Dealer financing
Thread Starter
Safety Car
Joined: Dec 2009
Posts: 4,308
Likes: 3,206
From: Oro Valley Arizona
Dealer financing
From the OP re: Phoenix dealer saying they will require him to finance the car. Otherwise he doesn't take delivery. There is method to the seeming madness. Greed comes immediately to mind.
Online source:
Most car dealers make money on financing by increasing the intereste rate the lender charges and pocketing the difference. This is called "finance reserve" and most dealers will charge up to 2.5% in additional interest, although there are cases where they will raise the rate by as much as 8%.
Dealers are not required to disclose the finance reserve , but you can ask them to show you the approval from the bank in order to see what rate you actually qualified for and whether or not the dealer is charging you extra on top of that.
Online source:
Most car dealers make money on financing by increasing the intereste rate the lender charges and pocketing the difference. This is called "finance reserve" and most dealers will charge up to 2.5% in additional interest, although there are cases where they will raise the rate by as much as 8%.
Dealers are not required to disclose the finance reserve , but you can ask them to show you the approval from the bank in order to see what rate you actually qualified for and whether or not the dealer is charging you extra on top of that.
Last edited by papillion; Jul 10, 2020 at 03:55 PM.
Le Mans Master
Joined: Dec 1999
Posts: 6,516
Likes: 4,843
From: One Hour From Boston!
Doubt financing at the dealer is ever a good choice, except when they’re offering 0%. Which leaves:
* Pay cash and never worry about a payment, or...
* Leave your cash in investments that (hopefully) pay better than the interest rate of a car loan.
My bank gave me a HELOC (Home Equity Line of Credit) with a 1.75% rate. When my C8 arrives, I’ll probably do that, keep my money in investments paying more than 1.75% interest and use the 1.75% HELOC.
* Pay cash and never worry about a payment, or...
* Leave your cash in investments that (hopefully) pay better than the interest rate of a car loan.
My bank gave me a HELOC (Home Equity Line of Credit) with a 1.75% rate. When my C8 arrives, I’ll probably do that, keep my money in investments paying more than 1.75% interest and use the 1.75% HELOC.
Banned Scam/Spammer
Joined: Aug 2015
Posts: 3,166
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Why did you need to start a new thread on this? Wasn't the OP's thread sufficient?
https://www.corvetteforum.com/forums...-the-sale.html
https://www.corvetteforum.com/forums...-the-sale.html
Instructor
Joined: Mar 2019
Posts: 201
Likes: 236
From: New Jersey
I am financing 1/2 my car.
I got a pre-approval from a credit union I have a loan with on my 3500 Silverado. They got me a rate of 3.1% / 72 months.
My dealer at Kerbeck said as long as I financed over $40K, he got me 2.49% / 72 months.
Every car I buy through a dealer (new or used) I finance 1/2 if I can get less than 3.5% - Over 6 years I can make the difference and I am never backward in a vehicle.
I got a pre-approval from a credit union I have a loan with on my 3500 Silverado. They got me a rate of 3.1% / 72 months.
My dealer at Kerbeck said as long as I financed over $40K, he got me 2.49% / 72 months.
Every car I buy through a dealer (new or used) I finance 1/2 if I can get less than 3.5% - Over 6 years I can make the difference and I am never backward in a vehicle.
Drifting
Joined: Feb 2002
Posts: 1,327
Likes: 257
From: Oklahoma City OK
Why did you need to start a new thread on this? Wasn't the OP's thread sufficient?
https://www.corvetteforum.com/forums...-the-sale.html
https://www.corvetteforum.com/forums...-the-sale.html
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Racer
Joined: Feb 2020
Posts: 483
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From: Houston, TX
From the OP re: Phoenix dealer saying they will require him to finance the car. Otherwise he doesn't take delivery. There is method to the seeming madness. Greed comes immediately to mind.
Online source:
Most car dealers make money on financing by increasing the intereste rate the lender charges and pocketing the difference. This is called "finance reserve" and most dealers will charge up to 2.5% in additional interest, although there are cases where they will raise the rate by as much as 8%.
Dealers are not required to disclose the finance reserve , but you can ask them to show you the approval from the bank in order to see what rate you actually qualified for and whether or not the dealer is charging you extra on top of that.
Online source:
Most car dealers make money on financing by increasing the intereste rate the lender charges and pocketing the difference. This is called "finance reserve" and most dealers will charge up to 2.5% in additional interest, although there are cases where they will raise the rate by as much as 8%.
Dealers are not required to disclose the finance reserve , but you can ask them to show you the approval from the bank in order to see what rate you actually qualified for and whether or not the dealer is charging you extra on top of that.
Team Owner
Joined: Sep 2010
Posts: 32,290
Likes: 4,625
Doubt financing at the dealer is ever a good choice, except when they’re offering 0%. Which leaves:
* Pay cash and never worry about a payment, or...
* Leave your cash in investments that (hopefully) pay better than the interest rate of a car loan.
My bank gave me a HELOC (Home Equity Line of Credit) with a 1.75% rate. When my C8 arrives, I’ll probably do that, keep my money in investments paying more than 1.75% interest and use the 1.75% HELOC.
* Pay cash and never worry about a payment, or...
* Leave your cash in investments that (hopefully) pay better than the interest rate of a car loan.
My bank gave me a HELOC (Home Equity Line of Credit) with a 1.75% rate. When my C8 arrives, I’ll probably do that, keep my money in investments paying more than 1.75% interest and use the 1.75% HELOC.
Team Owner
Joined: Apr 2008
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From: Middle TN by way of KY, OH, VA, IL, CA, FL, NY, SC, HI
Melting Slicks
Joined: Aug 2005
Posts: 2,600
Likes: 784
From: Scottsdale Arizona
You must finance through the dealership not through your own source which for me would be USAA if I needed it.
Melting Slicks
Joined: Sep 2002
Posts: 3,466
Likes: 149
From: Earth
From the OP re: Phoenix dealer saying they will require him to finance the car. Otherwise he doesn't take delivery. There is method to the seeming madness. Greed comes immediately to mind.
Online source:
Most car dealers make money on financing by increasing the intereste rate the lender charges and pocketing the difference. This is called "finance reserve" and most dealers will charge up to 2.5% in additional interest, although there are cases where they will raise the rate by as much as 8%.
Dealers are not required to disclose the finance reserve , but you can ask them to show you the approval from the bank in order to see what rate you actually qualified for and whether or not the dealer is charging you extra on top of that.
Online source:
Most car dealers make money on financing by increasing the intereste rate the lender charges and pocketing the difference. This is called "finance reserve" and most dealers will charge up to 2.5% in additional interest, although there are cases where they will raise the rate by as much as 8%.
Dealers are not required to disclose the finance reserve , but you can ask them to show you the approval from the bank in order to see what rate you actually qualified for and whether or not the dealer is charging you extra on top of that.
Lastly most Chevrolet dealers will not take the “you must finance with us” approach to avoid a potential bad survey “CSI” for the dealership.
Pro
Joined: May 2005
Posts: 534
Likes: 158
From: Treasure Coast FL
This really isn’t the case and I think very few and far between examples of this happening. Most C8 buyers will have a 740 plus credit score. Most dealers are not going to try to hold rate on a C8 customer. Most will want the opportunity to match or beat the customers credit union or bank, just so they can make the flat that pays the dealer. It’s usually not much as many have trades or significant money down. The less the customer finances the less dealer makes in reserve.
Lastly most Chevrolet dealers will not take the “you must finance with us” approach to avoid a potential bad survey “CSI” for the dealership.
Lastly most Chevrolet dealers will not take the “you must finance with us” approach to avoid a potential bad survey “CSI” for the dealership.
If I finance, I usually chose to do the dealer but always call my banks and get quotes and dealers always match them. They still make money on it, get their finder commission.
Melting Slicks
Joined: Oct 2016
Posts: 2,876
Likes: 2,506
Nothing says the dealer has to show you the "approval" from the bank and certainly nothing that says they must show you their "buy rate". Yes, the dealer does make money selling financing and in many cases that is one of the primary sources of income in the store.
That said, there is also nothing that says you can always get a better financing deal from someone else even if the dealer is making money. Dealers are in a position to channel a large volume of financing to particular sources who are in the business to buy those loans. As a result, those lenders often make concessions for that volume that makes the dealer very competitive. Also, dealers have access to the manufacturers captive finance arms and often manufacturers subsidize their rates as an incentive to sell vehicles.
Someone else stated to do your finance shopping before encountering the dealer. Sage advice. Know your options for comparison, don't buy unneeded finance products, and make smart decisions. One of the biggest mistakes I saw shoppers make was to bargain like crazy for days on the price of the vehicle and then get totally put to sleep by the F&I guy.
That said, there is also nothing that says you can always get a better financing deal from someone else even if the dealer is making money. Dealers are in a position to channel a large volume of financing to particular sources who are in the business to buy those loans. As a result, those lenders often make concessions for that volume that makes the dealer very competitive. Also, dealers have access to the manufacturers captive finance arms and often manufacturers subsidize their rates as an incentive to sell vehicles.
Someone else stated to do your finance shopping before encountering the dealer. Sage advice. Know your options for comparison, don't buy unneeded finance products, and make smart decisions. One of the biggest mistakes I saw shoppers make was to bargain like crazy for days on the price of the vehicle and then get totally put to sleep by the F&I guy.
Race Director
Joined: Aug 1999
Posts: 13,300
Likes: 2,510
From: Bluffton SC via Canton Oh
This will be my 3 rd corvette at the same dealer. We help each other out. I finance some of each car with him assuming it does not cost me more money. It’s like allowing them to activate on star .....I don’t want or need on star but last time they were getting $100 kick back to activate it at delivery.
And in return I get a nice discount on my corvette. Not sure in the c8 as he has to see what monies are available from gm......marketing and all that stuff.......but I got 7500 off a 16 z.
Yea I’ll finance with my friend the dealer if we can help one another.
Imho people always want to have a defensive or adversarial approach to doing business. When you approach it as a partnership it’s sometimes amazing how well things work out.
And in return I get a nice discount on my corvette. Not sure in the c8 as he has to see what monies are available from gm......marketing and all that stuff.......but I got 7500 off a 16 z.
Yea I’ll finance with my friend the dealer if we can help one another.
Imho people always want to have a defensive or adversarial approach to doing business. When you approach it as a partnership it’s sometimes amazing how well things work out.
Race Director
Joined: Aug 2015
Posts: 12,263
Likes: 4,755
From: SE WI
If it's GM finance, he got docked from GM. You have to wait till after the 3rd month to pay it off or the dealer has to refund the incentive they got from GM. In my case, I like the dealer, so I worked with them. I got the $1000 discount, paid about $350 in interest to GM financial, which left me with $650. I was ok with that. If you hate the dealer pay it off right away. GM Financial customer service confirmed that there was no early payoff penalty. But the dealer has to refund it all if you pay it off before you 3rd scheduled payment calendar date. I've purchased two new C7's from this dealer and will very likely order my C8 from them. I want to keep a good relationship with them. It's definitely good right now.
Last edited by Zjoe6; Jul 12, 2020 at 09:48 AM.
Melting Slicks
Joined: Aug 2005
Posts: 2,600
Likes: 784
From: Scottsdale Arizona
If it's GM finance, he got docked from GM. You have to wait till after the 3rd month to pay it off or the dealer has to refund the incentive they got from GM. In my case, I like the dealer, so I worked with them. I got the $1000 discount, paid about $350 in interest to GM financial, which left me with $650. I was ok with that. If you hate the dealer pay it off right away. GM Financial customer service confirmed that there was no early payoff penalty. But the dealer has to refund it all if you pay it off before you 3rd scheduled payment calendar date. I've purchased two new C7's from this dealer and will very likely order my C8 from them. I want to keep a good relationship with them. It's definitely good right now.
