Dealer wants financing over cash. Must be some kickback to dealer for buyers who finance. Anyone know how much?

 

It's very ironic huh...they tell you they have no control over your APR, but then they push higher rates on you. Then if you nag enough, they'll go lower. I know they profit off the APR as well.

 

Has to be some kickback to get customers to finance vs. pay cash. Why else turn down cash? Especially since I told them I'd pay off in 30 days if I finance so there really isn't any savings with the APR etc.

 

Yes, a dealer makes money off of loans. That's not a secret and there is nothing wrong with it. You, as a customer have all the tools necessary to negotiate a good deal for yourself.

Also, just because a dealer makes money off of a loan, doesn't mean that it comes out of your (customer's) pocket.
Just keep that in mind. Don't automatically accuse dealers of being your enemy, or trying to rip you off. They can be your best friend if you play your cards right.......

 

no problem on the finance... agree to it on condition of getting $XXX additional discount, then pay off the loan with the finance company. just check the loan agreement for any early payoff penalties.

 

I think it is actually not well known but in addition to selling you a car, the dealer is selling you a loan. They get points (each point is one percent of the loan.) The higher the rate, the more points the dealer receives.

The same is true when you buy a house. The loan originator is rarely the mortage holder.

 

You are forgetting about the instances when the dealer sells the loan at the same rate it buys it for.
That happens all the time and the bank will still pay the dealer a little something for assigning the loan, but the customer doesn't lose anything.

 

1.9 on civics pays $100
flat for leases is $75.00
All others is about $50 per every $5000.00 loaned
Ie: $20,000 car = about $200.00

This is chicken feed, and is just a "Thank you for using us" payment to the dealer from the bank.

This is the approximate pay if the dealer gives you the going BUY RATE.

 

Dealers always make money on arranging loans, it's their way. It's the price we pay for the dealer to do all the paperwork involved in getting us the loan. When I bought my '87 Integra (in 1988) I received financing from GMAC because the dealership was affiliated with them and also sold GM vehicles. I also had a friend working at GMAC. I forget the actual numbers, but the APR on my loan was something like 10.5% and my friend at GMAC told me (in confidence for fear of losing his job) that I had been approved through GMAC for a rate of 9.5%, meaning the dealership was tacking on an additional 1% for itself. Just one more reason to pay off the loan early, which I did.

 

SPeaking as an ex-F&I guy even if I gave you the loan for the same APR I was getting it for, I would do so. It gave me a better shot at closing the extended warranty as well as tacking on life or aciddent/health insurance and that is where the real money is. I also got payed on percentage of deals that were financed vs. cash.