How does loan amount affect the dealer?

[snareman]

Dealers apparently prefer that you take out a larger loan with the car. What's the difference in what the dealer gets if I take out a $10k vs $40k loan on a new car?

[Higgs Boson]

some banks give the dealer a percent of the amount financed to get the loan business from them, other banks give them a flat fee.

talking about a percent or two, it's not a large amount. but, the more you finance, the bigger the finance charges are for the life of the loan.

[snareman]

I was asking my CA if there is a minimum loan amount with BMWFS and he said it was 10k, "but we'd hope (ask) you'd take a larger loan amount".

[Higgs Boson]

The finance manager doesn't get paid anything unless someone finances or buys a warranty, etc. They don't really like doing paperwork (their job) for free so yes, the more you finance then the more likely they can pay the rent so to speak.

[snareman]

The finance guys never love me because I never take them up on any of their offers. And on my last car they had assumed that I was going to only put $10,000 down. I didn't correct them because they never actually asked me until I got to the finance guy who was a jerk at baseline so I didn't mind the last minute surprise of telling him I was actually putting $60,000 down.

[TheWatchGuy]

typically they get a percentage of the interest or the loan. if you get the financing through the dealer and not through a 3rd party, they get a higher percentage. Thats why a lot of times, in the past not really in today's market, you could get a better deal if you financed through them since they are making up that discount on the financing.

[BMWCCA1]

I believe the FS minimum is $7500.

[///MPhatic]

Few dealers make money on financing, unless they are mousing the rate (selling it higher than they bought it). Typically this is not the case. There is a fee you pay for just walking into the office (usually $199 or so), even if you are writing a check for the vehicle. That covers the business office.

If your dealer is getting a kickback from a bank to get financing, or mousing the rate, find another dealer.

[VipinLJ]

Wow. And the dealers I go to usually suggest I take a loan from my local credit union because they have the lowest rates and no bank can touch those!

[///MPhatic]

Originally Posted by VipinLJ

Wow. And the dealers I go to usually suggest I take a loan from my local credit union because they have the lowest rates and no bank can touch those!

This is absolutely correct. Even a bank's buy-rate can't match a credit union.

[VipinLJ]

Originally Posted by ///MPhatic

This is absolutely correct. Even a bank's buy-rate can't match a credit union.

Oh yes it is. I'm just surprised because none of them have ever pushed me into taking a loan from them. I didn't know dealership/finance guys working there made money from getting customers to take a loan from there!

[KevinC]

Originally Posted by ///MPhatic

If your dealer is getting a kickback from a bank to get financing, or mousing the rate, find another dealer.

Literally EVERY dealer is making money off EVERY single loan they write. Unless you bring your own financing or cash, there's a cut for them.

[///MPhatic]

Originally Posted by KevinC

Literally EVERY dealer is making money off EVERY single loan they write. Unless you bring your own financing or cash, there's a cut for them.

I've worked for Toyota, Suzuki, Honda, Mazda, Nissan and Hyundai and I can tell you without a doubt that dealers do not always make money on the loans. If they sell the rate at buy then there is $0 made.

[Westside Guy]

Some dealers are asking for 1% over the nationally advertised rated from BMW. If you challenge the finance manager and insist that they match the advertised rate they will usually agree. Unfortunately not all customers are savvy enough and the dealer pockets that extra 1%.

[snareman]

Originally Posted by Westside Guy

Some dealers are asking for 1% over the nationally advertised rated from BMW. If you challenge the finance manager and insist that they match the advertised rate they will usually agree. Unfortunately not all customers are savvy enough and the dealer pockets that extra 1%.

I had a dealer with my M4 tell me they either wanted 1% over or for me to buy one of the packages from the finance guy. Thankfully I didn't have to go with them.

[///MPhatic]

It appears that BMW dealers suck. Who knew?

[snareman]

Originally Posted by ///MPhatic

It appears that BMW dealers suck. Who knew?

Well, from dealing with several now some definitely suck less than others. Unfortunately some of them (similar to so many companies) forget that customers are the source of their income.

[Westside Guy]

Originally Posted by snareman

I had a dealer with my M4 tell me they either wanted 1% over or for me to buy one of the packages from the finance guy. Thankfully I didn't have to go with them.

I wonder what would happen if a customer filed an official complaint with BMWFS about a dealer charging more than the nationally advertised rate?

[KevinC]

Originally Posted by Westside Guy

Some dealers are asking for 1% over the nationally advertised rated from BMW. If you challenge the finance manager and insist that they match the advertised rate they will usually agree. Unfortunately not all customers are savvy enough and the dealer pockets that extra 1%.

They are permitted to do this as a matter of BMW policy. If the rate isn't being promoted/advertised, then I don't have a problem with it. The consumer can accept/reject any rate, bring their own financing, whatever. Where I have a HUGE problem with this practice is when the rate is actively being promoted by BMW, THEN they try to add up to a point to the advertised rate - that's just false advertising at that point. This happened to me in April 2021 when I took delivery of my M2c. BMW had been pushing a 0.9% financing rate on the model for some time when I ordered in February. My CA had me submit a credit app on the spot so that I would qualify for it. 90-day lock on the rate to allow the car to arrive from Germany, in case the promotional rate was discontinued in the meantime. So I got approved that day. I show up 12 weeks later to pick up the car, and the lying sack of shit F&I criminal lies to me and tries to tell me that rate is "no longer offered" and that the lowest rate now offered is 1.9%. I call bullshit, pointing out that I'd already been approved at 0.9% with 90-day lock. He punches some keys on his computer and relents, without offering any explanation for his "error". (I checked after leaving and 0.9% was still being actively promoted by BMW - a total lie that it was "no longer available".) If he were honest - and NOTHING was honest about this transaction - he would have simply said that they were marking up the rate "because they could". Except they couldn't, because of what I'd been promised (which was correct per BMW policy) when I was prequalified specifically to preserve the 0.9% promo.