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F&I Menu Selling: Don’t Fall for It!

Written by Ray Shefska

My career in the retail automotive business started in 1977. Buying a car doesn’t have to be anxiety inducing, stressful, or painful. Instead it can be confidence inspiring, fun, and convenient. Let me show you how.

January 14, 2021

You just negotiated and agreed to a car deal. Congratulations! Now isn’t the time to put down your guard … As one sales process ends, another is about to begin.

You see, the F&I (finance and insurance) office is where the real money is made in a car dealership. It’s where an F&I manager will offer you all sorts of additional products to go along with your new vehicle. In today’s modern F&I office there are dozens of products you can buy, and to convince you to buy them, savvy F&I managers use what is called menu selling.

What exactly is F&I menu selling? How should you handle it? And what should you know before you step foot in an F&I office?

Don’t worry, we’ve got you covered. Your Auto Advocate is dedicated to arming you with all of the information that you need to get the best deal possible (both on the front-end, and on the back-end of your car deal).

Let’s break down exactly what an F&I menu is, discuss why it’s in use, and teach you how to handle it. The next time you walk into the car dealership, you’ll be ready.

What is F&I Menu Selling?

After you’ve negotiated your car deal, you’ll meet the F&I Manager. Sometimes you’ll meet the F&I Manager when you’re still completing your car deal with your salesperson, but nine times out of ten, you’ll meet them once you step foot in their office. You’ll exchange some pleasantries as you acclimate, then they’ll pull out the menu. That’s right, a menu. It will have four or five columns, each with different types of coverage and protection. At the bottom of each column is a display price for your projected monthly payment.

The menu can either be physical (like a menu you would see at a dinner), or digital (typically pulled up on either an iPad, or a giant screen on the F&I Managers desk).

The finance manager will go over each column, discussing the different levels of coverage available in each program, and give you the total monthly price for each package. Note that it’s the monthly price, but more on that later.

You’ll then be asked which level of protection is right for you. Nowhere on the menu is there an option to have no coverage; you’ll have to ask for that on your own.

This entire concept is known as menu selling. It’s a simplistic way to get you to buy an extended warranty, tire and wheel protection, dent and ding coverage, etc, etc. The entire concept is based on the notion that if you give people a list of options, they’ll feel compelled to pick at least one of them, and when you frame it as “this protection only increases your monthly payment by $15 per month,” it becomes increasingly difficult (as a customer) to say “no.” 

Don’t fall for it. It’s fine if you want added coverage for your new car, but don’t let this psychological trick be the reason you purchase. F&I menu selling isn’t an unethical car dealer practice, but it’s certainly a tactic you’ll run into. Simply be prepared.

And, as always we do offer transparent pricing for Your Auto Advocate members on vehicle service contracts, so if you are interested in buying an “extended warranty” get a “cost plus” quote from us to price shop with. More on that here: https://yourautoadvocate.com/extended-warranty/

Why Are Menus Involved?

Way back in the day it wasn’t uncommon for F&I products (like extended warranties) to get “slipped in” to a customer’s car deal, even if they weren’t disclosed. Those days are fortunately long gone (thanks to several lawsuits), and nowadays “disclosure” is a primary concern for the F&I Manager.

All F&I products need to be presented to every customer, and the customer must specifically decline the coverage being offered. If the customer declines, they’ll have to sign something that says they declined. This policy prevents finance managers from selling you something you don’t even know about, but at the same time, it opens up entirely new sales opportunities.

D&I menu selling on a docuPAD

For a while, F&I Managers would simply tell you about the different levels of protection. Then, some revolutionaries came up with the idea of “The Menu”. It caught on like wildfire, and it’s now standard practice in car dealerships around the country. Our favorite implementation of the “menu” is the docuPAD, a giant tablet that sits on a F&I Managers desk. It looks a little silly, doesn’t it?

How Should You Handle F&I Menu Selling?

What do you do when you’re greeted with the F&I menu?

The first thing that any reputable F&I Manager will go over is your base payment, without any added coverage. They’ll also show you the APR and the term length of your loan (if you’re financing). You need to initial next to all three to indicate that you received those specific terms.

If you would like to decline all options, make that clear. Say that you’re ready to sign the disclosure and that you will not be buying any further coverage. Be firm and confident. Be prepared to walk out on the entire deal if they push you on trying to buy coverage that you don’t want. This is especially important if the F&I Manager says anything along the lines of “You know we can lower your interest rate by a point if you buy the extended warranty …” Not only is this illegal, it’s a sign that this is a dealership you shouldn’t do business with!

Of course, you might actually want some of the options on the menu, and this is where it gets tricky. You’ll need to understand the full price of the products, not just their impact on your monthly payment.

The way that they convey the price is in terms of how it will impact your monthly payment. They’ll say that you’re going to pay nothing today, it’s all bundled into the payment, and it’ll only increase by X amount. Those are all sales tactics.

Here’s what you do: ask for the total cost of the product you’re interested in. Don’t accept the standard “it’s only $15 per month” answer. You need a full dollar amount. Most F&I Managers won’t have an issue providing you the total figure, it may simply take some poking and prodding. Once you get the price, know that you can cross shop at other dealerships, online companies, and even here at Your Auto Advocate. Whatever you do, don’t fall prey to the idea that you can’t negotiate on F&I products. Just like your car deal, the products in the F&I office are negotiable.

Payment Buyers Beware

F&I menu selling prays on payment buyers. A payment buyer is a term for anyone who buys their car based on their monthly payment. There’s nothing wrong with this, and it’s a perfectly reasonable way to think about car buying.

However, the issue with F&I menu selling is that it takes advantage of payment buyers by squeezing options into the monthly payment, then downplaying their cost.

The best way to protect yourself against F&I menu selling is to focus on the out-the-door (OTD) price. The OTD price is the total figure that includes everything you’ll be paying for, including extended warranties and other options. It’s really the best way to know how much you’re actually paying for a car. You will have negotiated the OTD price with your salesperson, and now you’ll do it again with the F&I Manager.

Conceptualizing your car buying experience as a single number, instead of a series of monthly payments, helps you understand the impact of menu selling. Sure, $15 per month seems reasonable. Stretched over a long enough term, that can be $2,000 added to the price of your car.

Everything In the F&I Office Is Negotiable

Here’s a general rule of thumb: if there’s a tax applied to it, you can negotiate it. Everything else cannot be negotiated. Guess what’s taxed? Every option on the menu, and every other service the F&I office presents you with.

If you do want something that’s being offered, get them to go lower on price. Finance Managers have a complex commission structures, but in the simplest terms, most are rewarded for moving a volume of products, even if they aren’t the most profitable. This means the F&I Manager is motivated to move their products so that they get paid more.

You can use this to your advantage by asking for a discount. Say that the payment option on the menu is too much, but you’re interested in the coverage. Be clear that you don’t want to extend your payment term, but you want a lower monthly payment.

You might be surprised by how flexible finance managers can be. The key is to use the same trick for declining coverage overall, projecting confidence and staying firm.

You Will Be Seeing the Menu

F&I menu selling is so prevalent that we can almost guarantee you’ll be seeing it the next time you buy a car. Ever since its creation, it’s been a massive profit generator for car dealerships. By packaging everything into options and just tacking it onto your monthly payment, more and more car buyers are susceptible to saying “yes,” when in reality they aren’t 100% sure what they’ve bought.

Menu selling isn’t “good or bad,” it’s simply a function of buying a car. Our hope is that when you experience it you’ll be more informed and confident as a result of taking the time to read this page.

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6 Comments

  1. george braue

    If I was interested in buying extended warranty coverage with a new car purchase (to take advantage of a cheaper model with less reliability) would it be better to ask the salesperson for pricing combining the car and the warranty (and letting the salesperson know that I am getting similar quotes from other dealers)?

    Reply
  2. Robert mendez

    I fell for all the f&I crap come to fine out the tire protection is a lengthy process mostly so say just fix it . The dealer bares no responsibility for any of crap you bought it’s all tool free numbers . I try getting a dent fix size matters so don’t expect anything bigger than a quarter to get fix extended warranty save your money put x amount away in case you need repairs done and most of all buy a dependable car with little problems .I had a Toyota four runner it was the best SUV ever never change a bulb or minor fix that a good product 100,000 miles and was able to half the price back in my pocket

    Reply
  3. Kevin Clay Sr

    Hello Ray and Zach,
    The article states that a new car buyer should be willing to walk out on the entire deal if the F&I manager is persistent in trying to get the buyer to purchase coverage he or she doesn’t want. You said especially if the F&I manager says something along the lines of, “You know we can lower your interest rate by one point if you buy the extended warranty.” Would you please explain why this tactic is illegal if used, so that I will now that I should not be doing business with this particular dealership.
    Thanks!

    Reply
  4. Bill Lemons

    Thank you both for explaining what happens on the other side of the dealership’s desks.
    Question, if you do make the mistake of enrolling in say an extended warranty or some other monthly add on, will that be an issue if say within 10-days or so you decided to pay off the car loan? Does the add on(s) simply become void or is there a continuing legal financial obligation?

    Reply
  5. C Walker

    In newspaper ads I see “0% financing ($17.97/thousand borrowed).” Could you explain? Is that a fee, or ?

    Reply

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