| Car dealerships profit Big Time when you allow them | | | | Like a Cash Buyer," which greatly increases the |
| to arrange financing for you. Most consumers do not | | | | leverage you have when negotiating the best possible |
| realize just how big a profit center the Finance office is | | | | deal. I recently observed the last 40 deals at my |
| for a car dealership. There are three major reasons | | | | dealership, and found that cash buyers paid over |
| why you will want to arrange your own financing. | | | | $2500 less per car deal, compared to those that |
| #1 You eliminate any rate mark up. What this means is | | | | financed. If that's not a call to action, I don't know what |
| if a dealer were able to get a 5.9% buy rate from a | | | | is! |
| lender, the lender will, on average, allow a two point | | | | When you are able to "Buy Like a Cash Buyer," you |
| markup. This means the dealership could sell the loan | | | | don't have to worry about negotiating the monthly |
| to you at 7.9%, and over the term of the loan this | | | | payments, you can instead focus on the Out The |
| could equate to hundreds, or even thousands of dollars | | | | Door Amount, which is exactly why cash buyers save |
| in profits that you paid unnecessarily to the dealer. | | | | so much money. |
| For instance, a $20,000 loan at 7.9%, over 72 months, | | | | #3 You can have the dealer compete to arrange your |
| would have a total finance charge of $5,254.72. The | | | | financing. Yes, I know I just gave you some pretty |
| same $20,000 loan at 5.9% would have a finance | | | | convincing reasons to secure your own financing, but if |
| charge of $3,851.44. Subtract the $3,851.44 from the | | | | you're approved from your source for 6.9% and the |
| $5,254.72 and your left with $1,403.28. The lender will | | | | dealer can offer 5.9%, take the 5.9%. Who cares if |
| typically split this with the dealership using a 75/25 or | | | | they are making a profit, they just saved you a bunch |
| 70/30 split. So that means the dealership would get | | | | of money. Better yet, you just saved yourself a bunch |
| 75% of $1,403.28, which equals $1,052.46 additional | | | | of money, because you forced the dealer to give you |
| profit for the dealer. | | | | their most competitive rates, and this was all due to |
| Who do you think gets stuck paying the bill? Drum roll | | | | you doing the smart thing and getting pre-approved. |
| please...You got it, you do! | | | | In the mean time...Take care and beware! |
| #2 Getting pre-approved gives you the ability to "Buy | | | | |