Finance Department Products-“The Menu System”
This is the part of the transaction where your wallet can get significantly lighter. This is a huge profit center for any dealership, and there will be several products that will be offered to you. The presentation of choice these days is the “menu” style and it is usually very effective at steering customers to choose a package. There is typically four columns with the first being the most comprehensive array of products(highest profit), and then the products fall off as you go down to what is typically a “basic” package with two to three products listed. The menu is usually formulated for you after an interview process is completed by the finance manager or finance director. The menu is then created based on your answers to the questions presented during the interview. The menu will then be “tailored” specifically for your driving habits, as well as the importance of vehicle care to you. It is important for you to know, that the questions that are asked, are asked for specific reasons. This allows the business/finance manager to use the answers against you later. This makes it easier for them to convince you of why you should choose certain products by using the “you told me” close. This is all part of an elaborate “selling system” that works very effectively, and it will cost you money if you are not careful. The key is to be aware that you are being “sold” throughout the whole process, and to think rationally about what is really important to you.
I am not saying that some of these products will not be beneficial to yourself, or the auto buying public. I am just saying that some products may not be necessary, and more than likely you will be wasting money.
These are some of the more common products that may be offered to you.
1. Extended warranty
These are high profit margin warranties and in many cases are a good idea, but be prepared to pay more from a dealership. There are alternatives to the warranties available at the dealership, or independent auto dealer. I cover this in detail in the extended warranty page.
2. Maintenance programs
These are programs that allow you to pay up front for scheduled maintenance during the warranty period, or beyond the warranty period in the case of extended maintenance. There can be a cost benefit depending on your driving habits, and you essentially lock in pricing for the services at todays costs. This leaves you shielded from any increases in parts costs or labor rates.
3. Lease protection
Lease protection is a policy that covers excess wear and tear on a leased vehicle. The leasing company(usually manufacturer) will charge the lessee for any damage or wear that is deemed excessive. This is usually assessed when the car or truck is turned in at lease termination. This can be really vague in many instances so be sure to read the lease contract carefully before signing the lease. The lease protection covers up to a certain dollar amount for this type of damage or wear. It allows you to pay up front, and not have to worry about any charges up to the allowed amount at lease end. If you are really hard on your vehicles and you anticipate that you may get “whacked” at the end of the lease then take a good look at the program. For the most part, the leasing company will allow for normal wear and tear, and this will be sufficient for most people.
4. Paint Sealants/Interior protectants
They are usually huge profit items and for the most part are generally not worth the cost. I strongly suggest you research them before saying yes to any of them. The big selling point that is presented by the finance department, is that they are backed by a warranty from the product company. This warranty is supposed to cover environmental hazards, and interior staining due to food and drink spillage, pets, vomit, crayons, etc. I encourage you to look closely at the fine print of the warranty, if you are even considering any of these products. Often times, after reading the fine print you will discover that you will have to jump through hoops like a circus bear to get something covered, if even at all.
5. Security coding/Window etching
Do not waste your money on this at all! This is just “juice” for the dealership. You have insurance on your car and you are paying for that already, so there is no need for any of this garbage. Many dealers put this on their cars, and lead you to believe that you must take it because it is on the car. Rest assured, you do not have to take it, and if they force the issue just get up and leave. This is product that offers not value to a consumer. It is usually a small cost when compared to the other items which is why many people just say yes. Do yourself a favor and say NO!
6. Clear/Invisible protector films
These products are thermoplastic shields that are applied to the front of the vehicle, to protect against stone chipping. The basic package normally covers the front fascia and a portion of the hood and fenders, as well as the back sides of the exterior mirrors. You can also normally choose to add certain additional pieces such as full hood and fenders, rear bumper, and door edge guards for an added cost. The whole car can be wrapped if a customer wanted, but this can be really expensive. I am a big believer in the benefit that this product offers. In my opinion, it is a must have on on any highline car, especially low slung sports cars. It will keep the front of the car great looking great, and also chip free. This will help with resale, and trade value in the future.
7. Key Protection
Key protection is a product that covers you in the event that your key is lost, broken, or stolen. I am not a big believer in this product either, but it is usually rather inexpensive. The newer keys are very complex and can be upwards of $500-$600 dollars to replace on certain cars. At a minimum, any new car key will be at least $200 these days and usually more. If you have a tendency to lose your keys, you may want to take a look. If you are like most people and have never lost a key or maybe one, then pass on this offering. The odds are that you will only be spending more money for nothing.
Every dealership will offer a slightly different array of products, but I have chosen to explain the most common ones. However, there may be a few items that are presented to you that are not listed. Do not panic, just evaluate each item that is presented, and make a logical decision as to whether there is value and worth the investment.
Lastly, if you see value in some of these products then go ahead and invest in them. However, take the time to understand exactly what you are getting for your money and read the fine print on any items that have a contract, guarantee, or warranty. Often times, what you think you are getting and what you actually get, are two different things. If you do not understand them, then make the finance manager explain them to you in detail. It is never a pleasant experience when you find out far too late that you purchased a limited (potentially worthless) product or service.