Confessions of an Auto Finance Manager -

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Confessions of an Auto Finance Manager

A Former F&I Guy Explains How He Did



Part 2: Tricks of the Trade

The office for my new job was in a mobile home parked at the back of the car lot. It can look inconspicuous, but what goes on in the F&I office is the lifeblood of the car business. Before you enter the finance office, a car deal has really just been a lot of talk. But in F&I, all the verbal promises are put in writing, the customer signs and the contract legally binds the buyer to make all the payments.

Dave, who ran the finance office at my new job, wasn't the stereotype of the sneaky F&I guy. He had a good sense of humor and was very relaxed with his customers: a little too relaxed, I thought. If he just pushed a little harder it seemed he could've sold a lot more products.

In the beginning, I just sat in the back of the room while Dave handled the customers. Meanwhile, I got to observe Dave's sales techniques, such as the way he started the F&I process.

Setting the Tone
Dave would usually glance down at the contract and then look up at the customer and say, "Oh! So you're the folks who bought that black Suburban. Man, that's such an awesome car!"

What he was doing was showing the customer that he cared about their purchase and shared their excitement, as if they were on the same team.

This opening was important because it set the right tone. Often they had been test-driving and negotiating all afternoon and, basically, they just wanted to get the hell out of there. So Dave had to refocus them on the excitement of the new car so he could sell them a slew of additional things.

Most salesmen know that once a customer starts saying yes, it's easy to keep them saying yes to other things. We called this being in the "yes mode," and we tried our best to exploit it.

Dave would start by asking the customer a question he knew they would say yes to, like: "Do you like this car?"

Obviously, they would say yes since they had just agreed to buy it.

"I bet you'll really enjoy taking this car on vacation."

Of course they said, "Yes."

So then he'd ask, "So I'm sure you'll want to buy an extended warranty to protect your investment?"

And they often said, "Yes."

Running F&I on My Own
After only 10 days of training, Dave went on vacation and left me in complete charge of all the finance work for the dealership. I was nervous because I wasn't detail-oriented. And a car deal involved dozens of documents, which I needed to get the customer to sign correctly in multiple places. And if you didn't get everything right, the DMV would reject it.

I made endless checklists to remind me to dot all the i's and cross the t's. But as I gained experience, I became more confident. I even decorated my office to make customers more comfortable. I put up pictures of the beach and some inspirational sayings: fun stuff to relax people.

The Flow of the Deal
The F&I process actually started before I even met the customer. The salesman gave me the credit application to run while they were still negotiating. Often, I'd go out and take a look at the people to get a feel for them. That way, when I met them in the F&I room I could break the ice by making some small talk. For example, if I saw one of them wearing a Green Bay Packers hat, the first thing I'd say to them was, "How about those Packers?" In my time in F&I I talked about all kinds of things I had no real interest in: deer hunting, football, hockey — even cooking.

If the customer's credit score came back over 700, we wanted to make sure they bought a car as quickly as possible and got them out of there. We would tell the salesman to "spot them" (let them take delivery on the spot) before the bank formally approved the loan.

On the other hand, if the customer had really bad credit, we knew there was no way we could sell them a car. So the two ends of the spectrum (the really good and the really bad) were easy to deal with. But the vast majority of customers fell somewhere in between, and it required a lot of work to get them financed.

Dealership Financing
Most people wanted to finance their car by taking out a loan or leasing it. The dealership had access to wholesale lending rates, called the "buy rate," and loaned this money to the customer at a few percentage points higher, which we called the "sell rate." This was a huge source of revenue for the dealership and it was about 50 percent of the commissions I earned.

Bumping up the interest rate was easy to do because most of our customers didn't know what rate they qualified for. If I sensed that they were uninformed, I could offer them, say, two points over and they would agree to it. If a customer had good credit but didn't know it I could say, "We ran your credit report and, well, I guess you've had a few problems. But I'll do my best to help you out."

A Lucrative Sales Pitch
After the loan was arranged, I tried to sell the customer extra products and services. This was a grueling process but it was where a lot of my commissions came from. The biggest item for me to sell was the extended warranty.

Usually, I'd begin by asking, "How long do you folks plan on keeping your new car?" The answer I wanted was: "I'm going to keep it until the wheels fall off." If I heard this I could easily sell them an extended warranty. But if they said they always traded in after three years I was screwed.

I found a little detail that helped me sell extended warranties. I'd say, "Did you know that your new car has more computer chips in it than the space shuttle?" People were amazed. Then I'd continue, "It's a sophisticated piece of machinery and it's expensive to repair. A transmission problem could be $3,000 or higher."

The other way to sell the extended warranty was to say, "It's cheaper if you buy it now and you can always cancel it if you change your mind." But most people never cancel, because they simply forget about it.

Next: Part 3: Lessons From the Other Side of the Desk

To find a dealership that knows how to treat shoppers right, please visit's Dealer Ratings and Reviews.



  • atiaga0903 atiaga0903 Posts:

    good article. i do disagree with him saying not to buy extended warranties. a warranty is a good idea expecially if your on a budget and 5 years down the road you have a $3,000 car bill. but, as he said, do not take the first offer for the warranty. make an offer for the warranty, it shows the f&i guy that you would consider buying it but not at retail. a fixed budget at $420 a month car payment with a warranty than a invariable budget of $410 a month car payment with no warranty. : )

  • tel703 tel703 Posts:

    As with any industry, there is good and there is bad. Ours is no different however I do believe, regardless of the type of industry, the majority of company's in business today are conscientious, straight forward and honest in their dealings with their customers. To act in any other fashion is not only wrong; it is a recipe for failure. Some of the points raised by the author of this article imply his employers were unfortunately those in the minority. Case in point: • employing convicted felons • allowing finance departments to operate with no internal profit caps • improper disclosures As for his 10 items of advice on things not to do: • #3 Don't buy the service contract - I disagree. For some customers a service contract can and often is a life saver. Factory coverage will expire based on which ever occurs first; the years or the mileage. The average customer in our market drives 18,000 to 20,000 miles per year which means their 3 year 36,000 mile factory warranty expires in two years or less. In addition, the longer term power train warranties while good are limited in coverage. • I agree customers should do their homework regarding financing however there is nothing unethical about charging a fee in the form of a rate markup for securing and processing loan arrangements for a consumer. In fact in our market, it is rare that a customer can obtain a lower rate than we are able to offer them even after a rate is marked up. And rate markups cannot be excessive as they are regulated by the individual lender. • GAP insurance is just as valuable on a retail contract as it is a lease contract based on the amount of equity going into the deal In conclusion, I agree completely with the statement, "When the F&I process is done right, and the customer is informed, it works."

  • felisaj felisaj Posts:

    consumers need tobe informed. my second car purcahase, after reading several articles i realized i made several mistakes and now im armed with infromation. if you go to car buying there is a wealth of information espically about warranties and where to purchase them cheaper and what they cover. knowledge is power

  • This is the inside scoop from an auto dealer's Finance Manager on how they make profit on the deal - great to know.

  • alansmith alansmith Posts:

    I am an "F&I" manager of some 28 years and I have met a range of people who do this job. However, I find that the tenet "those that can do, and those that can't teach" has a fundamental flaw - It excludes those that have a fundamental character, or morality, deficiency that enables them to see, and indulge, the obvious opportunity to fleece the unsuspecting client. This is a short term philosophy that means that long term business managers are few and far between - but those that stay the course, and don't "do the expose for cheap returns" - are a valuable member of a successful sales team, and close more deals than the whole team combined - I despise your synopsis and your weak analysis, and find it unsurprising that you post under a pseudonym - sad sad sad

  • johnnyfi johnnyfi Posts:

    I'm a Finance Manager, F&I... Whatever you want to call us. I prefer Business Manager... I am here to say a couple of things, it is articles like this that ruin the car business. As a young man in my mid 20's working behind the desk its hard enough having to deal with people thinking they are getting "hammered", "beaten" or "robbed"... WE DO NOT ROB YOU. Everyone makes a profit, if you weren't sitting in front of me then that means you wouldn't be making a profit at your job or your employer wasnt and therefor you couldnt get paid! Stop baggering us there may be some bad guys out there but for the most part we are just trying to make a living just like you, with families! Here is a true story just three weeks ago I was sitting with a customer and I was trying to sell my products, he inquired about Tire and Wheel so I began to pitch a bit harder... He felt the price of 695 was too high for him! He also said how its a crock. Well needless to say he now has to pay for a blown tire and curb damage on his vehicle guess what his bill is??? Well over $1000, he begged me for the protection so I sold it to him today... We are all not bad and if we didnt believe in the products we were selling we wouldnt sell them point blank! Stop spending 7-10 dollars on a cup of starbucks a day bc guess what YOU'RE GETTING ROBBED! Welcome to how the media mis construes with your way of thinking. Sincerley, "Your Business Manager"

  • tommydoug tommydoug Posts:

    Great article and very true, what I know and see most dealers are crooks. You hardly find an honest decent dealer out there. Their sale tactics are BAIT and SWITCH. Every price quote must in writing email or fax, NO VERBAL quote since those crook dealers can change their deals or words once you bite the BAIT. Don't ever fall in their traps, just say NO for everything they try to sell unless it really needed that's why I did on my first NEW CAR purchased in 2001. Didn't buy a thing of they trying to sell beside the car. After nearly 12 years my car Honda Accord still running strong without any problem since then. NO or NEVER NEVER TRADE in your car, otherwise you would loose a lot of money. One important thing, never believed in online reviews 100% if you see all good reviews. It's too good to be TRUE, YES it is. Just beware of those crook dealers out there!

  • nhundan nhundan Posts:

    I think this guy is an absolute joke. It's amazing that he pats himself on the back like he's some saint. Schemers are always the most delusional. He has "no regrets" but feels funny about "all the mistakes his customers make." Are you kidding me? He never felt compelled to "fix" those mistakes, did he? After all, his job was to make as much money as possible for himself. Who do you serve, Nick James? God or Mammon?

  • There is no such thing as a good F&I manager. They are only there to make additional profit for the dealer because their profit margins on auto sales are low. Do your homework and secure your financing before heading out to buy. Then, once you make the deal with the sales person, tell the F&I guy that financing has already been secured and that you are NOT interested in his scum products and services. Less to the dealer and more in your pocket is always a good thing.

  • dkramone86 dkramone86 Posts:

    See, I find it kind of messed up that just cause so and so is retired he feels the need to bash the rest of us. When I used to work for big domestic dealers as a salesmen you always get people who want to piss on you. Here's some better advice, buyers are liers. You can do yourself a favor and treat your salesman with respect cause in the end I have the ultimate power and if you show respect you will get it in return. Treat me like I'm beneath you and ill be the one laughing in the end just to spite you by ripping your face off cause you are an [non-permissible content removed]. As far as finance goes most of these guys are right, I can't tell you how many times a month I got called from insurance companies asking me what a car was worth someone just totalled. You just might be that guy who owes 10k on a vehicle that's only worth 3k now and when you total it guess what? You now owe 7k on a vehicle that you don't have and when you get your next one you now get to add 7000 on the bottom line. Instead of adding that few dollars a month for piece of mind you now get to pay an extra 150 a month for the next 5 year's unless you are the above described jackoff then its going to be an extra $200. Point is finance is there to help you protect your investment and if you feel otherwise then take your chances but know the facts. Karma.

  • car_guy88 car_guy88 Posts:

    There are way too many generalizations. Not only that, but how many customers come in "informed" and offer $3,000 less than invoice on a vehicle? A lot. Fact is, the finance officer/manager isn't there to steal from people. If you have a crooked person in a dealership where those kinds of practices are greeted with a slap on the back rather than a threat of losing their job if they threaten the reputation of dealership again, then that is unfortunate. This day in age with all of the technology, it is not common practice to "steal" from customers by selling products with huge markups. If making a profit is a crime though, don't buy anything.......ever. I am warning all of the consumers that ALL businesses make a profit!!! Even Wal-Mart. This guy is either trying to get right with "God" or trying to get better sleep at night because he is probably the guy that "stole" $6,000 from the couple mentioned in his story. What a joker.

  • gopats77 gopats77 Posts:

    I have a good idea.....why doesn't everyone just pay cash and none of this would even matter? Obviously because everyone CAN'T and dealership F&I is not only vital to the dealership nut NECESSARY to the consumer. I don't see how getting a $35,000.00 loan in an hour is "annoying" or "time consuming", but I guess whoever wrote this worked in a dealership and had the "inside scoop" so they must be right.

  • andy682 andy682 Posts:

    This is a terrible and totally misleading article. I am a finance manager at a high volume store. Telling people not to purchase extended warranties is not only reckless by you but by for publishing it. Are you going to pay for the repairs once their bumper to bumper is done with? What about used cars? What do you know about peoples driving habits, maybe they will put 36k miles a year in 2 years like I do. Sounds to me like you my friend and the place you worked at where scumbags, not every place is like this. $8,000 in back end? I almost peed myself from lughing when I saw this..what bank is going to buy 8k in back end. Hell I can sell every product I have and not make 8k in back end. You were just a rookie and it probably wasn't costed out. My warranty company paid out over 140k in claims last month to my dealer alone. What about GAP insurance? Are you going to suggest not to purchase that as well? Everything in this article is a misrepresentation and gives buyers a worse impression of my industry. With all the information out there, the majority of my customers are well informed. If you are buying a 30k car, why wouldn't you spend an extra 2k to protect kinda stupid not to. Even if you buy these products, you don't want to use them...that means something bad happened. Do you have life insurance? Do you wish to use it? Didn't think so...What about medical insurance? Want to use that? NO! Means you got sick or hurt. Same thing with an extended warranty and GAP protection. You don't want to use the product because that means something bad happened...its called peace of mind. I'm done ranting...this article is awful, and shame on for posting it when this guy specifically says do not buy extended warranties because its a reflection of your site.

  • marvinlee1 marvinlee1 Posts:

    Extended car warranties, in economic terms, are a profit making enterprise for the warranty sellers. The profit comes from the disparity between the cost of the warranty and the actual cost of repairs paid for by the warranting company. Most car buyers will lose money over the life of the warranty if they pay for the extended warranty. There are exceptions, and they should be recognized for what they are: non-typical events that most car buyers will not experience. A risk factor not discussed is that extended warranties work only when the promised services are delivered in reality. A Google search reveals that extended warranty buyers sometimes have problems collecting on the extended services promised. Consider also that money has time value. You pay early for the extended warranty, thus losing interest on your money, but collect later, after the warranting company has already made a profit on your payment. If you finance payment for the extended warranty, you are also paying interest on your purchase. An alternative approach is simply to buy a new car that is known for reliability and a strong factory warranty. Most new cars have excellent warranties and you can check these out before you buy.

  • susanc310 susanc310 Posts:

    Extended warranties/service contracts are a waste of money. By time your car needs a major repair the warranty will have already expired.

  • keestbo keestbo Posts:

    seriously? don't buy an extended warranty b/c the factory gives you a 3/36? First off, that makes NO sense. Do things work better right when you get them, or 8 years down the road? I am a finance Mgr. I DID buy an ext warranty for an Acura. Warranty paid a 4800 dollar bill. You are a genius, sir. Plus your f&i office was in a crack hut tailer. Nice op! HA!

  • observer9 observer9 Posts:

    dude are you seriously trying to write a behind the scenes "reality show" expose on what it is to be a F&I guy? The [non-permissible content removed] GM bailout coupled with secured loans to people like Elon Musk have forever absolutely and completely doomed this country. For god's sake, when you go talk to anybody who sells cars anymore, they want to talk about the Internet. NOBODY sells cars anymore. [non-permissible content removed] you clowns.

  • observer9 observer9 Posts:

    Oh and since nobody else has ever said this to you. Nobody cares about your job dissatisfaction because you didn't set out to be the guy in the office signing people up. Try being the guy bringing you the deals. Like I said, a nation full of clowns perpetuating more clown college because they saw a picture of [non-permissible content removed].

  • jalapeno1 jalapeno1 Posts:

    Silly to argue about whether the customer is getting ripped off. If they buy a service they want they are not getting ripped off. The customer is willing to trade money for some assurance. I simply do not buy warranties because between the warranty period (when everything is covered anyway) and about 200,000 miles most mainstream Fords and Toyotas are incredibly reliable. I can handle an occasional $4000 repair, especially if you consider that the insurance costs $2500 plus finance charges. It is extremely unlikely that a Malibu or Camry is going to have two or more such repairs. Odd to me that F&I departments never have any data on the one thing that would make me buy - to prevent expensive work that is marginally unnecessary. Insurance companies will not tolerate this. Example: A house I bought had a warranty. The AC went out during a heat wave. I was skeptical, but the insurance company had a competent repair done the same day. Total cost was less than the deductible. Had I been on my own, I would have had no idea which of the dozens of repair companies was reliable. The least busy company on that day would likely have been the worst option. I could have received an honest repair, but for all I knew it could have been $2000 and it was too damn hot for second opinions. The guy did not dare rip off the insurance because they were making him send photos of parts and they were his bread and butter during the slower times. Another example is a $250,000 hospital bill that magically became less than $30,000 when paid by Blue Cross. So the service department has incentives to recommend a $3000 tranny replacement, knowing it is a $200 solenoid, knowing that the tranny is unlikely to fail before the customer retires the car. This is not necessarily a rip-off - even if it is a coincidence the customer is going to scream to high heaven and expect free service if anything happens to that tranny in the next 5 years, so the service department is buying their own 'insurance' from the low-information customer. Some poor F&I person might finally make a sale from me if they could ever make that case...

  • mwa1 mwa1 Posts:

    Totally misleading article, absolutely horrendous. Good Finance Manager offers products and show value to clients in an Ethical Way and let the customer make the final decision. In the end, it's customers' money and they should make the final decision. This article is a representation of the writer's own experience and ethics. The reason he's not doing that job anymore is not what he states in this article, is because his unethical behavior caught on to him. Poor choice by Edmunds to publish this article, very poor. Customer pays for value and if they see value in something, they should buy it. Service contracts and insurance products are not meant for everyone especially if their driving trend is low miles or just leasing rather than buying. These days, there is no such thing as what the writer is talking about. He, himself. was probably one of the biggest crooks of his time and may be worked for a dealer who did ton of subprime business and saw and did what he's confessing about. As an Finance Manager, we have to offer every product to everyone and there's no such thing as pressure sales. Ethics is a key in every business. We as consumers get sold on products and services in every walk of life but don't consider that as a waste of money!?!? Examples of those coverages/warranties are, Furnace, TV, Fridge, House, Cable box, electric/gas lines and much more. For some people, car is their livelihood and do not have the liquid resources to pay for mechanical repairs as they come so that's why it's the situation every one is in. This article is very misleading and, being such a known site, funded by ads from many auto dealers/associations, should not publish such garbage based on one incompetent person who didn't know how to do his job so he's out to take jabs on the whole industry. I'll end with couple of true examples so we all can chew on that and hope this unethical writer can too. I worked for an auto group in 2006 where we sold a Chevy Trailblazer SS to our detail shop manager. We offered him Life & Disability policy. He had one new born and one 4 years old at the time and wife was a stay home mom. He saw value in that product on a $40k loan and bough it. During summer of 2008, while playing basketball with friends, he had a cardiac arrest and passed away on the spot. He was 32 at the time. Now you all can guess what happened with that loan... Paid in full for the family who otherwise had to let it go back to the lender. I saw their faces and know the feeling to this date. If I wouldn't have offered that product to them, I wouldn't have done justice. Less than 5% of clients in my market but this product but if I don't offer this to everyone, then I am being unethical. Choice is up to the client and should be. Another quick one, client purchased Tire & Wheel coverage and had over $1200 worth claims in less than three months. He saw value, bought it and came out as a winner. I've some who bought it and never had a claim and some who didn't buy and wished they had. We don't plan on getting sick and go on for months without seeing a doctor, but when we do, we sure do appreciate health insurance. Bottom line is that you are misguiding consumers by publishing such garbage and remove this. This is not a true representation of the industry. Hope your editorial staff is more knowledgeable in the future before putting such stuff out there for public to read.

  • isellhondas isellhondas Posts:

    Sounds like someone is a bit touchy here.

  • ken117 ken117 Posts:

    Some F&I products may have some value, depending upon the cost. For example, an extended service contract, key replacement, GAP. Others are a complete waste. For example, paint protection, etch, etch again. The one sure thing is all products sold in the F&I office are grossly overpricd making the value dubious at best, For example, the extended service contract is sold by the insurer for $800 or so. The freindly F&I person will gladly sell that product to the buyer for $2,000. No sane person would attempt to defend a profit of $1,200 on an $800 product. There are reasons virtually every consumer advisor recommends against F&I products. Presenting a couple of examples proves nothing. The fact is the vast majority of people who purchase an extended service contract will lose money. The smart buyer will take that $2,000 and place it in an interest bearing account. Should a covered repair occur, that money is available. Should a covered repair not occur, that money remains with the buyer rather than the F&I person.

  • Michaell Michaell Posts:

    The smart buyer will take that $2,000 and place it in an interest bearing account. Should a covered repair occur, that money is available. Should a covered repair not occur, that money remains with the buyer rather than the F&I person.
    Assuming that the buyer has $2000 available to do so. I believe many folks don't, and therefore tack on the amount of the warranty to the loan as a form of insurance. I agree that there is a profit built into the cost of these add-ons - unlike invoice prices on cars, which are relatively easy to determine on-line, the "true" cost of these items is very difficult to discern.

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