Dealer Add on’s & Extras – what they don’t want you to know

by Car Negotiation Coach

So you’ve learned how to buy a car at the best possible price and think that guarantees you a good deal.  Well think again!  Did you know that a majority of a car dealer’s profit comes from the Finance Office (or F&I Department)?  Dealerships want you to think the hard part is over and that it’s time to let your guard down.  But as you’re getting ready to sign for your new car, the Finance Manager will smoothly convince you that you need expensive add-ons and extras.

The image below shows how much the Finance Department really makes off everything they sell you.  Note: these high numbers aren’t even the total price you pay, they only represent dealer profit!

Average Car Dealer Profit for Add-on’s & Extras

Car Dealer Add On Infographic

But not to worry, you don’t really need most of these items.  Here’s a breakdown of what these items really cost the dealer and what you can do to save yourself money.

Breakdown of Add-ons & Extras in the F&I Dept.

ItemCost to DealerRetail PriceDealer ProfitSuggested Action
Fabric protection (scotch guarding)$5$300$295Not necessary. If you want it, buy Scotch Gard for 9 bucks and apply yourself.
Paint protection$10$325$315Not necessary. If you want it, buy sealant or wax for 15 bucks and apply it yourself.
Undercoating$200$700$500Don't get it, most new cars come with warranties against rust and corrosion.
Rustproofing$50$800$750Don't get it, most new cars come with warranties against rust and corrosion.
Pin striping$30$300$270Not necessary. If you want it, look for an independent shop to do it after you buy.
Car alarm$300$800$500Consider this, but it will be marked up significantly at the dealership. Go to an independent dealer and save money.
VIN etching$75$200$125Not necessary. If you want it, buy a window etching kit and do it yourself for 20 bucks.
Lojack$325$800$475Consider this, but get prices from an independent installer first.
Extended warranty$800 $1,800 $1,000 Not necessary, but can come in handy. Don't buy at the dealership without shopping around first. Read how to evaluate an extended warranty.
Gap insurance$200$500$300Not necessary, but get competitive quotes outside the dealership if you are going to buy it. Read more about gap insurance.
Financing$0n/aa lot!Dealers typically add 2-2.5% in APR to loans they provide. Find your own financing before heading to dealer. Ask if they can beat it.

Edits by: BFS

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