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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{ 8 comments… read them below or add one }


Reminds me of the Seinfeld episode when he goes to buy a new car and Elaines boyfriend is going to give him a deal..Elaine and Puddy end up breaking up at the dealership and Jerry gets screwed on all the extras!

That is some awesome info, and unbelievable how much they make on that stuff. You think it would be regulated to some extent..

Car Negotiation Coach

You gotta love Puddy! High five!


When I bought my car, the dealer argued with me, trying to get me to take the financing. He told me to take it and pay in full next month if I wanted. What a weasel. “95% of people take the financing” I told him I wasn’t a statistic, but I had no use for the financing. Period. No wonder they have a bad name.

Car Negotiation Coach

Joe- Great one-liner….I’m writing that down (you’ll get attribution of course :)). You definitely don’t want to be a statistic!

Budgeting in the Fun Stuff (BFS)

There are good salesmen and bad salesmen. The salespeople don’t usually have any control over the extras since their commissions are only based on the car’s sales price and the F&I Managers make their commission off of the extra APR and add-ons.

To make the best deal, know your stuff before walking into a dealership so you’ll get the price you want on everything you buy. The dealerships do usually have more L/H’s on file than you’d normally look up, so if you are financing, get preapproved by your bank or credit union and the dealership can take a shot at beating the rate for you. If you know how much you’re willing to pay for your add-ons, you can try to get them to beat that too. 🙂

Invest It Wisely

There’s also an item they peddle here called “Value to New”; it’s basically a type of additional insurance on the car where if you scrap it, they will replace your car with a new one for no cost added. No cost, that is, except the couple thousand dollars it adds to your financing!

Car Buying

Purchasing a vehicle is not a task that should be taken lightly or done quickly. Research all of your options based on the criteria you have determined after answering the above questions. Take at least a few weeks to look at and test drive cars, and to discuss your financing options before you come to a definite conclusion.

mike-recent buyer

i recently purchased a brand new vehicle. The process hasn’t changed much in the 30 years i have been doing it. a few dealerships like BMW don’t negotiate; i don’t buy from them.
My first advice on add ons…watch the movie Fargo with the classic scene of the husband and wife stuck with paying for add ons…you will see two age old customs that haven’t changed to this day.
[1] the invisible general manager in a back room that boycotts all low ball offers with a hand written note or [2] the response that i heard at my dealership and was used in Fargo “boy, i’ve never seen him do that before”.
after the end of four weeks of negotiating, i stick by an old saying of mine:
“a good deal is one where both parties think they screwed the other one and both of them are right”.
have purchased extended warranties anytime the car has expensive to repair items like electric seats; turbo engines, etc. you only have to use it once and it pays for itself. the other add on stuff is like popcorn at a movie theater

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