Quote:
Originally Posted by disneysteve
That's always been my thought, which is why I'm convinced 0% financing isn't really such a great deal. You end up paying more for the car because the dealer knows he's making nothing on the loan.
What I do wonder, though, is what happens when I'm on the lot shopping for a car and I haven't told the dealer how I intend to pay. I don't mention that until after I've agreed on a price. When he says to go speak with the finance guy, that's when I'll say I'm paying cash or already have my loan lined up. So how does that factor into the negotiation?
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I have a friend who worked as a car salesman at the local BMW dealership. I can only base my knowledge on his experience but their dealership did not offer any financing. They required their customers to get their financing from an outside source.
According to him though, other dealerships loved it when people financed through them because the salesman would be paid his commission on both the financing and the car. This would allow them to merge the financing and the car price to make a more complicated purchase for the consumer. This would allow the sales people to get a much higher commission because they had a lot of flexibility in how to sell the car to their customer.
It's a pretty devious way to make money by using the ignorance of their customer to make them feel like they are getting a good deal when they are really being screwed.