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Just because it's not a line item doesn't mean it's not there. It's just baked into the negotiated price. Of course despite the past jokes about "hands are t

Just because it's not a line item doesn't mean it's not there. It's just baked into the negotiated price. Of course despite the past jokes about "hands are tied" re the sale price of new cars, the manufacturers actually do have relatively rigid controls today on dealers lowering allowable sales price. (But not raising, which has turned into an interesting situation.) In reality, it just means you need to be trading in something to negotiate against any of that baked in finance cost, since trade-in amount is the one thing manufacturers can't really influence. Which isn't to say that captive/manufacturer financing isn't often cheaper. It's just that the actual cost of financing isn't as transparent as claiming "no fees". (You see this in gimmicks like having "no/low cost" financing, but at the expense of foregoing "cash back", which even in today's market is often upwards of $3k-5k.)

nradov 5y ago
Nope. I negotiated the purchase price and trade-in value before discussing financing. Nothing was baked in. And there was no manufacturer "cash back" offer on the vehicle I bought.
- beerandt 5y ago
  There's an entirely separate system of dealer approved discounts that customers never see. Regardless, you aren't getting a few lunch. It just means your negotiated price had the margins to absorb whatever financing they ended up offering. And the manufacturers are directly and indirectly controlling those margins based on complying with their approved discounts, whether advertised or unpublished. They even have a discount type for sales to immediate family, that applies to any car that doesn't keep dealer plates and dealer insurance.
cityofdelusion 5y ago
At least where I live in the United States, the base out-the-door price is generally negotiated _before_ you indicate if you will be paying in cash or via financing. I've never seen an origination fee on an auto loan here.
- beerandt 5y ago
  (Assuming you're not paying cash) Unless you've also negotiated your APR with your sales price, thats where it usually shows up. The rate is just recalculated to make the fee included. For "no penalty" payoffs, it generally has fine print saying you can't sell before some minimum period of ownership. Which is why it's a good idea to have backup financing pre-arranged and approved with a credit union. That gives you leverage to negotiate financing even with a settled cash price. Either that, or their margin on the vehicle at your negotiated price is big enough that it doesn't make much difference to them.
sonotathrowaway 5y ago
I have multiple years of experience in auto sales and I’m not familiar at all with lender fees ‘baked in’ to the price. Moreover, state laws required all costs to be broken out in the contract, there was no legal way to attempt to hide additional costs. I’ve personally watched many customers do exactly what you were contesting - take a loan, then pay it off early without penalty. Most lender had a 3-6 month wait on that, so they needed to make a few payments before paying it off in a lump sum.
- beerandt 5y ago
  >not familiar at all with lender fees ‘baked in’ to the price. Not cars, but a family member sells high end mowers. They offer 0% financing, knowing that they directly pay the lender $400 per loan to be able to offer that (varies with loan amount, but not much). They just price everything $400 higher when running that deal (their internal minimum recoup sale price, not necessarily the sticker or displayed discount price). >there was no legal way to attempt to hide additional costs. It's not hiding an "additional" cost, it just means the sale price or financing rate takes into account the dealers/ lenders cost to finance. It also has to do with whether the rate offered is APY or APR, and how those are used somewhat interchangeably to hide fees as included in the offered APR (so it's truthful, but basically based on a best-case payback scenario, and effectively higher if you prepay, even if there are no "penalties"). >Most lender had a 3-6 month wait on that, so they needed to make a few payments before paying it off in a lump sum. Yes, this is almost universal now, including provisions that restrict the title transfer for some minimum period (was 6 months in our last car, but they said some are for 12 or even 24 months). Basically they don't have to remove the lien until then, even if you pay off the note. So if you pay early, you are effectively penalized the annuitized cost between the payback date and when you are actually free to sell the vehicle to recoup that payoff amount.
  - sonotathrowaway 5y ago
    I never sold lawn mowers, I sold automobiles at a ounce shed dealership for a major automobile brand. There was never, at any point, with more than a dozen lenders, any type of fee associated with taking a loan. We did not offer lower prices for customers paying cash, it was the opposite in fact. We never paid a bank for giving a loan either. None of the things you keep proposing have any semblance to my professional experience.
vba616 5y ago
>In reality, it just means you need to be trading in something to negotiate against any of that baked in finance cost, since trade-in amount is the one thing manufacturers can't really influence Trade-in amount is completely arbitrary and fictional, like every other line item. It may be the government's fiction, the dealer's fiction, or someone else's, but it's fiction. The minute someone tells you they can't do this about that item, because blah blah blah, you should say "that's fine, I don't care about that item, only about the total". The more ways you can say that, while being polite and sincere about wanting to make a deal, the closer you are to a good price.
- beerandt 5y ago
  >Trade-in amount is completely arbitrary and fictional Which is exactly why it gives dealers a huge degree of freedom to work with for "bottom line" discounts, that manufacturers can't (yet) control/ influence. Dealers now make very little margin on new sales, and rely on income from monthly/quarterly/yearly kickbacks from the manufacturers, which are based on targets that include sticking to manufacturer approved discounts. Without a trade-in, they don't have a place on the reciept to pass some of that kickback on to you. If they discount the sale price, they lose the margin they had to give you the discount in the first place. Technically, you're right, in that they can sell for whatever they want, with no trade-in. They're just not likely to do that if it costs them more on the backend.
  - vba616 5y ago
    All of the shop talk about how the dealer supposedly makes a profit or doesn't, I think should be treated as small talk that has no bearing on actually making a deal. As a customer it's important to listen and say how I respect them and that they need to make a living, because salespeople think customers are all lying scumbags. It has to be as clear as day that I intend to make a deal as soon as possible. But whether this car is being sold at a profit or why is irrelevant. I'm not their accountant.

nradov 5y ago

Nope. I negotiated the purchase price and trade-in value before discussing financing. Nothing was baked in. And there was no manufacturer "cash back" offer on the vehicle I bought.

beerandt 5y ago
There's an entirely separate system of dealer approved discounts that customers never see. Regardless, you aren't getting a few lunch. It just means your negotiated price had the margins to absorb whatever financing they ended up offering. And the manufacturers are directly and indirectly controlling those margins based on complying with their approved discounts, whether advertised or unpublished. They even have a discount type for sales to immediate family, that applies to any car that doesn't keep dealer plates and dealer insurance.

cityofdelusion 5y ago

At least where I live in the United States, the base out-the-door price is generally negotiated _before_ you indicate if you will be paying in cash or via financing. I've never seen an origination fee on an auto loan here.

beerandt 5y ago
(Assuming you're not paying cash) Unless you've also negotiated your APR with your sales price, thats where it usually shows up. The rate is just recalculated to make the fee included. For "no penalty" payoffs, it generally has fine print saying you can't sell before some minimum period of ownership. Which is why it's a good idea to have backup financing pre-arranged and approved with a credit union. That gives you leverage to negotiate financing even with a settled cash price. Either that, or their margin on the vehicle at your negotiated price is big enough that it doesn't make much difference to them.

sonotathrowaway 5y ago

I have multiple years of experience in auto sales and I’m not familiar at all with lender fees ‘baked in’ to the price. Moreover, state laws required all costs to be broken out in the contract, there was no legal way to attempt to hide additional costs. I’ve personally watched many customers do exactly what you were contesting - take a loan, then pay it off early without penalty. Most lender had a 3-6 month wait on that, so they needed to make a few payments before paying it off in a lump sum.

beerandt 5y ago
>not familiar at all with lender fees ‘baked in’ to the price. Not cars, but a family member sells high end mowers. They offer 0% financing, knowing that they directly pay the lender $400 per loan to be able to offer that (varies with loan amount, but not much). They just price everything $400 higher when running that deal (their internal minimum recoup sale price, not necessarily the sticker or displayed discount price). >there was no legal way to attempt to hide additional costs. It's not hiding an "additional" cost, it just means the sale price or financing rate takes into account the dealers/ lenders cost to finance. It also has to do with whether the rate offered is APY or APR, and how those are used somewhat interchangeably to hide fees as included in the offered APR (so it's truthful, but basically based on a best-case payback scenario, and effectively higher if you prepay, even if there are no "penalties"). >Most lender had a 3-6 month wait on that, so they needed to make a few payments before paying it off in a lump sum. Yes, this is almost universal now, including provisions that restrict the title transfer for some minimum period (was 6 months in our last car, but they said some are for 12 or even 24 months). Basically they don't have to remove the lien until then, even if you pay off the note. So if you pay early, you are effectively penalized the annuitized cost between the payback date and when you are actually free to sell the vehicle to recoup that payoff amount.
- sonotathrowaway 5y ago
  I never sold lawn mowers, I sold automobiles at a ounce shed dealership for a major automobile brand. There was never, at any point, with more than a dozen lenders, any type of fee associated with taking a loan. We did not offer lower prices for customers paying cash, it was the opposite in fact. We never paid a bank for giving a loan either. None of the things you keep proposing have any semblance to my professional experience.

vba616 5y ago

>In reality, it just means you need to be trading in something to negotiate against any of that baked in finance cost, since trade-in amount is the one thing manufacturers can't really influence Trade-in amount is completely arbitrary and fictional, like every other line item. It may be the government's fiction, the dealer's fiction, or someone else's, but it's fiction. The minute someone tells you they can't do this about that item, because blah blah blah, you should say "that's fine, I don't care about that item, only about the total". The more ways you can say that, while being polite and sincere about wanting to make a deal, the closer you are to a good price.

beerandt 5y ago
>Trade-in amount is completely arbitrary and fictional Which is exactly why it gives dealers a huge degree of freedom to work with for "bottom line" discounts, that manufacturers can't (yet) control/ influence. Dealers now make very little margin on new sales, and rely on income from monthly/quarterly/yearly kickbacks from the manufacturers, which are based on targets that include sticking to manufacturer approved discounts. Without a trade-in, they don't have a place on the reciept to pass some of that kickback on to you. If they discount the sale price, they lose the margin they had to give you the discount in the first place. Technically, you're right, in that they can sell for whatever they want, with no trade-in. They're just not likely to do that if it costs them more on the backend.
- vba616 5y ago
  All of the shop talk about how the dealer supposedly makes a profit or doesn't, I think should be treated as small talk that has no bearing on actually making a deal. As a customer it's important to listen and say how I respect them and that they need to make a living, because salespeople think customers are all lying scumbags. It has to be as clear as day that I intend to make a deal as soon as possible. But whether this car is being sold at a profit or why is irrelevant. I'm not their accountant.