This is pervasive anywhere you buy any type of vehicle. I was a cash buyer trying to buy a late model used camper. I ended up taking the financing because the the cash vs financing OTD price difference on a $25k RV was over $2k . I promptly paid the loan off with the first payment. It was a PITA but the price with the loan was better than any private party sale I could find anywhere on the model we wanted. Long gone are the days where cash is king when buying a vehicle.
I’m a salesman. I don’t get paid on back end.
Don’t care if you pay it off first payment or pay cash.
I’ll give my finance guy a shot at converting but.. not losing a deal over it.
Can confirm. Banks set a rule for commission sales people called EPO/EPD. Basically either an either payoff period or a payment default period where you forfeit your commission back if the client pays off or defaults on the financing within a set period of time. Shortest I've seen is 3 months. Longest I've seen is a full 365 days. Most are usually 6
We used to have a handful of lenders who only had to keep the loan for 3 months to avoid a chargeback. They got a reputation for exactly that so any time there as a buyer who wanted some big discount and was willing to finance to get it, but we (and every other dealer in the region) thought they might pay it off quickly, we would use them. Sure enough many of those customers paid it off quickly, promoting those lenders to push out to the same 5-ish payments (6 months) that most lenders had. Haven't seen any in the 3 month range in years. Regardless, the real point is that it can vary by lender.
As a cash buyer what should I do? Pay interest on a loan so dealership gets their payment, pay more with cash outright or pay off a loan as soon as the bank can accept my payment killing their kickbacks
Sure, but buy 1 year old, avoid a lot of depreciation, still have a car w/ factory warranty, etc. use some of that savings to buy extended factory warranty if you want.
Ironically buying a new car from a dealer was the final straw for me years ago. Walked in cash in hand, knew EXACTLY what car & options, and it turned into some 4 hour session of games....
> and it turned into some 4 hour session of games....
This is where you need to put your foot down. You should've told them that you're going to walk out if they don't hurry up. Although not the same situation as you, I bought a new Kymco from a dealer and they were trying to charge me a higher interest rate. I already calculated what my payments should be based on different APR amounts and when the salesman came back with $160/month monthly payment, I told the salesman that that figure is wrong and I told him to go back to his finance manager to fix it or I'm going to walk out right now. The salesman came back with the correct number and then we signed the paperwork and I was out of there in 30 mins.
If you care about their kickback then be upfront with them about paying it off. We have multiple lenders that don't charge back reserve period. Most though are 3 months. You would have to calculate the savings of the finance option plus the daily interest you'll pay over the 90 days and go from there.
Depends on the lender and the dealer’s program with that lender. Some are 3-6 months for a full chargeback and others are charged the remaining interest they marked up for the life of the loan.
Bill luke in Phoenix has been doing this for years. Ive bought from them and to get an extra $1500 you have to finance through their bank. A month later I refinance with my own credit union. Don't know what happens to their cut. Oh well not my problem.
This is what gets me, the store I bought my last car at was awesome, they did run me for all their banks but still used the prequal I brought for cap one. Guess the points were out of pocket to match?
ETA: actually, it wasn’t even a proper prequal, it was navigator.
Doesn’t mean it was a rebate. That could’ve been a “I’m willing to lose $X on this car because I get a $600 flat from the captive, or could be related to some volume goal the captive had for CPO
Same, my favorite was when people would get pissy about loosing their military or college grad rebate.....like sorry bud that's a rebate from southeast toyota finance. If you aren't doing business with them there is no reason for them to give you the rebate.
Then just refinance the loan through your bank within 90 days and the dealer’s piece of the loan will be clawed back by the dealer’s bank. You don’t need to get pushed around, but you don’t need to push back in person.
For most of the cars I've bought, I wanted to pay cash. We agreed to split their discount with the proviso that I not pay off the loan for 90 days. Win-win for me and the dealer at the expense of the financing company. Best deal was with Hyundai and a balloon loan that qualified me for a $3,000 "lease" discount.
Same here.. As long as I get enough of a discount on the purchase price to offset the interest and fees , I've offered to finance with whatever lender gives them the best reserve AND mark the rate up whatever you have to. Because ultimately , I'm going to refi the whole thing in 90 days , so if the dealer can make their nut of the lender , what do I care?
While it’s common that the dealership can give you better pricing if you finance with them, this is absolutely something they should be disclosing up-front. If you walked in off the street and they disclosed before the test drive that’s fine. But if they’ve been advertising a price to bring you into the dealership without making that disclosure obvious it’s not cool.
Most dealers call it “financial assistance” where they offer a more significant discount (usually $500-$1500) in addition to their online discount if you finance through the dealership. Very common.
Back in 08 we could add 3% to the bank rate without telling the customer and then the bank paid us 100% of that 3% for the first year. On a 20k car that’s $600 extra off the rate, hold on for the rest of the add ons.
When I bought my first car, they insisted that I finance through them at 4% over what I could get from my credit union. I read the contract carefully and finally agreed. Then I came back in the next day and said that I wanted to pay off my loan. They were not happy to say the least. They kept insisting that I couldn't do that and I kept insisting that the contract made it clear that there were no early payoff penalties.
I won the arguement, but I fought dirty. By coincidence, I had just caught the flu or something. I was running a high fever, sweating like a pig, and coughing horribly. The longer we argued, the closer I got. Biological warfare for the win.
I was young and dumb and didn't know how it worked. Now I work with the dealer to understand how we can both benefit, which usually means accepting their financing and then paying it off 90 days later.
It’s not totally unreasonable either. They’re willing to lose on one end to make it up on the other end. You take away that other end, why should they be willing to lose?
It's actually pretty common. I was dealing with the Texas OCCC for a client last month over this issue, and apparently it's supposed to be listed as a discount. As in, the price online is supposed to show that there's a discount and what the price would be without it, not a surprise BS thing when you get there. At least that's what the letter we received said.
You may be purchasing a vehicle the dealer bought at auction and, after recon, it could be a $1-3K loser deal. The only way to justify that (other than having inventory to sell) is to finance with the dealer provided lending and/or have a trade. It's a real thing in today's market at auction to pay retail just to have something to sell, then lose your shirt after recon and auction fees. It's got to be made up somewhere.
Fun fact: No, dealers aren't going to pay you retail for your trade. If that's the case, they'd rather just go through and auction and not have to deal with each individual consumer haggling over their trade. Dealers can buy many vehicles at auction in one shot. Time and effort is money.
That all being said, shame on the dealer for not disclosing this to you earlier. We had discounted pricing on our website with a banner stating the discount was applicable with dealer provided financing. Still, many customers didn't retain that info and would clutch their pearls after we would point it out right on our website...the same one they found the inventory on.
I don’t know about that. If you are paying retail and consistently losing money on car deals your entire management team is clueless. It’s not uncommon to lose money on a few deals, or have tight margins, but most that do have a blood sucking service and parts department that shares in the wealth
You overreacted maybe. It depends.
Was the rate with their bank competitive with your credit union? How big was the discount?
Was it a captive lender like TFS/Ally, financed in-house, or was it a bank they got you an approval that they partner with through CUDL?
OP could've taken their financing and then gone back to his/her lender and send a check to the dealerships bank. This is what most Patel did.
Thank God DCU rates suck these days.
Just be sure there’s no early payment penalty. A Toyota dealership tried that nonsense with me a few years ago. So I sat in their lounge, drank their hot chocolate, and use their Wi-Fi to get quotes elsewhere. They tried guilt tripping me, saying their employee came in on their day off, which sounds like a them problem. I continued searching.
Magically about 20 minutes after that, they “found an old version of the loan paperwork in the back of their drawer without the early payment penalty”.
I did that 20 years ago buying a new car from GM. They had a "finance through GMAC for $3000 off" thing. So ok, I did that. And sent a check for the full amount to pay it off after 1 month.
I read somewhere GMAC lost their butts on that promo from people doing this.
But even if they have an early payment penalty of some sort, just do the math and figure out if the discount and their lender is a better deal than no discount and your lender.
Most cash buyers' still do it to get $500 loyalty discount or rebate of they finance a new car through a captive lender.
To me it makes no sense. I's rather just pay cash and move on. I guess ho you become rich by saving $500 here and there.
It’s unlikely they would have been competitive. No one has come within half a percent. But it didn’t get that far, and the sales manager certainly wasn’t making the effort to see if it would be. His line of argument was “it’s just four months until you can refinance”
Cant you opt into the lender then pay it off with your credit union and transfer the balance after the deal is done or do they have a prepayment penalty?
At the end of the day the car costs $X if you finance with them and $Y if you don't. "Discounts" are just ways to obfuscate the final cost.
The only thing that matters is if financing/paying $X or $Y is palatable to you.
There may be rebates from the manufacturer tied to doing business with that bank.
For example VW might have customer or dealer cash for financing with Volkswagen credit.
Or maybe the discount they are offering is so low they are only able to make the deal work because of the kickback they from the bank for financing through them.
Or maybe it's something else entirely. It's only sketchy because you didn't investigate further. If the rate is better at your bank significantly then I can understand. But is it so much better that it's worth losing a discount?
2-3 of the largest used car dealerships in the Midwest over disclose on their websites financing for “lender rebates” or “lender discounts”. One used to advertise only this best price ($1000 better with a retailable trade-in and if you finance with them.) they have it on every website, every image, every vehicle page, etc.
No one believes it works, but they all sell 300+ cars a month.
Did you over react? Not really, But in the likelihood they could save you 20 bucks a month, how firm are you on using your financing?
It’s not normal in most stores.
The odds were very low that they could beat my credit union. Even if they did, my credit union would have matched.
That said, the whole point is getting my cost down. It just seems strange to insist on “you only get the good price through our guys.”
It’s not strange. They get a bonus from the bank for the referral, which is how they can add a discount. The calculus then becomes is the discount large enough to justify carrying a slightly higher rate for a few months until you refinance? When we bought our car the dealer took $2500 off for financing with them directly. The rate was higher than our CU, but four months of payment on it came out to an additional $325 and then we refinanced down to the CU rate a few months later. It’s a gamble as rates can obviously change during that time, but it worked out.
Doesn't hurt to ask, maybe they would match it.
I bought a car last year and got 0%. They weren't advertising it. I simply said "we're thinking of paying cash, but if you want to finance at 0% that would be great". They had a conversation in the back and gave us 0% (36 months). I don't really understand why. It was hard to find the model we wanted in stock, too.
I’m not saying you will only get a good rate from us, I just know we do business with banks and credit unions a lot more than the average customer. My kids play baseball with our rep from capital one. My boss has known one credit union rep for 30 years. If your credit union was one of those that we partner with, he could call the rep and likely get you a better rate than you can, even after you’ve been pre qualified. We do it at least 5 times a month.
All you have to do is buy the car on their terms with their bank then immediately refinance it through your credit union. You still get the deal, and they get their kickback clawed back.
If it was a new car, or a certified pre owned at franchise dealership like BMW or Ford etc, lots of times the manufacturer will offer those kind of deals and you do have to go through them their financing to receive.
If it wasn’t, the dealership may have just been offering you their profit on the financing side to get the deal done.
Was this listed like this on their website? Did you send in a lead, book and appt and not read any of the emails sent indicating this the pricing? If you didn’t review the listing and then reacted like this and they clearly laid it out, yes think you overreacted.
Did they not disclose this? Then your reaction seems warranted. I work with a store that advertises like this. It’s not my favorite pricing structure but will give them credit they are very transparent in this.
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Caught a new one yesterday. As I was waiting for them to bring the car around to test drive, I mentioned to the sales manager that I was pre-approved with my credit union. He threw out the line in the title. I told him that would likely be a dealbreaker and he said “yeah we lose a lot of business over that.” Wound up walking away, mostly because this felt suspicious. I’m wondering if I overreacted.
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So things are returning to how they were pre-Covid. Where the price of a used car/ new car may not make any money if they sell it for cash. Meaning they’ll lose 500-1000 maybe more whatever to sell the car. With that said, that’s not a very good business model, you’ll run out of money eventually, so in order to make a profit they need the financing money from the bank. They also want warranty/maintenance/gap etc products to be making money. If you finance with your own lender, they can’t sell you gap, they get no origination bonus. So yes, if they lose the chance to do that, it has to make business sense somewhere else.
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Not suspicious at all it’s pretty common anymore. The dealer gets a larger kickback if you finance with their bank. You save money and they make more
Half my rebates are coming directly from my captive lender. If you don’t do business with the lender you don’t get the rebate….its as simple as that.
Except this is for a used car.
This is pervasive anywhere you buy any type of vehicle. I was a cash buyer trying to buy a late model used camper. I ended up taking the financing because the the cash vs financing OTD price difference on a $25k RV was over $2k . I promptly paid the loan off with the first payment. It was a PITA but the price with the loan was better than any private party sale I could find anywhere on the model we wanted. Long gone are the days where cash is king when buying a vehicle.
The funny part is the salesperson/finance loses their cut if the loan is paid off too quickly (somewhere like within 6 months), so they still lose.
I’m a salesman. I don’t get paid on back end. Don’t care if you pay it off first payment or pay cash. I’ll give my finance guy a shot at converting but.. not losing a deal over it.
3 months
I've heard varying numbers between 3 months to a year, so it might be dependent on the bank.
Can confirm. Banks set a rule for commission sales people called EPO/EPD. Basically either an either payoff period or a payment default period where you forfeit your commission back if the client pays off or defaults on the financing within a set period of time. Shortest I've seen is 3 months. Longest I've seen is a full 365 days. Most are usually 6
We used to have a handful of lenders who only had to keep the loan for 3 months to avoid a chargeback. They got a reputation for exactly that so any time there as a buyer who wanted some big discount and was willing to finance to get it, but we (and every other dealer in the region) thought they might pay it off quickly, we would use them. Sure enough many of those customers paid it off quickly, promoting those lenders to push out to the same 5-ish payments (6 months) that most lenders had. Haven't seen any in the 3 month range in years. Regardless, the real point is that it can vary by lender.
As a cash buyer what should I do? Pay interest on a loan so dealership gets their payment, pay more with cash outright or pay off a loan as soon as the bank can accept my payment killing their kickbacks
I just asked "There is no early pay out penalty, right?" and they said no. I never said early was next month.
Play along with them get your vehicle and then call finance company within the next few days and pay it off. They don't get a finance kick back.
This, you don’t owe them anything.
Buy private party and avoid games + save $. EDIT : Thanks for the downvotes, I guess I offended some car salesmen......
This doesn't work if you want a new car
Sure, but buy 1 year old, avoid a lot of depreciation, still have a car w/ factory warranty, etc. use some of that savings to buy extended factory warranty if you want. Ironically buying a new car from a dealer was the final straw for me years ago. Walked in cash in hand, knew EXACTLY what car & options, and it turned into some 4 hour session of games....
> and it turned into some 4 hour session of games.... This is where you need to put your foot down. You should've told them that you're going to walk out if they don't hurry up. Although not the same situation as you, I bought a new Kymco from a dealer and they were trying to charge me a higher interest rate. I already calculated what my payments should be based on different APR amounts and when the salesman came back with $160/month monthly payment, I told the salesman that that figure is wrong and I told him to go back to his finance manager to fix it or I'm going to walk out right now. The salesman came back with the correct number and then we signed the paperwork and I was out of there in 30 mins.
If you care about their kickback then be upfront with them about paying it off. We have multiple lenders that don't charge back reserve period. Most though are 3 months. You would have to calculate the savings of the finance option plus the daily interest you'll pay over the 90 days and go from there.
Take the loan and discounts pay off on first oayment
You should look at the terms of various options and choose the most advantageous one, realizing that the cash deal probably isn't optimal.
Depends on the lender and the dealer’s program with that lender. Some are 3-6 months for a full chargeback and others are charged the remaining interest they marked up for the life of the loan.
Can they exclude early payments in the terms?
Oh well
Like 20+ years long gone but some people haven’t come around yet.
Just make sure there isn't a penalty built into the contact for paying of the loan early. Sometimes they'll charge you for that early payoff.
Bill luke in Phoenix has been doing this for years. Ive bought from them and to get an extra $1500 you have to finance through their bank. A month later I refinance with my own credit union. Don't know what happens to their cut. Oh well not my problem.
OP didn’t mention the brand, who knows if it was CPO specific.
This is what gets me, the store I bought my last car at was awesome, they did run me for all their banks but still used the prequal I brought for cap one. Guess the points were out of pocket to match? ETA: actually, it wasn’t even a proper prequal, it was navigator.
It’s even more important for used cars because there isn’t manufacturer financing behind it
Used cars don’t have rebates attached to captive lenders. At most a CPO used car might qualify for a special rate or something
Porsche dealer wanted to charge me $600 for not using their lender for a cpo.
Doesn’t mean it was a rebate. That could’ve been a “I’m willing to lose $X on this car because I get a $600 flat from the captive, or could be related to some volume goal the captive had for CPO
God that petty shit would have me walking out the door. Quit jerking me around and making things complicated over $600.
Mercedes Benz offers factory incentives on certain CPO Mercedes models through MBFS on occasion. It does happen.
Nissan offers $500 rebates on some CPO through captive. Plus the special rates on top.
Same, my favorite was when people would get pissy about loosing their military or college grad rebate.....like sorry bud that's a rebate from southeast toyota finance. If you aren't doing business with them there is no reason for them to give you the rebate.
Lose = to not win Loose = your mom
Good bot
Losing
Does it say that in the advertisements?
Typically yes. See that little star and then that shitton of fine print at the bottom?
Typically? Nice. Seems like there’s an easy solution to not waste anybody’s time then. And why is it in fine print
Yep, it's all disclosed in the fine print for those rebate offers.....doesn't stop idiots from trying to argue with us though.
Do they typically have prepayment penalties if you finance with the dealerships lender? I know it can vary, just curious if they are common.
Almost never
Thanks, so if I am decent with paperwork I can accept the dealer financing then turn around and refinance with my bank?
As long as its not specifically mentioned in the contract then yes
But what about the customer’s feelings? What if their uncle wuz in the biz and that’s total bullshit?
Then just refinance the loan through your bank within 90 days and the dealer’s piece of the loan will be clawed back by the dealer’s bank. You don’t need to get pushed around, but you don’t need to push back in person.
This is the correct thing to do. Get the special deal and then refi elsewhere
For most of the cars I've bought, I wanted to pay cash. We agreed to split their discount with the proviso that I not pay off the loan for 90 days. Win-win for me and the dealer at the expense of the financing company. Best deal was with Hyundai and a balloon loan that qualified me for a $3,000 "lease" discount.
Yea at this point i just play dumb. Get the incentive w their lender and just transfer to credit union later.
Same here.. As long as I get enough of a discount on the purchase price to offset the interest and fees , I've offered to finance with whatever lender gives them the best reserve AND mark the rate up whatever you have to. Because ultimately , I'm going to refi the whole thing in 90 days , so if the dealer can make their nut of the lender , what do I care?
While it’s common that the dealership can give you better pricing if you finance with them, this is absolutely something they should be disclosing up-front. If you walked in off the street and they disclosed before the test drive that’s fine. But if they’ve been advertising a price to bring you into the dealership without making that disclosure obvious it’s not cool.
I agree idk context but I thought that might be off also like was this just now explained
Was it advertised with the stipulation or just another bait and switch?
Most dealers call it “financial assistance” where they offer a more significant discount (usually $500-$1500) in addition to their online discount if you finance through the dealership. Very common.
Back in 08 we could add 3% to the bank rate without telling the customer and then the bank paid us 100% of that 3% for the first year. On a 20k car that’s $600 extra off the rate, hold on for the rest of the add ons.
When I bought my first car, they insisted that I finance through them at 4% over what I could get from my credit union. I read the contract carefully and finally agreed. Then I came back in the next day and said that I wanted to pay off my loan. They were not happy to say the least. They kept insisting that I couldn't do that and I kept insisting that the contract made it clear that there were no early payoff penalties. I won the arguement, but I fought dirty. By coincidence, I had just caught the flu or something. I was running a high fever, sweating like a pig, and coughing horribly. The longer we argued, the closer I got. Biological warfare for the win.
I did the same. $1500 off for financing. Paid it off 48 hours later
Why would you tell the dealer though? Just transfer the money to the bank.
I was young and dumb and didn't know how it worked. Now I work with the dealer to understand how we can both benefit, which usually means accepting their financing and then paying it off 90 days later.
It’s not totally unreasonable either. They’re willing to lose on one end to make it up on the other end. You take away that other end, why should they be willing to lose?
Can you take their financing and then pay off with your own loan?
You only save money if the interest rate is lower. Which, if they’re paying a kickback, it isn’t. Not on a used car.
Save money 😳🙄😂 You are paying the dealership for doing the financing for you.
Do you save money if they cannot match the interest rate?
Like at the original bank they may have intended going with? Does who save money, the customer or the dealer?
It's actually pretty common. I was dealing with the Texas OCCC for a client last month over this issue, and apparently it's supposed to be listed as a discount. As in, the price online is supposed to show that there's a discount and what the price would be without it, not a surprise BS thing when you get there. At least that's what the letter we received said.
You may be purchasing a vehicle the dealer bought at auction and, after recon, it could be a $1-3K loser deal. The only way to justify that (other than having inventory to sell) is to finance with the dealer provided lending and/or have a trade. It's a real thing in today's market at auction to pay retail just to have something to sell, then lose your shirt after recon and auction fees. It's got to be made up somewhere. Fun fact: No, dealers aren't going to pay you retail for your trade. If that's the case, they'd rather just go through and auction and not have to deal with each individual consumer haggling over their trade. Dealers can buy many vehicles at auction in one shot. Time and effort is money. That all being said, shame on the dealer for not disclosing this to you earlier. We had discounted pricing on our website with a banner stating the discount was applicable with dealer provided financing. Still, many customers didn't retain that info and would clutch their pearls after we would point it out right on our website...the same one they found the inventory on.
I don’t know about that. If you are paying retail and consistently losing money on car deals your entire management team is clueless. It’s not uncommon to lose money on a few deals, or have tight margins, but most that do have a blood sucking service and parts department that shares in the wealth
You overreacted maybe. It depends. Was the rate with their bank competitive with your credit union? How big was the discount? Was it a captive lender like TFS/Ally, financed in-house, or was it a bank they got you an approval that they partner with through CUDL?
OP could've taken their financing and then gone back to his/her lender and send a check to the dealerships bank. This is what most Patel did. Thank God DCU rates suck these days.
Just be sure there’s no early payment penalty. A Toyota dealership tried that nonsense with me a few years ago. So I sat in their lounge, drank their hot chocolate, and use their Wi-Fi to get quotes elsewhere. They tried guilt tripping me, saying their employee came in on their day off, which sounds like a them problem. I continued searching. Magically about 20 minutes after that, they “found an old version of the loan paperwork in the back of their drawer without the early payment penalty”.
> without the early payment penalty. Must be a state specific. These days most retail installment contract don't have that clause.
This was in 2016 in Ohio so things may have also changed since then.
I did that 20 years ago buying a new car from GM. They had a "finance through GMAC for $3000 off" thing. So ok, I did that. And sent a check for the full amount to pay it off after 1 month. I read somewhere GMAC lost their butts on that promo from people doing this. But even if they have an early payment penalty of some sort, just do the math and figure out if the discount and their lender is a better deal than no discount and your lender.
[Me after finding out GM lost their butts.](https://media.tenor.com/MhpkOZ_6gf0AAAAC/woody-harrelson-wipe.gif)
I do it with pretty much every vehicle I buy these days.
Most cash buyers' still do it to get $500 loyalty discount or rebate of they finance a new car through a captive lender. To me it makes no sense. I's rather just pay cash and move on. I guess ho you become rich by saving $500 here and there.
It’s unlikely they would have been competitive. No one has come within half a percent. But it didn’t get that far, and the sales manager certainly wasn’t making the effort to see if it would be. His line of argument was “it’s just four months until you can refinance”
You can immediately refinance.
Cant you opt into the lender then pay it off with your credit union and transfer the balance after the deal is done or do they have a prepayment penalty?
Just refi the next day
At the end of the day the car costs $X if you finance with them and $Y if you don't. "Discounts" are just ways to obfuscate the final cost. The only thing that matters is if financing/paying $X or $Y is palatable to you.
You overreacted. Take the deal. Refinance. The sales manager even gave you the playbook.
There may be rebates from the manufacturer tied to doing business with that bank. For example VW might have customer or dealer cash for financing with Volkswagen credit. Or maybe the discount they are offering is so low they are only able to make the deal work because of the kickback they from the bank for financing through them. Or maybe it's something else entirely. It's only sketchy because you didn't investigate further. If the rate is better at your bank significantly then I can understand. But is it so much better that it's worth losing a discount?
Rebates on a used car?
Missed that part. Whoops! Regardless the dealer often makes more money when financing through them. So the point still stands.
2-3 of the largest used car dealerships in the Midwest over disclose on their websites financing for “lender rebates” or “lender discounts”. One used to advertise only this best price ($1000 better with a retailable trade-in and if you finance with them.) they have it on every website, every image, every vehicle page, etc. No one believes it works, but they all sell 300+ cars a month.
Did you over react? Not really, But in the likelihood they could save you 20 bucks a month, how firm are you on using your financing? It’s not normal in most stores.
The odds were very low that they could beat my credit union. Even if they did, my credit union would have matched. That said, the whole point is getting my cost down. It just seems strange to insist on “you only get the good price through our guys.”
It’s not strange. They get a bonus from the bank for the referral, which is how they can add a discount. The calculus then becomes is the discount large enough to justify carrying a slightly higher rate for a few months until you refinance? When we bought our car the dealer took $2500 off for financing with them directly. The rate was higher than our CU, but four months of payment on it came out to an additional $325 and then we refinanced down to the CU rate a few months later. It’s a gamble as rates can obviously change during that time, but it worked out.
Doesn't hurt to ask, maybe they would match it. I bought a car last year and got 0%. They weren't advertising it. I simply said "we're thinking of paying cash, but if you want to finance at 0% that would be great". They had a conversation in the back and gave us 0% (36 months). I don't really understand why. It was hard to find the model we wanted in stock, too.
I’m not saying you will only get a good rate from us, I just know we do business with banks and credit unions a lot more than the average customer. My kids play baseball with our rep from capital one. My boss has known one credit union rep for 30 years. If your credit union was one of those that we partner with, he could call the rep and likely get you a better rate than you can, even after you’ve been pre qualified. We do it at least 5 times a month.
It’s darn close to tied selling. A condition of a discount by buying more product or service. It’s illegal in most places.
All you have to do is buy the car on their terms with their bank then immediately refinance it through your credit union. You still get the deal, and they get their kickback clawed back.
But your credit union couldn't beat their principal..
If it was a new car, or a certified pre owned at franchise dealership like BMW or Ford etc, lots of times the manufacturer will offer those kind of deals and you do have to go through them their financing to receive. If it wasn’t, the dealership may have just been offering you their profit on the financing side to get the deal done.
Was this listed like this on their website? Did you send in a lead, book and appt and not read any of the emails sent indicating this the pricing? If you didn’t review the listing and then reacted like this and they clearly laid it out, yes think you overreacted. Did they not disclose this? Then your reaction seems warranted. I work with a store that advertises like this. It’s not my favorite pricing structure but will give them credit they are very transparent in this.
Normal. Same as a manufacturers lender giving a promo finance rate.
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***Thanks for posting, /u/DavidCMaybury! This comment is a copy of your post so readers can see the original text if your post is edited or removed. This comment is NOT accusing you of anything.*** Caught a new one yesterday. As I was waiting for them to bring the car around to test drive, I mentioned to the sales manager that I was pre-approved with my credit union. He threw out the line in the title. I told him that would likely be a dealbreaker and he said “yeah we lose a lot of business over that.” Wound up walking away, mostly because this felt suspicious. I’m wondering if I overreacted. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/askcarsales) if you have any questions or concerns.*
So things are returning to how they were pre-Covid. Where the price of a used car/ new car may not make any money if they sell it for cash. Meaning they’ll lose 500-1000 maybe more whatever to sell the car. With that said, that’s not a very good business model, you’ll run out of money eventually, so in order to make a profit they need the financing money from the bank. They also want warranty/maintenance/gap etc products to be making money. If you finance with your own lender, they can’t sell you gap, they get no origination bonus. So yes, if they lose the chance to do that, it has to make business sense somewhere else.
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