Know What the Dealer's Finance Manager is Going to Say Before He Says It

The finance manager is the most gifted salesperson in the entire dealership. The finance department is responsible for 80% of a dealership's profits. The finance manger is the one that makes all this money for the dealer. You should have a very healthy fear and respect for this person...this guy is the real pro. Typically, he has held every position in a car dealership. He has already sold cars and he has already been a sales manager/closer.

The car business has been set up the same way for 100 years. You walk in, start negotiating with the salesman who goes back and forth between you and the sales manager until you get frustrated and worn out and finally accept that the deal you have is probably the best deal. After all this intense negotiation, you have a price on the car you can live with, you think you got the most money for your trade and you are okay with the payments they have quoted you. Now that you have agreed to do business, you can sit back, calm down and relax. But, more importantly, you lower your guard. Then, you walk into the finance office and the whole process starts all over again, except this time your guard is down and you are not expecting it.

The national average of payment increase for all the dealers throughout the country is a $27 dollar/month bump in your payments from the time you walk into the finance office and walk out. If your loan is set at 60 months, that $27/month bump just made the dealership $1,620. Most people don't think in terms like that because they think they are getting a great deal.

The finance manager has several different products that he is going to try to convince you to buy. And he has a compelling reason as to why you should buy and what good it is going to do you. Because your guard is down and you are no longer in a frame of mind to negotiate, most people end up buying one or two products from him at full price. The first thing that you need to know is that every single product the finance manger sells has loads of profit built into it. And furthermore, every single product is absolutely negotiable. The finance manager may sell you LoJack and tell you it costs $895. LoJack is a good thing in certain areas of the country because of car theft; however, it's not a good deal at $895 because the dealership probably brought it from LoJack for $300-$400. This means that at $895, the dealership is making 50% or more gross profit on the sale of it. A lot of times, finance managers will package different things together in groups and sell them as bonus packages. Sometimes they will have a sheet pre-printed and it will have four columns. Column One will say something like "Super premium protection package." In that package, you get an extended warranty, a car alarm, LoJack, gap insurance, paint protection and interior protection. This will be pitched to you as the best value and only increases your payments by $75/month. The next column will have less additional products and only cost $55/month. The third column will still have less products and be $35/month. The final column will probably be listing only LoJack and gap insurance for $25/month.

You can visit LoJack and purchase online.

The finance manager is going to try and sell you the most expensive package because it means $4,500 worth of profit to the dealership, of which usually the finance manager earns 25% of whatever he sells. This means on $4,500 worth of gross profit, the finance manager's commission will be $1,125. Not bad for a guy that just types up some paperwork and talks with 40-100 people a month.

The finance manager is one of the most well compensated positions in the dealer showroom. It is not uncommon for a finance manager's salary to be over $20,000/month. My recommendation to you is not to buy anything from the finance manager if you are leasing the car. If you are purchasing the car, gap insurance and an extended warranty will make sense, if the price is right.

If you see value and want to buy any products the finance manager is pitching you, you absolutely have to know how to negotiate with car dealers. There are two ways of doing this. You can hold out until he cuts his price two or three times. Or to save time, look him dead in the eye, tell him that you know everything he sells has built-in profit in it. Make him aware that the only way you will purchase anything and help his "penetration" is if he shows you in writing or in a chart form exactly what his cost is for each product. Tell him for every product that you decide to buy, you will only buy the product if he agrees to sell it for $50-$100 above his cost.

When buying a car from a dealer, never let the finance manager switch your financing terms. At this point in the deal, you should have already negotiated a great deal on the car you are buying, gotten the most money for your trade in, found out through the dealership what the financing buy rate is, etc. By knowing all this, the dealership is hardly turning a profit, which means the finance manager is going to be pushing really hard to sell you products. If you decide to buy additional products, make sure that you see exactly what the cost sheets say. Don't take the finance manager's word for it and believe everything he is telling you, because he is probably not shooting straight with you. Be sure to tell him you don't want to hear what the costs are, you want to see what the costs are. Unfortunately, that is the only way to find out what the finance manager's products actually cost.