Quote:
Originally Posted by Zsteve
And the moral of the story is.....
get a pre approved loan from your bank and go in and say I have a preapproved loan for the price you showed him on the pape and say make it happen. Tell em dont worry about financing just get me this price or I walk.
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It isn't too well known, but dealers pick up a lot of their profit in the "finance manager's" office. It isn't just from the extras they try to sell, it is from the finance rate. Dealers get a rate from a bank and then they mark it up, just like they do for cars. So what they offer you isn't the bank rate, it is the bank rate plus what they are able to get out of you. The bank takes the loan at the original rate, and rebates the difference to the dealer.
This sort of behavior is illegal in most other places. The auto industry lobby has kept Congress from including car sales in these consumer protection laws. It is always preferable for you to do your own loan shopping before seeing a dealer. Banks can't mark up loans arbitrarily like car dealers.
Now when you go to the dealer, if the quoted rate is more than the bank offered, finance through the bank. Don't give the dealer the business.
One other thing; on occasion a dealer will "sell" a loan below cost. If they can't close a deal because the loan payment is too high, the dealer can give you the loan below the rate the bank quoted them. They will pay the bank the difference (it's just a lump sum when the loan is closed). If you get quoted 4.1% and the dealer offers 3.99% they may be eating the few hundred bucks it costs to get the sale.