Quote:
Originally Posted by Dayze
I would venture to say no. since financing it typically, I believe, done outside the dealership/manufacturer. sometimes you might find GM financing, or something of the like, but each time I've done it, they sell the loan off anyway.
|
Not quite how it works but the sentiment is the same.
The dealership doesn't make the loan then sell it off, they actually have a buy rate, and a sell rate.
Say you come in and buy a car, and the dealership says ok your rate is going to be 2.9%. Well, the dealership got a buy rate of 1.9%. Meaning the difference in interest amount the bank will collect over the life of the loan is 1%
So hypothetically lets say in this situation that amounts to another 800 bucks over the life of the loan. The bank actually pays a % of that number to the dealership for facilitating/bringin the loan to them. Depending on the lender, this % can vary, but there is where you make money on finance reserve, as a dealership.
Before anyone goes "OMG THEY ARE MARKING MY RATE UP!11!!" Keep in mind, the 'buy rate' the dealership gets typically cannot be gotten by you as a consumer from that bank any way, what the bank is doing is rewarding the dealer for feeding them loans. In simple terms, the dealership is basically just wholesaling them loan customers, and collect on the difference between the wholesale rate, and the retail rate.
Edit; To add to this, even when you buy a new car and take 0% or 1.9% financing on it, even the manufacturer will pay out a couple hundred bucks to the dealer, so no matter what, financing makes the dealer money, cash buyers or outside lienholders do not.