New Car Dealer REQUIRES Financing

[dheb]

My strategy with a dealer is to let them finance so I can get the best price, and they think they'll make money from the loan; then pay off the loan before the first payment's due. They don't need to know I'm not going to pay all that interest while we're negotiating price.

 

[anothercog]

Most of the car buying you Tubers out there say to never admit you are paying cash until you have nailed down a price. Even then they may have incentives that can only be used with financing.

The last vehicle I purchased new I took all the financing incentives and then paid it off the following month.

Cash is not king in the new car business as manufacturers make more money financing than making vehicles.

 

[KarenF]

I have bought my last several cars in the following way:

1. Check out the make model and features I want on line
2. Test drive a few
3. Check out values on TruCar
4. Email around to several dealers throught their online sites or fleet sites asking if they have the specific car with features and color etc I want in stock
5. If so ask for a price by email
6. Visit the best one to check out the car ask about incentives
7. Confirm price (I have the email) and if they fudge or try to add on, walk
8. Evaluate if financing gets a discount
9. Choose financing or cash
10. Decline all pressure for upsales
11. Sign
12. Drive away

The process has been amazingly painless.

This is exactly what DH did when we bought our 2020 Subaru. The salesman said, I see you have the TruCar price. Do you want the car? We said yes. Done. It was painless. The second I get a sleazy vibe from a car salesman I walk.

 

[Global Wizzo]

I accompanied DD while she was shopping for a new car. She was focused on the Kia Telluride. The local dealer kept pushing financing, by offering a supposed discount. When asked what the interest rate was, he replied "whatever the current rate is. It doesn't matter since you intend to pay it off in 3 months anyway." Both the finance manager and sales manager repeated this obfuscation. We walked.
When the salesman made a follow-up call, DD told him the process felt sleazy and said she just wanted cash-only price. He had to call back, then gave her a higher number unless she agreed to financing, and STILL would not reveal interest rate.
A second Kia dealer, by phone, was a similar experience. There was a happy ending, she got the car from a 3rd dealer without that financing B.S. But this financing requirement is a new wrinkle for me. Does anyone know if this was a fluke, perhaps only with Kia, or is this the latest flim-flam for many new car dealers?
ETA: DD's FICO score is 820 or so.

Several years ago, I had to replace a vehicle while on a trip. Ended up at a Chrysler dealer that actually had what I wanted in stock. Routine haggling over trade and price. $1000 disc if I financed. Did the cc payment for 5K or so, trade and financed about 35K. Worst part is they really screwed up the title work. I ended having to walk it through myself, paying it off and getting a clear title took a lot of work since original loan had to be cleared. They never did the vehicle detail they promised. New Van that had been sitting 30 days needed a better detail than a wash.

Wasn’t worth the $1000. Hate Chrysler dealers.

Contrast that with the MB I purchased. Found one with all the options I wanted, called the dealer. Cc deposit and spent 45 mins at the dealer picking up the car after writing a check. Similar experience at a Volvo dealer.

 

[OldShooter]

... Worst part is they really screwed up the title work. I ended having to walk it through myself, paying it off and getting a clear title took a lot of work since original loan had to be cleared. ...

A number of years ago I saved $4500 on a Mazda RX8. F&I guy knew I was going to pay it off, didn't care. He said to hold off paying until I got the title in the mail. Paying too early lead to problems at the state. I took his advice and had no problems.

 

[SecondAttempt]

Several years ago, I had to replace a vehicle while on a trip. Ended up at a Chrysler dealer that actually had what I wanted in stock. Routine haggling over trade and price. $1000 disc if I financed. Did the cc payment for 5K or so, trade and financed about 35K. Worst part is they really screwed up the title work. I ended having to walk it through myself, paying it off and getting a clear title took a lot of work since original loan had to be cleared. They never did the vehicle detail they promised. New Van that had been sitting 30 days needed a better detail than a wash.

Wasn’t worth the $1000. Hate Chrysler dealers.

Contrast that with the MB I purchased. Found one with all the options I wanted, called the dealer. Cc deposit and spent 45 mins at the dealer picking up the car after writing a check. Similar experience at a Volvo dealer.

I have definitely found "luxury" car dealers treat customers better. This may not always be the case but the last couple of dealer cars I bought were from Acura and BMW and the experience was surprisingly pleasant. With Acura I told them I'd be writing a check. They gave me a price. I countered about 10% lower expecting to settle closer to 3% under their ask. To my surprise they accepted the first counter offer. They made a credit offer but this was years ago when rates on car loans were much higher so we all knew it was not very attractive. After "no thanks" I wrote a check and the handed me the keys.

With BMW it was a bit of a contrived situation. I had wrecked my car so I needed something. I was looking at many makes but it was graduation season so Toyotas, Honda, Ford, etc. were at sky high prices. A friend was returning her BMW leased for her by her corporation. I was hoping to snag it but fell in love with the same model of a different color that was also a lease return after 3 years and only 15000 miles. The asking price was less than a new Camry.

When I expressed interest the salesman handed me the keys for a test drive. He did not go along. They might have wanted a copy on my driver's license but I do not recall. Even if they did, it was my Arizona license with no real useful information. Salesman just said bring it back before closing which was 2 hours out. I had a bit of fun but was back in half an hour and offered $1000 under what they were asking, cash. They accepted.

When we were drawing up the paperwork they encouraged me to finance and offered me 2% (in 2018) which was pretty good. I said I'd put down 50% and finance the rest. After applying and running my credit they reduced the rate to under 1.5%.

They then offered me the various warranties. Normally I would not have bitten but my friend had had big problems with tires and wheels (I think she hit a lot of curbs!) so I paid $1800 for a 3-year wheel and tire warranty. For this they reduced the interest rate to just under 1%. In hindsight it was probably a waste of money because I had no wheel/tire issues beyond wear.

Overall it was a pleasant experience with BMW. I would not buy another one for reasons having nothing to do with the dealership. My main reason is maintenance costs and failure of simple things that costs thousands to repair but my local dealer has usually gotten BMW to pay for repairs.

 

[Cerys]

I accompanied DD while she was shopping for a new car. She was focused on the Kia Telluride. The local dealer kept pushing financing, by offering a supposed discount. When asked what the interest rate was, he replied "whatever the current rate is. It doesn't matter since you intend to pay it off in 3 months anyway." Both the finance manager and sales manager repeated this obfuscation. We walked.
When the salesman made a follow-up call, DD told him the process felt sleazy and said she just wanted cash-only price. He had to call back, then gave her a higher number unless she agreed to financing, and STILL would not reveal interest rate.
A second Kia dealer, by phone, was a similar experience. There was a happy ending, she got the car from a 3rd dealer without that financing B.S. But this financing requirement is a new wrinkle for me. Does anyone know if this was a fluke, perhaps only with Kia, or is this the latest flim-flam for many new car dealers?
ETA: DD's FICO score is 820 or so.

Bought my Kia in 2018. I really love that car. What I was told at the dealer was that KIA make their money on financing. If I financed I got $2000 off the car. No financing, no $2000 off.

The car cost what the car cost — there is no negotiation. This was the third dealership I was at and each one the price was the same for the exact same car that I wanted and I was told the same thing.

If I paid the car off immediately, the dealership didn’t care. The dealership did what they were supposed to do.

I bought the car with the financing got the paperwork, paid it off the next month. Got my $2000 off.

In my opinion it almost made it easier to buy the car there because everybody was upfront about it. There wasn’t this back-and-forth song and dance crap.

I almost like to buy a new one because I moved across country into a cold area and heated seats would be nice but that seems spoiled to me. Anyhow, the one thing I know about buying a car is that the next time you buy a car they’ve changed everything and it isn’t that way from the last time you bought a car. Car dealers apparently really love that song and dance back-and-forth crap. They haven’t quite figured out that we all really hate that part.

 

[CaptTom]

The total sales price was divided by 36 and that was the monthly payment. The 36th payment was a bit more or less than the other 35 but the total payments equaled the bottom line. Other than moving autos off the sales floor I don't see how that advantaged the dealer.

The "price" is a myth. It's all smoke and mirrors with fees, extras, trade-in value, dealer incentives, financing kick-back, etc. They'll adjust all of these, and then add BS "administrative" fees on top, to make sure they get the profit they want.

 

[Closet_Gamer]

Such a wide variety of car dealer experiences.

I just bought a used F150 from a local Chevy dealer and they were absolutely fantastic. When I showed up for a test drive they just tossed me the key with zero sales nonsense. I came back the next day and took it home to ensure it fit in my driveway. We went 1 round on negotiation. I got a fantastic truck at a fair price and they gave me a good deal on the trade. Zero BS about upselling this, that and the other thing. They made one ask on an extended warranty, I said no, and that was it. Without even asking they proactively called my insurance company and swapped the cars on the policy. Even handed me the little velcro things to attach the EZPass to the new car. Top marks.

Other end...I got into a spot where I had to buy a car for DD. Long story. I also was buying a car for her to keep for a long time, so we were specific on what she wanted. Found a used Mazda CX-5 in good shape. Dealer was a nightmare. Loads of sales BS. Tried to add a charge to the agreed price as a penalty for not financing it. Dealer fee. Endless upsell nonsense. Cherry on top was that they would only take a personal check if I also applied for and was approved for a loan to buy the car, which they canceled once the check cleared. When I got home we discovered the second key was for the wrong car.

DD loves the car which is the only saving grace.

I sent a note to the owner about what a horrid experience it was and all he could bring himself to say was "Sorry about the key."

I make it my life's mission to tell everyone I know what a horrible dealer they are.

 

[kbousack]

I just bought my DD a 2024 Kia Soul about 2 weeks ago from the Kia dealership. I paid cash. They did not push me to finance at all and I was adamant on what I was going to pay for the car. We had to negotiate on the pricing a bit before they got it down to my price, but they did. They had no problem with me writing a check for the entire amount.

 

[RE2Boys]

I've had similar experience on the first part, where the dealer wanted me to make a few months of payments before payng off the loan. It has nothingt a t all to do with the borrower's credit history. I think it has to do with that if the loan is paid off too quickly then the lender might try to clawback the initiation fee/commission that the dealer received for arranging the financing since it was a sham.

On the last part, by paying cash or electronically, he is missing out on saving 2% on all his purchases and also the protections that using a credit card provide. He should get a 2% cash back credit card, use that for all his purchases and have it set up to autopay the full balance every month. If he spends $2k a month then his rebate would be a cool $480 a year... free, easy money... what's the matter with that?

Sorry PB, I wasn't precise in my terminology. I considered the use of a credit card as a form of electronic payment. He does earn 2% cashback on many purchases.

 

[brucethebroker]

Such a wide variety of car dealer experiences.

I just bought a used F150 from a local Chevy dealer and they were absolutely fantastic. When I showed up for a test drive they just tossed me the key with zero sales nonsense. I came back the next day and took it home to ensure it fit in my driveway. We went 1 round on negotiation. I got a fantastic truck at a fair price and they gave me a good deal on the trade. Zero BS about upselling this, that and the other thing. They made one ask on an extended warranty, I said no, and that was it. Without even asking they proactively called my insurance company and swapped the cars on the policy. Even handed me the little velcro things to attach the EZPass to the new car. Top marks.

Other end...I got into a spot where I had to buy a car for DD. Long story. I also was buying a car for her to keep for a long time, so we were specific on what she wanted. Found a used Mazda CX-5 in good shape. Dealer was a nightmare. Loads of sales BS. Tried to add a charge to the agreed price as a penalty for not financing it. Dealer fee. Endless upsell nonsense. Cherry on top was that they would only take a personal check if I also applied for and was approved for a loan to buy the car, which they canceled once the check cleared. When I got home we discovered the second key was for the wrong car.

DD loves the car which is the only saving grace.

I sent a note to the owner about what a horrid experience it was and all he could bring himself to say was "Sorry about the key."

I make it my life's mission to tell everyone I know what a horrible dealer they are.

"I make it my life's mission to tell everyone I know what a horrible dealer they are." I attended a sales conference years back where the keynote speaker asked the gruoup "who can tell me what an unhappy customer is?" He said "wrong" to each of the dozen who raised their hands with an answer. "An unhappy customer IS A TERRORIST!" was his answer. Truth, that!