Have you ever walked out of a car dealership’s finance office carrying keys to a new vehicle and a bundle of complicated paperwork — without feeling entirely comfortable or informed about what you just purchased? If so, you’re not alone.
Most of us think we can rest easy once we get to the finance office, but the unfortunate reality is that this is where some of the biggest dealer fees exist, hiding in the insurance premiums and monthly payments.
Finding a new vehicle to purchase can be stressful and confusing, and those problems are often made worse when you add in an overload of information about extended warranties and financing payments. It’s not uncommon for car buyers to leave the finance office confused with all the different options.
While many car dealerships are honest and trustworthy, some aren’t. These other dealerships often deploy deceitful sales tactics to help close a deal, focusing more on getting into your wallet than offering you the services you need or want.
Here are the biggest things to watch out for in the finance office.
Huge markup on coverage options
That’s right, motor vehicle dealers have been given a restricted license to sell New Vehicle Replacement Insurance and Extended Warranty on your vehicle. Most people don’t know that the markup is huge — 40, 50 and even 60% or higher commission charged by the dealers and built into these products. Let’s break down these products:
- New Vehicle Replacement Insurance: As mentioned above, your existing insurer will settle any total loss claim based on the current depreciated value of your vehicle. With NVR, you will benefit from the insurance proceeds to buy a brand-new car without additional costs.
- Extended Warranty: Extended Warranty is now considered insurance in Western Canada. Why? So many problems within the industry drove the need for regulation to protect the consumer. Many people don’t know that dealers have competition, and the coverage from independents is just as good, if not better. Plus, you will benefit from transfer options, half the cost, repair facility choice, and so on. Buying a new vehicle? The manufacturer’s extension comes with the same heavy commissions loaded within. Luckily, alternatives exist and offer huge savings!
Upselling the payment plan
An extra $9 a week for 8 years… sounds much better than $3,744, right? There is nothing wrong with financing options, but make sure every single product they sell is presented to you as a total cost. Whether it’s automotive sales or a household appliance, salespeople are trained to understand your monthly budget to hide the actual cost.
This CBC Marketplace episode shows just how aggressively the payment plan is pushed.
Fast-talking, aggressive salespeople
Car dealerships often try to add extra charges that are not advertised, as this customer in Alberta experienced, as reported by Global News.
Don’t be afraid to ask a salesperson to slow things down, repeat themselves or write out specific numbers for you. Taking the extra time to comprehend what you’re buying fully could save you thousands of dollars.
A lack of willingness to help down the road
You wouldn’t buy house insurance from a realtor or life insurance from a doctor, so why are we accustomed to buying car insurance from car dealers? The insurance market has taken time to go online, and the dealership was the consumers’ only choice. However, now we can buy directly from the company that will pay the claim.
Think about this scenario: a total loss claim has occurred, and you’ve emailed the finance office about your problem, but they haven’t emailed you back after a long time. You decide to call the dealership, but your call gets bounced between a couple of different employees, and then you’re told to contact the warranty/insurance provider for the plan they sold you. The sad truth is that the finance office has ZERO involvement in the claim and is limited to obtaining commission dollars from you.
Let’s also not forget the biggest myth in the industry: “If you buy the manufacturer’s product from me, you can rest assured all claims are covered, no matter what.” That is not the case—the extended warranty from the manufacturer is subject to terms and conditions just like an insurance policy or warranty contract from a third party. Read our blog here to learn more.
The Obvi advantage
For the team at Obvi, customer satisfaction is the highest priority.
We know how important vehicles can be in people’s lives. We aim to provide as much peace of mind as possible that you’ll be in good hands and back on the road again soon. As both a seller of extended automobile warranties and a claims handler, we’re with you every step of the way. And while dealership salespeople can be pushy when commissions are on the line, that’s not the case with Obvi. More than anything else, we want you to be satisfied with your experience.
Visit our Extended Car Warranty page to learn more. Contact us any time if you have any questions.