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Knowing these few simple facts can put you in a great p... Knowing these few simple facts can put you in a great position to negotiate the financing on your next car (Getty Images).

Congratulations. You've successfully negotiated the purchase price of your new or used car or truck. You've made a great deal.

Next you're ushered into the dealership's "Business Office" - also known as the "F&I Office" for "Finance and Insurance". You're introduced to the Business Manager, a pleasant well-groomed woman (or man) who congratulates you on your purchase. She reassures you that you made a wise decision and that the tough part is over so now you can relax. You sit and breathe a welcome sigh of relief.

As you go through the formalities of signing the various forms and agreements, she casually explains to you your financing terms, your interest rate and other details. Along the way, she offers you several "extras" that will add "mere pennies a day" to your monthly payments. Among these items might be an Extended Service Warranty, Paint and Fabric Protection, Rustproofing, Undercoating, Alarm System, Window Tinting, and maybe even Life, Health, or Disability Insurance.

You're relaxed. The negotiating is over. And these "extras" sound really worthwhile. Besides, you like this Business Manager. She's so darn nice and sincere. So you agree to the interest rate and financing terms. You purchase the Extended Service Warranty. You even purchase the Paint and Fabric Protection.

BAM! You just put a small fortune in her purse. Why? Because the biggest secret that the dealership doesn't want you to know is this:

The "Business Manager" is, in reality, a salesperson working on commission.

Most of what the Business Manager offers you is negotiable.

Of course, you probably didn't know that. Most car-buyers don't. And certainly no one at the dealership is going to tell you.

The plain fact is: Car dealerships often make more profit from the financing of the vehicle and the sale of "extras" sold in the Business Office than from the actual sale of the vehicle itself.

So what to do? No worries, my friend. Here are some car negotiation tips for dealing effectively with the dealership's "Business Manager":

1. Don't let your guard down. Just because the Business Manager may seem friendlier and nicer than the car salesman, it doesn't mean the deal is over once you enter the Business Office. It isn't. The deal doesn't conclude until you drive the vehicle off the dealership's lot. So despite how friendly the Business Manager may seem, remember that she's there to make as much money as possible for herself and the dealership.

2. Arrange your financing before you go to the dealership. Since the Business Manager works on commission, she may try to trap you in a higher-than-necessary interest rate so she can maximize her commission. Avoid the dealership games by arranging your financing before you set foot in the dealership to buy. Apply for an auto loan at your bank or credit union. You can also apply for an auto loan online. Then compare all of the loan offers you've received and choose the best one. Once at the dealership, compare your best offer with the dealership's offer and decide which is the best deal for you.

You can obtain financing quotes from your local bank or credit union or for free online by using sites such as car.com

3. Try to negotiate the interest rate. If you were unable to qualify for financing from any bank, credit union or online financier, then you'll probably be stuck with dealership financing. And your auto loan will probably have a relatively high interest rate since you are considered a "credit risk." Nonetheless, if you feel that the interest rate that the Business Manager offers you is unreasonably high, tell her so and ask her to lower it.

4. Think twice about the "extras." Each "extra" you purchase means another commission to the Business Manager. But do you really need these "extras"? Probably not. For example, you'll certainly be offered an Extended Service Warranty. All new cars and trucks come with comprehensive warranties so you don't need to buy another one. As for Paint Protection, you can apply it yourself by buying any inexpensive "over-the-counter" polymer sealant car wax. You can apply Fabric Protection yourself by buying a can of Scotchguard. You may be able to purchase Window Tinting, Alarm Systems, Pinstriping and other after-market items cheaper on your own. Rustproofing is usually applied automatically in the factory so you certainly don't need to pay twice for it. (Check your vehicle's Factory Warranty to see if it includes a Rust Perforation Warranty. Most do.) And by all means, decline any health or life insurance that you may be offered by the dealership.

5. Go to the experts for answers. Don't count on the dealership to give you straight answers about financing. Remember, they may say anything to get you to finance your vehicle with them on their terms. So for the real facts about monthly payments, interest rates and other important financing details, ask your bank or credit union for the truth. They'll be happy to take the time to explain it all to you in an easy-to-understand no-pressure atmosphere.

6. Take the time to learn. Be sure to do all of your research and get the necessary facts before you go to the dealership to buy. Remember that they want you to be hurried and confused. So don't fall for that trap. Take the time to do your research. It'll pay off big time in the long run.

Michael Royce is a consumer advocate and former car salesman. For more car-buying tips and advice, visit his Beat The Car Salesman website.



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  • 216 Comments
      ingfp
      • 5 Months Ago
      I worked for a GM and Honda dealer in the 80's and a lot of what you said is true. Some dealers used stronger tactics than others. You are correct in how the business manager gets paid..commission. As the Business Manager you have the toughest job in the house. You have to make the interest spread for the dealer, sell the extended service agreement, sell the add on items and perhaps close a deal that isn't closed. So when I was the business manager I had to keep the salesman, dealer, customer all happy. Bottom line, let the salesperson KNOW that you KNOW up front and you can by-pass the dog and pony show!. By the way, this isn't the only business with these practices. Go to a Chiropractor or or Best BUY and get the same add-on sales show.
      • 5 Months Ago
      We bought a $12,000. car. Paid cash. No financing No "business office" No fabric insurance. NO PAYMENTS!
      • 5 Months Ago
      Pay cash or a large down payment, consider pre-owned. I bought a pre-owned mercedes and saved thousands and it was still under factory warranty. Normally vehicles are terrible investments, so why pay as much as a small house for a new car!
      Billy
      • 5 Months Ago
      Most Americans do not know how to care for their car. I have a Pontiac Grand Am I bought new in 1988. It currently has 295,000+ miles on it. I inspect and repair as necessary, never letting any problem go because it is old. I have a maintenance schedule that I follow. I have used synthetic oil and grease since 500 miles. I rebuilt the engine at 200,000 miles and I still get 35 MPG in town. I plan on keeping this car until it just absolutley cannot be worked on anymore. And Obama wanted to destroy this car so I would foolishly buy a new one that gets less MPG and cost more to operate. Why? I still trust my old Pontiac to go anywhere at any time, and no, I dont have any problems between scheduled maintenance.
      nysbravestcomic
      • 5 Months Ago
      IMPORTANT...if you plan on purchasing the car 'cash' do NOT tell the dealer that thinking you'll get a lower price. They make more on your interest then on the actual purchase. Let them set up your financing and pay the total loan off on the first payment.
      user598486
      • 5 Months Ago
      Best time to buy a car is when you don't need it. This way the ball is in your court. When I bought my new car I bought it under my terms. I came right out and told the sale's man, "Look I really don't need a new car right now", I'll buy under my terms not yours" And I got me a brand new car!
      • 5 Months Ago
      Been a Finance Manager for 16 Years, I was making a point that to listen to this article is not only insulting to my profession, it is a total disservice to the public. I dont understand your post?
      Master
      • 5 Months Ago
      It was about 1996, I went to Pearson Ford in San Diego ca and ended up dealing with the used car manager. I had a paid off trade in with 98 thousand miles on it. He wanted to put me in a white Thunderbird with 97 thousand miles, it was owned by a chain smoker and was full of animal hair, the smell was awful. The price? 14 thousand dollars. I told him I did not like the car but he continued to do the paperwork, he pushed the finished paperwork in front of me for my signiture and I said no. He got mad and said " You mean I did all this work for nothing"? I told him again that I didn't like the car, he then shouted at me to get out. I was stunned, I did leave. I was young and inexperianced. I can promise you that this would not happen today, I would go toe to toe with this clown or anyone like him, he would be unemployed by the end of the day. To date I have never returned to Pearson Ford ( they have moved and changed their name a bit ) and I wouldn't even if they gave me a car
      • 5 Months Ago
      really ...pizza? What do you do for a living? And why does what someone does for a living, being government or have anything to do with this. geez!
      Great One
      • 5 Months Ago
      TO THE UNEDUCATED, THIS IS MY FIELD AND FOR ONCE AGREE WITH THE WRITER. IF YOU ARE NOT GOOD AT HAGGLING BECOME A COSTCO MEMBER AND BUY A CAR THROUGH THEIR PROGRAM. THAT WILL GIVE YOU THE LOWEST PRICE YOU CAN EXPECT. WHEN THEY TOSS THE EXTRA DEALS AT YOU S A Y N O , NO MATTER HOW SWEET. WHEN THE PAPER WORK AND PAYMENT BOOK COMES THROUGH IT WONT BE SO SWEET. ALSO THE UPGRADE MAY NOT BE SO SWEET. WHEN MY GIRL WENT AND BOUGHT A LOW COST NISSAN VERSA . TO GET A RADIO AND POWER DOOR LOCKS SHE WAS EXPECTED TO FORK OVER 1,400.00. WE HAD AFTER MARKET RADIO INSTALLED FOR 275.00 AND FOUR DOOR LOCKS ADDED AS WELL FOR 325,00. SAVED 800.00 OVER WHAT DEALER WANTED. IF YOU NEED THE RUST PROOFING BUY TWO CANS A NAPA AUTO STORES FOR 14 BUCKS AND HAVE SOME ONE SPRAY IT ON . SAME CRAP THE SEALER CHARGES 700.00 FOR.. AS FOR THE WARRENTY , WELL THE CAR IS ALREADY COVERED FOR 3-5 YEARS AND YOU WILL PROBULLY TRADE IT OFF BEFOR THAT. YOU GAIN NOTHING. YOU COULD PUT THE COST OF THE WARRENTY IN YOUR POCKET AND IF YOU NEED IT THEY USE IT. NOW AS MUCH AS THIS PAINS ME IF YOU BUT NISSAN , HONDA OR TOYOTA YOU WONT NEED IT , THEY ARE DESIGNED TO GO 200,000 MILES AND DON'T BREAK EASY.............
      • 5 Months Ago
      Why do we have to negotiate? Why not just open dealerships with real price tags on the window and let us do our own shopping like any other retailer? I would be more likely to buy a new car or truck that way.
      • 5 Months Ago
      IIs the dealer prep charge legit or a rip off?
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