Jun
22
Do dealerships make money off financing?
By
Antonio G asked:
Do dealerships or just the banks make money off of financing? I am going to finance a 25k(OTD) car…with a 5k down payment…so that is 1000 dollars in interest (at 5%)…can I haggle with the dealership by sayin look, your makin an extra thousand off me so lower the price!, or does the bank get that extra thousand?
Do dealerships or just the banks make money off of financing? I am going to finance a 25k(OTD) car…with a 5k down payment…so that is 1000 dollars in interest (at 5%)…can I haggle with the dealership by sayin look, your makin an extra thousand off me so lower the price!, or does the bank get that extra thousand?
3 Comments
June 23rd, 2009 at 10:45 am
You bet they do. Last car I bought was for cash. They begged me to finance the car with them. Why? To help me out? No, so they could make more money off of them. Whether they get a kickback or a portion of the interest I do not know, but they sell financing for more money in their pockets.
June 25th, 2009 at 4:31 pm
the 5k down should be going towards the OTD price of the car so you would only be financing 20k total. it will also give you a lower payment.
the dealerships do make money off financing, but they will not give you money off because of that, they need to make money too!
my advise is finance the whole amount and keep your 5k in your bank, your payments may be $75-$100 more a month, but think of how many months you can pay even $100 more before you use up your 5k.
June 28th, 2009 at 6:23 pm
bank gets most of the “extra thousand”, dealership gets a fee for “loan origination” – but it is not big and they are unlikely to lower price based on that “extra earnings”.
Regards,
Investreus.