Can New Car Dealer be Honest

[RedLS1GTO]

Originally Posted by Bruze

When I bought my C6 ten years ago, I went into my local bank and inquired about the rate on a loan -- it's a great small bank, been with them for 42 years. I know the manager personally, and she said that they cannot match the rate that car dealers offer.

But you have to shop around. Sometimes a credit union gives the best rate.

The dealers are just a passthrough entity on "their" loans. If you actually look at the paperwork (which I know is asking too much for some ) all of the loan documents will have the bank header. The dealer won't even be mentioned outside of things related to the title transfer.

That agreement is 100% between the buyer and the bank.

The "profit" that a dealership sees from a loan is essentially nothing more than a referral fee. It's not much, and more importantly to the discussion, it doesn't change based on interest rate. Dealers don't make more by putting people in bad loans. It's actually usually the opposite. Dealers actually get less for higher risk (ie. higher rate) customers because the bank is more likely to have someone default on it.

[Onebadcad]

Originally Posted by RedLS1GTO

Skipping everything else, this is an absolute false pretense. Outside of Buy-Here-Pay-Here nonsense, individual dealers have absolutely 0 to do with the interest rate that a customer gets. That is all driven by the financial institution providing the loans. Dealers aren't the ones giving loans. If you don't like the rate, take it up with the bank, not the dealer.



Profit... for who?

If your claim is that the dealers are the ones who profit from high rates, I'd love to hear the methodology of how that happens.

Pretty certain that most stealerships can upsell the rate you qualify at in order to get a kickback, YSP yield spread premium, from the lender / bank.

With that said, always have your financing approved BEFORE you go to the stealership, if the stealership can beat it, go with them, if not, use your source.

[RedLS1GTO]

Originally Posted by Onebadcad

Pretty certain that most stealerships can upsell the rate you qualify at in order to get a kickback, YSP yield spread premium, from the lender / bank.

With that said, always have your financing approved BEFORE you go to the stealership, if the stealership can beat it, go with them, if not, use your source.

I have had agreements in place with 30+ banks. They are the same banks that work with the major OEM dealers. Not a single one of them has ever had any incentive on putting somebody in a higher interest rate loan. Not a single one. Ever.

[Bruze]

Originally Posted by RedLS1GTO

The dealers are just a passthrough entity on "their" loans. If you actually look at the paperwork (which I know is asking too much for some ) all of the loan documents will have the bank header. The dealer won't even be mentioned outside of things related to the title transfer.

That agreement is 100% between the buyer and the bank.

The "profit" that a dealership sees from a loan is essentially nothing more than a referral fee. It's not much, and more importantly to the discussion, it doesn't change based on interest rate. Dealers don't make more by putting people in bad loans. It's actually usually the opposite. Dealers actually get less for higher risk (ie. higher rate) customers because the bank is more likely to have someone default on it.

I don't care about any of that, all I care about is the interest rate.

[Onebadcad]

https://www.bankrate.com/loans/auto-...inancing/#what

What dealer financing is and how it works

Dealer financing is typically considered a last resort by most experts. Dealers make money off in-house financing because they mark up your offered rate. For example, if you could qualify for a loan at 7 percent through a bank, you may receive an offer of 9 percent through dealership financing.

https://www.realcartips.com/carloans...inancing.shtml

How Much Money Do Dealers Make on Car Financing?

When you get a car loan financed through a dealership, they're not actually the ones loaning the money.
Dealerships work with several banks and they simply arrange the financing for you. Just like any service where there's a middleman, you can expect to pay some sort of commission.

Dealers make their commission through what is known as a finance reserve. This is an extra percentage added to your interest rate - usually 1 to 3%.

For example, a dealer may be able to get you financed at a 5% interest rate through one of their lending partners. This is called the "buy rate" - the rate at which the bank is willing to loan you the money.

The dealer will keep this figure hidden from you. What they will show you is the "sell rate", the interest rate that includes their commission. In this case, it may be 7%.

This 2% difference is where the dealer makes their money when they arrange the financing for you.

[6spdC6]

Originally Posted by Onebadcad

https://www.bankrate.com/loans/auto-...inancing/#what

What dealer financing is and how it works



https://www.realcartips.com/carloans...inancing.shtml

How Much Money Do Dealers Make on Car Financing?

That is why you should have a high credit rating and do your homework. If financing is necessary you know the numbers from your local banks and CUs

Dealers cannot hose you that way. Only once did a dealer beat the best rate I could get from local sources and that was a incentive going on by GM.

[Onebadcad]

Originally Posted by 6spdC6

That is why you should have a high credit rating and do your homework. If financing is necessary you know the numbers from your local banks and CUs

Dealers cannot hose you that way. Only once did a dealer beat the best rate I could get from local sources and that was a incentive going on by GM.

I agree.
For mortgages and car loans do your homework, as many wealth / investment companies have alliances in place to provide lower-than-market rates for their customers through non-subsidiary companies.

I bought my C7Z in 2017, learned about this, my rate was 1.75% for 60 months, about 1.00% lower than I could get at my local bank.
U.S. Bank was the auto lender, never used them before or after.

[donuts]

Originally Posted by Onebadcad

Pretty certain that most stealerships can upsell the rate you qualify at in order to get a kickback, YSP yield spread premium, from the lender / bank.

With that said, always have your financing approved BEFORE you go to the stealership, if the stealership can beat it, go with them, if not, use your source.

Stealth post evaporator Batman … redLs1 hit the trail for some reason.

True story, at ford dealer buying new super duty, get to the finance ****ers office and he goes through the usually scam script and I tell him no on all his marvelous offers, he then proceeds to tell me about all of his fabulous financing options . Chase was 5% but no factory cash , BOA was 4% , and Ford was offering $5000 cash if you financed with them and he said rate was 7% .. I laughed .. I told him I knew what my credit score was and to quit ****ing around. He picked up the phone and acted like he called Ford finance office to see if he could get rate reduced , (I think he called his wife ) anyway he said that was as good as they could do. I said fine . He said to come back in 60 days and he would refi with other lender to get rate down but he would still get Ford kickback and I would get my cash. I said fine just get me the **** outa here. I get a letter from Ford about two weeks later stating that after they reviewed my application and finance agreement that there would be a rate reduction to 2.9% , which was the offer at the time. I called the dealer , who I knew personally and told him what had happened and the prick got fired . I bought another truck about 2 years later from same shop and dealer friend had to tell the new finance prick to skip the bullshit and if he even thought about trying to scam me he would get his ass kicked.

So my new conclusion is some dealers can be good people but they hire guys with experience who are greedy cheating sorry ass pricks who know how to screw people over.

[RedLS1GTO]

Originally Posted by donuts

Stealth post evaporator Batman … redLs1 hit the trail for some reason.

True story, at ford dealer buying new super duty, get to the finance ****ers office and he goes through the usually scam script and I tell him no on all his marvelous offers, he then proceeds to tell me about all of his fabulous financing options . Chase was 5% but no factory cash , BOA was 4% , and Ford was offering $5000 cash if you financed with them and he said rate was 7% .. I laughed .. I told him I knew what my credit score was and to quit ****ing around. He picked up the phone and acted like he called Ford finance office to see if he could get rate reduced , (I think he called his wife ) anyway he said that was as good as they could do. I said fine . He said to come back in 60 days and he would refi with other lender to get rate down but he would still get Ford kickback and I would get my cash. I said fine just get me the **** outa here. I get a letter from Ford about two weeks later stating that after they reviewed my application and finance agreement that there would be a rate reduction to 2.9% , which was the offer at the time. I called the dealer , who I knew personally and told him what had happened and the prick got fired . I bought another truck about 2 years later from same shop and dealer friend had to tell the new finance prick to skip the bullshit and if he even thought about trying to scam me he would get his ass kicked.

So my new conclusion is some dealers can be good people but they hire guys with experience who are greedy cheating sorry ass pricks who know how to screw people over.

What exactly did I do?

What I deleted was that YSP is illegal and applied almost exclusively to mortgages.

Originally Posted by 6spdC6

That is why you should have a high credit rating and do your homework. If financing is necessary you know the numbers from your local banks and CUs

Dealers cannot hose you that way. Only once did a dealer beat the best rate I could get from local sources and that was a incentive going on by GM.

You really think that the Credit Union and local bank branch doesn't have that baked in as well?

The dealer gets a reserve. It's not much. It's also shown in the Truth in Lending section of any loan paperwork. It's not something that is snuck in undetected. If you get a better rate somewhere else, great. Saves me the time of trying to figure out how many times someone lied on the credit application because they didn't think anybody would notice.

[RedLS1GTO]

Also, this thread makes me so glad that I decided to get out of the actual ownership side of the dealership.

It seems like every dipshit that walks through the door is hopped up on nonsense that they saw on youtube thinking they are being ripped off. ...and dammit, I'm not going to do it to them.

You think that the finance guy is an ass? Read through this thread and imagine having to deal with this bullshit 40 hours a week. (much more than that if you actually own the place)

[Onebadcad]

Car buyers are easily bigger aholes than anyone / anything at the dealership.
They will always have lower income and worse credit than stated, and will continue that lie even after you prove them wrong.

My 20-year old nephew has been selling new cars for about 3 months.
He converts maybe 25% of buyers that need financing.
The other 75% are a total waste of his time, there to tire kick and fantasize, as not qualified buyers, which they already know.

[dvarapala]

Whenever I am buying a new car I go to my Credit Union and get approved for a car loan before setting foot inside a stealership. Then when the F&I guy tries to sell me on the stealership's financing I show them the rate I'm approved for and tell him if they can beat it they get my business.

So far not one of them ever has.

Likely the only way it's possible is if the manufacturer is offering special financing, but even then this is usually in lieu of a cash rebate which is usually worth more than I would save in interest.

[6spdC6]

Originally Posted by RedLS1GTO

What exactly did I do?

What I deleted was that YSP is illegal and applied almost exclusively to mortgages.



You really think that the Credit Union and local bank branch doesn't have that baked in as well?

The dealer gets a reserve. It's not much. It's also shown in the Truth in Lending section of any loan paperwork. It's not something that is snuck in undetected. If you get a better rate somewhere else, great. Saves me the time of trying to figure out how many times someone lied on the credit application because they didn't think anybody would notice.

It also cuts right through the bullshit fast. At that point all the FM is going to do is TRY to sell me expensive add ons and financing. I do not do add ons. As far as fiance I simply say here is my rate, one word answer, can you beat it yes or no. Saves a lot of time.

I have top credit and on some occasions I simply do a check. (They really do not like that.)

[RedLS1GTO]

Originally Posted by 6spdC6

I have top credit and on some occasions I simply do a check. (They really do not like that.)

What do you check... and why would anybody not like it?

Top tier credit is easy. Here's your rate. Here are the banks that I looked at. If you don't like it? Great, come back with a check from whatever bank you want.

[RedLS1GTO]

I have bought many cars from dealerships. I can say with complete certainty that I have never been ripped off or "hosed" in any way. I have also never had to act like a dick or "do something that they hate" to ensure that. I've walked away from deals I didn't like. I've talked through some things that I didn't like but I've never had to pull out some bag of tricks to make it happen.

I've spent a hell of a lot of time on both sides of the desk. I genuinely don't understand the combat mentality towards buying a car.

It's a business negotiation just like any other.

[6spdC6]

Originally Posted by RedLS1GTO

What do you check... and why would anybody not like it?

Top tier credit is easy. Here's your rate. Here are the banks that I looked at. If you don't like it? Great, come back with a check from whatever bank you want.

I think they do not like it because they do not get a chance to run numbers by you. By not needing fiance they only have the paperwork to do without gaining any more chances of getting more money.

[RedLS1GTO]

Originally Posted by 6spdC6

I think they do not like it because they do not get a chance to run numbers by you. By not needing fiance they only have the paperwork to do without gaining any more chances of getting more money.

I'm not arguing in this case. I genuinely don't follow what it is that you are checking that prevents them from running something by you. Maybe reading comprehension is not my forte today.


EDIT:

Holy shit.

Nevermind.

You mean you pay with a check. Like I said. Reading comprehension.

[Bruze]

Originally Posted by 6spdC6

It also cuts right through the bullshit fast. At that point all the FM is going to do is TRY to sell me expensive add ons and financing. I do not do add ons. As far as fiance I simply say here is my rate, one word answer, can you beat it yes or no. Saves a lot of time.

I have top credit and on some occasions I simply do a check. (They really do not like that.)

The last "finance guy" (they're just up-sellers) I dealt with was at West Herr Mazda in Canandaigua, NY about a year and a half ago.

He was a complete asshole. He started his spiel about all the extra warranties available yadda yadda. I said "Are these cars so poorly built that we need warranties beyond the manufacturer's?" He didn't find that funny.

Finally I said to him that I'm not buying any of that crap, so can we move on? He said "Well, a lot of wealthy people don't need these warranties . . . " GFY.

There are numerous other reasons I will never go back there for anything. My backup camera is working intermittently, still under warranty, but I will drive to the next nearest dealer, 10+ miles away to get it fixed.

[donuts]

Originally Posted by RedLS1GTO

Also, this thread makes me so glad that I decided to get out of the actual ownership side of the dealership.

It seems like every dipshit that walks through the door is hopped up on nonsense that they saw on youtube thinking they are being ripped off. ...and dammit, I'm not going to do it to them.

You think that the finance guy is an ass? Read through this thread and imagine having to deal with this bullshit 40 hours a week. (much more than that if you actually own the place)

Speaking of gaslighting Batman.. sounds like you could be one of them.

I’ve experienced the stupid shit from ****wad finance guys, from Porsche dealerships to Ford dealerships, I’ve only ran across a few who weren’t total dicks trying to take advantage of your ignorance. I don’t need to watch YouTube.

Imagine being a finance guy that doesn’t lie, gaslight, and try to cheat his customers out of their hard earned cash .. his 60 hour work week is tiresome perhaps but he’s trusted and good folk aren’t pushed to fight for their lives to make a purchase.

[Bruze]

Originally Posted by donuts

Speaking of gaslighting Batman.. sounds like you could be one of them.

I’ve experienced the stupid shit from ****wad finance guys, from Porsche dealerships to Ford dealerships, I’ve only ran across a few who weren’t total dicks trying to take advantage of your ignorance. I don’t need to watch YouTube.

Imagine being a finance guy that doesn’t lie, gaslight, and try to cheat his customers out of their hard earned cash .. his 60 hour work week is tiresome perhaps but he’s trusted and good folk aren’t pushed to fight for their lives to make a purchase.

I wonder how car dealers got this reputation . . . ? Hmmm . . .



From post #15:

Originally Posted by Bruze

A relevant point I just thought of: My HS buddy's older brother told me this in the late '60s (he would have been in his early-mid 20s at the time and was a real gearhead) paraphrased:

"All car dealers are assholes and they all know it. But they don't care, because they know that you'll get pissed at them and won't come back, but there are only so many dealers in the area so you'll end up going back to them at some point."

"There's nothing new under the sun." -- King Solomon