Insurance Or Finance? Decide What’s Best For You


You have every right to be relieved because you’ve finally found the car that’s best for your personal and professional needs. It’s been hours since you walked into the car dealership searching, test driving, and negotiating the price. But it’s not time to relax yet. There’s still one essential step left. One of the most overlooked aspects of buying a car is the visit to the Insurance or Finance department. You need to head on down to the office where you will have to sign some papers, finalize the payment plan, and select any additional insurance products.

What is the finance and insurance office?

Here is some general information about the F&I office and what to expect when you go there:

An F&I office is where the dealer writes up the sales contract and where you will arrange payment for the automobile. You’ll also need to decide what additional products you plan on purchasing.

You’re probably thinking why the salesperson doesn’t just hand over the file so you can sign the documents. Keep in mind is that there are several legal forms and essential paperwork that needs to be completed. The salesperson is not qualified to do this job. The F&I manager is trained in this field and knows which forms need to be signed as well as the various products that should be offered to every customer who will buy a car.

What am I signing?

Be prepared to face a sea of papers. It may be challenging surfing through them, but you need to be aware of exactly what you’re signing. You’ll be presented with lots of information, so budget adequate time to review them, especially the contract. Make sure to read each carefully, checking if the data is correct, such as name, address, model, odometer reading, etc. Some principal ones are listed below:

  1. The sales contract

Also known as the vehicle purchase agreement, it’s the most significant document that you’ll sign. Remember that the sale of a car isn’t official until you sign the contract. It contains details of your financing and payment information. It should also list all items that are being included in the total purchase price, including fees, taxes, associated costs, and any additional products which you have agreed upon. Understand that you won’t be able to alter any of the terms once you’ve signed. The following is typically listed:

  • Vehicle sale price
  • Trade-in credit, if any
  • Interest rate
  • Length of the loan
  • Add-ons such as extended warranties, theft-deterrent systems, or additional insurance products
  • The amount that is being financed
  • Rebates, if any
  • Total down payment
  • Monthly payment
  1. Finance options

This section of the agreement breaks down the total cost of the car and your financing options. Once you have paid the down payment, you will need to make arrangements with a finance company to set up the terms of the payment plan. If you have been pre-approved for a loan from your bank or credit union, you’ve done most of the work. That means you have a quote for the interest rate, charges, and the length of time the loan will need to be repaid. Since the dealership also offers financing options, the F&I manager will ask you if he can try to beat the quoted rate. Check to see if the figures match your expectations.

  1. Vehicle reassignment form and report of sale

This form transfers ownership. But it contains the following items:

  • The car that’s being sold
  • The selling price of the vehicle
  • The year and make
  • Vehicle identification number (VIN)
  • License plate number, if the car is used
  • The mileage on the odometer at the time of purchase
  1. Credit application

This document is important for the dealer when it runs a credit check for your financing application. A dealership must have your permission and the way to get it is through a credit application.

  1. Additional products or services

There is a variety of products offered by the dealer that can be added to your loan. They vary depending upon the dealership, car, and region. However, it’s crucial for you to research each product and weigh the benefits.  If you agree to buy a service or product, it will raise the monthly payment drastically. And whatever you decide to purchase at the end of the day, remember to negotiate the price or ask for a discount. Here are some that an F&I manager could offer:

Extended warranty

Also known as a service contract, it’s one of the priciest products offered. The cost varies depending on the vehicle, coverage, and brand. This warranty starts as soon as the limited warranty that comes with a new car expires. If you decide to buy a warranty, it’s preferable to stick with the manufacturer’s warranty instead of a third-party one. If you feel that investing in a warranty won’t fit your budget at the moment, you can always purchase one later. It ’ll give you some extra time to think about it and shop for a better price. Keep in mind that if you wait until after the new-car limited warranty expires, the rates may be considerably higher.

Maintenance plans

This is a bundle of scheduled maintenance plans, such as oil change, in a package deal. Since the prices of everything are continuously increasing, this plan allows you to avail cheaper labour rates in the future. However, some of them limit buyers to one dealership for service. Make sure to inquire about all the restrictions.

Anti-theft products

A wide range of products is available, from a simple car alarm, a starter interrupt, to a GPS locator. Some dealerships install these products on all their automobiles as soon as they place them on their lot. However, you’re not obligated to buy them. So if you feel that these products are unnecessary, you can ask to have any device removed or deactivated. But remember to do it before you take possession of the car.

Road hazard and wheel warranties

This is coverage for your wheels and tires in the event of damage. It’s especially important for those who often drive on roads with potholes or debris.

Paint and fabric protection

Science has come a long way, and, concerning durability, so has modern automotive paint. Dealers offer services for protecting both the inside and outside of your car. A special chemical sealant is applied to the fabric or paint.

Excess wear and use protection

This insurance applies to leased cars. If you return the automobile with a few dents, scrapes or stains in the upholstery (not banged up), you’ll be covered. Do not confuse this with car insurance- that’s coverage for vehicles involved in an accident.

Invest Time Now to Avoid Problems Later

Unfortunately, some car buyers get charged for products or services they didn’t purchase. To prevent this from happening, take the time to read and understand all the forms. It will no doubt slow down the sales process, but investing time now will be well worth it. If you make a mistake, it could end up costing you thousands.