2 ms·

I mean yes, I'm sure they're getting something, but the margins are so thin I don't think it's even worth considering. Consider a $50k car, dealer offers you 1%

I mean yes, I'm sure they're getting something, but the margins are so thin I don't think it's even worth considering. Consider a $50k car, dealer offers you 1% via bank. At best the bank is only taking half of that (0.5% is already ridiculous for a not-really-secured loan, considering new car depreciation), so over a 5yr loan the dealership makes... $1250. That's, what, one week of salary for one of their salesmen? I just don't think it's as much of a factor as we think it is. People talk about the dealerships handing out $10k discounts because "they make their money on financing" but the math just doesn't support that unless you're doing credit-card-interest-level loans.

kube-system 6y ago
Usually people cite the financing incentives when people mistakenly use the "cash is king" strategy when trying to negotiate on a car, but it isn't the only way they're making money. Dealers make significant money from manufacturer kick-backs and service too. Also 1% sounds too low for an independent bank loan, even with the now-cratered loan rates. I am guessing that is probably a subsidized loan through a manufacturer's bank. Manufacturers have long offered artificially low rates through their own banks to help move product.