F&I (Dealer Finance and Insurance) is
the car dealer's area of highest profit.
The dealer wants to sell you "F"—their financing. Why? Well,
let's say the dealer's buy rate* is 8% and they convince you
to pay 11% interest on your auto loan. Who gets the 3% difference?
And if you buy their financing, they can sell you "I"—credit
life, accident and health insurance—again at a considerable profit.
And while they're at it, how about extended service contracts,
undercoating, an alarm system, etc., etc., etc.
It is not uncommon for the "business manager" (F&I salesperson)
to be the highest paid salesperson at the dealership. Why? Because
it is not uncommon for the F&I department to be the most profitable
department at the dealership.
BEWARE! You shop for your car. Take the time to shop for your
financing, insurance, and warranty as well.
*Buy Rate–the lowest rate the dealer can finance a vehicle
for a credit-worthy customer.