have copies of all your paperwork including contracts for the vehicle purchase and any extra optional products and services you decided on. Some of these options may not make sense for you. For instance, if you put a large down payment on a lease car, you probably don't need Gap insurance and if you take good care of the vehicle, you may not need protection from excessive wear and tear.
If all the things being presented to you are overwhelming, extended warranties and maintenance plans can be purchased later as can anti-theft devices and paint and surface protection.
To learn more about what is offered in the F&I office, call, email, chat or visit your local Lithia Auto dealership. With over 75 years of experience in personal transportation and over 260 dealerships from coast-to-coast, we are happy to help and answer any questions you may have.