KBJCpilot From United States of America, joined May 2012, 95 posts, RR: 8 Posted (10 months 4 weeks 10 hours ago) and read 1532 times:
I have been working with a local dealership to buy my son a car. After the negotiating we ended up meeting with the finance guy whose job it was to sell us additional products and services. When we were negotiating with our salesman we agreed on a cash price and maximum monthly payment. When we asked him what the interest rate was he said that we'd have to ask the F&I guy.
So we visit the F&I guy and he quotes us our payment. When we ask for the interest rate he says 9.9% for 48 months. Now we just purchased a different car a few months ago and got 2.75% for that loan so we asked him why the difference. He said that 9.9 was the maximum percentage we would pay and although he may be able to find a lower amount 9.9 was the best he could do today.
I called our bank and was told that we could get the same car for a few percentage points less then we were being quoted. We told him this and he changed the paperwork to reflect the new APR.
I asked him what would have happened if the bank had come back with 6.75 or 7.25 after we had left the lot and had signed for the 9.9%. He said that we'd be stuck with the 9.9% rate. Which makes me angry.
So my question is this: How much of a kickback would the dealer receive if he wrote the deal for a higher ARP? And does the bank spiff them more if they get deals signed for higher APRs?
BMI727 From United States of America, joined Feb 2009, 14329 posts, RR: 26 Reply 2, posted (10 months 4 weeks 8 hours ago) and read 1479 times:
Quoting KBJCpilot (Thread starter): When we were negotiating with our salesman we agreed on a cash price and maximum monthly payment.
You probably shouldn't be talking any monthly payments with the salesman.
Quoting DesertJets (Reply 1): If your bank or credit union can offer you a better rate I'd certainly go down that route.
You should talk with your bank before going to the dealer to know where you stand. That way you know what a good deal is. The dealer really wants to get the highest interest rate so they get the most when they turn around and sell the loan to a bank.
Why do Aerospace Engineering students have to turn things in on time?
KBJCpilot From United States of America, joined May 2012, 95 posts, RR: 8 Reply 3, posted (10 months 4 weeks 8 hours ago) and read 1471 times:
We ended up getting a rate from our credit union for far less than the dealer was going to offer. I was just wondering how the dealer got comp'd and how the dealer is spiffed by the bank. I guess it's wondering how the game is played on the back end.
BMI727 From United States of America, joined Feb 2009, 14329 posts, RR: 26 Reply 4, posted (10 months 4 weeks 7 hours ago) and read 1431 times:
Quoting KBJCpilot (Reply 3): I was just wondering how the dealer got comp'd and how the dealer is spiffed by the bank.
The dealer sells the car and that's it, the loan is with the bank. Dealer financing makes money by them selling loans to a bank.
I was at a car dealer about a month ago and they seemed pretty much hell bent on me financing a car I wanted to pay cash for. Suffice to say I didn't buy there, but not just because of that. The salesman took it upon himself to tell me what car I wanted and there's nothing they could do to piss me off more.
Why do Aerospace Engineering students have to turn things in on time?
dl021 From United States of America, joined May 2004, 11433 posts, RR: 81 Reply 5, posted (10 months 4 weeks 5 hours ago) and read 1381 times:
OK..so what you do is go ahead and finance the car with your bank at home and pay off the note (assuming it's simple interest) with the finance company arranged by the car dealership. Email me for details or questions.
F&I managers are tasked with making a profit for the dealership, and the earn the dealership a commission from the finance company for every loan they place. Your bank earns a profit every time it lends you money, too. Rates are negotiable, and you just have to be aware of your options prior to negotiating with any of the players in this arena.
Hope you're enjoying the new ride....it's always exciting having new wheels!
Flighty From United States of America, joined Apr 2007, 7441 posts, RR: 2 Reply 6, posted (10 months 4 weeks 2 hours ago) and read 1341 times:
Quoting KBJCpilot (Thread starter): So my question is this: How much of a kickback would the dealer receive if he wrote the deal for a higher ARP? And does the bank spiff them more if they get deals signed for higher APRs?
It's his job to charge you $1,000,000 if he can get away with it. It's nothing personal, it's business (he's not your friend). Each interest rate carries with it a market value of the bond. Each point of interest is real dollars in the guy's pocket.
Personally I'd say "hell no" to borrowing money at 10% (or even 6%) just to buy a car. If you have cash in the bank earning less than 6%, use the cash instead. If there is no cash in the bank... probably don't go car shopping. But most Americans do anyway, so do whatever you feel like.
zippyjet From United States of America, joined Sep 2001, 4724 posts, RR: 13 Reply 7, posted (10 months 4 weeks 2 hours ago) and read 1341 times:
I tried selling cars for one month and the only thing I got from the experience was diarrhea from eating too much junk food.
And, this was 1989 at a Toyota dealership. This was the heyday of Toyota in the USA! You could get fired for just working your schedule. They expected you to work 6 days a week on straight commission from open to close 0900--2100!. I learned one thing about car sales. Sure, the gift of gab and product knowledge were important but, you had to be a fast talker with finance. And there was one guy who made over $100,000 annually. (This was 1989) so that was a nice piece of change. He was organized like an OCD nazi!. He had "tickler files." If you bought a car from him he even had your cat's birthday and when kitty had her birthday he sent you a birthday card saying "have your furry friend purr when you drive a new Toyota! Each dealership has different compensation. This was also the pre-Car Max/pre Saturn era.
Airstud From United States of America, joined Nov 2000, 1855 posts, RR: 1 Reply 8, posted (10 months 4 weeks ago) and read 1294 times:
I guess I ought not to be surprised - and in fact am not surprised - by the sharkiness of car salesfolk.
But, I am planning to lease, say, a Mazda3 or Toyota Corrollaness within the next coupla weeks - what sort of traps am I - a total car-buying/leasing n00b - liable to fall into?
I want just wheels; a no frills, safe, reliable, fuel-efficient buggy with a manual transmission (OK, and air conditioning). Lotsa ads in the Sunday papers here in Minneapolisness/St Paul saying you can get that for $200 month.
nwaesc From United States of America, joined Aug 2007, 3324 posts, RR: 9 Reply 9, posted (10 months 3 weeks 6 days 19 hours ago) and read 1242 times:
Quoting KBJCpilot (Reply 3): We ended up getting a rate from our credit union for far less than the dealer was going to offer.
We actually had just the opposite experience lately. We bought an '08 model from a large local dealer this past fall. I had the numbers through both our regular bank and our credit union in hand, and was just waiting for our F&I guy to come back with a crazy interest rate. They rate they quoted was actually lower! Also, he had everything "extra" broken out (road hazard, extended warranty, etc.), and the prices for each. He gave it all to us to mix & match (or decline) as we pleased, with no pressure (!).
"Nothing ever happens here, " I said. "I just wait."
dl021 From United States of America, joined May 2004, 11433 posts, RR: 81 Reply 10, posted (10 months 3 weeks 6 days 18 hours ago) and read 1231 times:
Look...buying a car ought to be fun. You never get the chance to spend this kind of money, and you're doing it on something you will be spending alot of time with.
Go...pick out the three best rated cars you like the looks of.....find the nearest dealership to you....ask the receptionist who is the best salesman at the car dealership .... Seriously...she knows....tell that person you want to see the car, hear why it's a good choice, see why the dealership is a good choice...i.e. service department etc...drive it on a good test drive to see if you are going to enjoy it.....and only then discuss money if you are ready. Start with the least expensive model that meets your needs, as you can always go up in price it it's hard to come down if you start looking too high.
Then just talk price...not payments. The lowest price is going to get you the lowest payment, but focusing on payment could lead you to not discussing price at all, and paying too much...from your perspective.
If there is a lease deal advertised understand that it's the lowest priced unit on the lot, and has the least number of options, generally. But still focus on price AFTER you ensure that the salesperson, dealership and car are going to meet your needs. You will pay a little extra for the best of all the above. A good salesperson and dealership are useful to you down the road, and enhance your ownership experience. You can always use a good car connection.
Once you're in the "box" with the finance manager, after you have settled on price, then understand its that persons job to sell you insurance and service contracts and other stuff as well as a rate. Go forearmed with a rate from your bank, and know what all their advertised offers are. If they can beat your bank then great. I not then write a check and they'll hold it till your bank funds the loan. If they have a special rate make sure you read the fine print and will qualify...usually you have to have excellent credit and a down payment. Same for leases. Learn the lease formula (found online) so you can double check their math. Remember dealer doc fees and the lease acquisition fee charged by dealers and banks everywhere. It's not a cheat if they tell you about it, and everyone really does pay these things.
Feel free to email me and ask about these things.
Smile, be friendly, have a good time....be prepared to walk away if you're not getting the deal you want, but understand that dealerships have to make a profit, and that if you take care of them they usually value you and take care of you. Ask for references and be friendly, knowledgable and in charge of the process.
Ken777 From United States of America, joined Mar 2004, 7453 posts, RR: 5 Reply 11, posted (10 months 3 weeks 6 days 8 hours ago) and read 1159 times:
Quoting Airstud (Reply 8): But, I am planning to lease, say, a Mazda3 or Toyota Corrollaness within the next coupla weeks - what sort of traps am I - a total car-buying/leasing n00b - liable to fall into?
One way to make life easier for you is the "car sites" like edmunds.com. They give you a lot of information, including a Fair Market Value for various ZIP codes.
the first thing you might want to do is to check for rebates & Incentives. Click on New Cars and you'll see the incentives option. It lists them by brand and includes incentives to dealers. You can also check cities reasonably close to you in case there is a better price. (I only have bought Toyotas in Joplin because Oklahoma dealers have stiff increases because of their distributor.)
You can also reap some good information under the Tips & Advice column, and customer reviews of cars you are considering.
asuflyer05 From United States of America, joined Feb 2004, 2369 posts, RR: 3 Reply 12, posted (10 months 3 weeks 5 days 19 hours ago) and read 1101 times:
I've found most banks limit the rate markup to right around 2%. This can vary by bank, state, type of vehicle so YMMV. If the dealer contracts the customer at the buy rate then most banks pay a small flat fee to the dealer.