Yahoo Autos What is the F&I Office? Why you're there and what they'll offer
This is part of our Car Buyer's Glossary series breaking down all the terms you need to know if you're buying a new or used car from a dealership.
"Going to F&I" is the final step in buying a car at a dealership. It can also be the most frustrating, as you're likely to have already spent hours at a dealership test driving, negotiating and, inevitably, waiting around.
F&I literally stands for Finance and Insurance, and is the office where you will sign all required legal documents associated with a car purchase. This can include signing financing agreements, or if you're financing the car separately or purchasing with cash, hand over the required payment. This is handled by a dedicated "F&I manager" specifically trained and familiar with the various forms and contracts required.
Because there are far fewer F&I managers than salespeople (in fact, there's usually only one), this can lead to a sort of bottleneck at the dealer, especially on weekends or other busy days. As a result, be prepared to wait a half hour or longer just to get into F&I. Ideally, the dealer will be using that time to prep your car, while you could also ask your salesperson to begin explaining the many (and often complicated) features of your new car.
Once you're in F&I, you can expect the process to take another half hour or longer depending on the amount of paperwork that needs to be signed. This can depend on the state in which you live, and whether you're financing, leasing or paying with cash. Crucially, however, it can also depend on whether you purchase any of the many products and services that the F&I manager will offer. This would be the other primary task of the F&I manager: pad the deal.
This is where doing some research ahead of time will literally pay off, as you'll know what products you might be interested in, what constitutes a good or bad example of that product, or most simply, tell the F&I manager "no" to everything and save yourself a lot of time. Frankly, the safest course of action is to just say "no" as these products are often of dubious value and can usually be purchased after the fact. Besides, "just an extra $20 per month" might sound like a good deal, but multiply that by months and by years and by the interest rate ... and well, it's suddenly a very hefty charge.
Nevertheless, F&I managers aren't snake oil salesmen and the products can be beneficial to certain car buyers. Their prices are also negotiable. Below are some of the most common products.
Extended Warranty
Probably the most common F&I product purchased. It's also one of the most expensive. On the surface, it makes good sense: protect yourself from future maintenance and repair costs after the new-car warranty has expired, especially as the car gets older and therefore more likely to require maintenance and repairs. And below the surface, maybe it will make sense for you as long as you confirm it's a warranty backed by the manufacturer as opposed to a third party (those are definitely not recommended).
However, the value of any warranty is largely determined by how it was used. If your car breaks a lot, it was worth it. If it was a reliable champ, you wasted a big chunk of dough. Of course, you won't know that answer at the time of purchase, and as such, putting a value on that warranty is difficult. You can bet that the price the dealer quotes is doing their profit margin a favor, not your pocketbook.
It's also important to note that you can buy an extended warranty at any time before your new-car warranty expires. If you're on the fence, it's probably best to just say "no" and see how things are going as your car ages.
Vehicle Service Contracts / Maintenance Plans
This provides pre-paid service visits for your car similar to what some manufacturers include in the new-car warranty. Basically, you're paying in advance for scheduled service visits, locking in the price to prevent future increases in labor or parts costs. It also means you won't literally have to hand over money during those future maintenance costs. However, you're still paying for them and the parts/labor inflation argument is dubious – especially since the maintenance plan will likely cost more than those scheduled maintenance visits (why else would the dealer offer them?). Finally, it's important to note whether the maintenance plan applies only to that specific dealer, or if you can use it at any of the brand's dealers. You never know when you, or the dealer, might move.
A more sensible idea would be to take whatever amount the dealer quotes you and put it in an interest-bearing account. Draw from it for maintenance, and don't be surprised if there's a lot left over at the end of the plan period.
