Why was Car Salesman pushing me to finance my vehicle when I said I had cash?

[OKCShooter]

The "down payment" on the car is what they have invested in the car. All the payments are pure profit.

This isn't true, although good rule of thumb is that they buy at the auction, triple the lot ready price and take whatever down they can (usually $500-$1K)

So, buy a Taurus for $2500 at auction + $500 to make it lot ready makes it a $8995 car.

Buy here/Pay here don't want to carry that note forever - they actually hope to get enough payment history to sell the note off to buyers.

Same scenario as above...down payment of $1K and then payments of $150/week for a few months get the Capital back and then sell the balance of the note off for 70% (That's the profit).

I know some owners so I have intimate knowledge of how these businesses work.

 

[Mos Eisley]

When I sold cars years ago the finance manager made "points" on the loan. We, as salesmen, didn't make anything but were always told that we should push OUR financing. The finance manager was always the one who did the final paperwork no matter the method of payment. If your customer had their own financing, or had cash, you could bet that you would be waiting while other customers who didn't went ahead of you. They, and you, would always be treated somewhat coldly by the finance manager as well. I hated everything about being a salesman but that was a particularly sour part of the process.

BTW, this wasn't a "tote your note" lot but a factory dealer.

 

[dennishoddy]

When I sold cars years ago the finance manager made "points" on the loan. We, as salesmen, didn't make anything but were always told that we should push OUR financing. The finance manager was always the one who did the final paperwork no matter the method of payment. If your customer had their own financing, or had cash, you could bet that you would be waiting while other customers who didn't went ahead of you. They, and you, would always be treated somewhat coldly by the finance manager as well. I hated everything about being a salesman but that was a particularly sour part of the process.

BTW, this wasn't a "tote your note" lot but a factory dealer.

Yeah, I paid cash for our Nissan, and the guy kept asking me for personal information, and was real insolent when I wouldn't give him anything for personal information. Here is my ID, here is my money,
Gimme the freeking car and I'm out a here.

 

[Chard]

Extended warranties are a money maker. They are negotiable tho.

 

[Dave70968]

Additionally, people with cash have a budget in mind, and don't often exceed it; people buying on credit are more likely to be "persuaded" to buy something more expensive.

 

[nofearfactor]

People with good credit usually prefer to finance 'pre-owned' vehicles at new car dealerships and dont usually run into many problems if theyre savvy and get everything they want on a certified vehicle. The rare people (my mother) who will come in and plop down cash or do a bank transfer for a brand new car sure as hell dont either.

No offense, but, $5k isnt alot of money these days when buying a used car. Maybe the salesman thought you could finance over the $5k for a better car using your 5 as down? And then he could get a better commission.

But if you went to a predominantly used car lot though likely they were all bought at auction and most of those places make a ton of money on pay by the week or bi-weekly only customers, hard working people but likely with sketchy or no credit and no other option but high risk financing. The lots wont sell them for cash period- unless youre willing to pay out what their preset loan value on it would, and who would do that. Bad as it sounds it is a lot of poor peoples only way of driving a slightly better than hoopty vehicle. Ya, they might be paying $75 a week for prolly for 80-104 weeks or more for that 08' Cobalt that is actually worth about half that. But, they likely dont have many options. The lot loves it too. If they dont pay like agreed, the repo man comes for it and back it comes, detail and fresh fluids (and leaks temporarily repaired) and its back on the line ready for someone else needing semi reliable point A-B transpo.

If youre a cash buyer, especially looking at one for under 10-15k IMO, just go person to person, youll get way more car for your money, and the person may or may not be lying about something but at least they may know something about the cars history or you can at least do your own CarFax before you buy, or maybe even take it to your trusted mechanic before you buy.

 

[Shoot Summ]

Could have been a number of reasons he was pushing to finance, all were based on more profit for the Dealership.

It also changes the conversation from "purchase price" to monthly payment. When buying cars, the vast majority of people are fairly ignorant to the mechanics of the deal. They get spun up on a nice car, and what they can afford monthly. Next thing you know they are way upside down on a car, that they will pay on for 6 years.

If you are smart about it, with the rates so low right now, it actually makes sense(to me) to finance and let your cash grow at a higher rate in some smart investments. We just bought a new car, financed 100% at under 2%. I'll sell the old car, and pay the note down. I've already made an extra payment(1st payment wasn't due until next month). And I'm paying extra monthly. This made more sense to me than taking money out of an investment that pays a 6% dividend, and has appreciated over 10%.

 

[RKM]

My wife worked warranty at different dealership for over 20 years. Last time I bought a car, I let her do all the talking. When we left the salesman was under the desk in the fetal position wondering what the hell just happened. Wifey knows all the tricks, gimmicks and double talk. Other than being a beautiful bride she is my ace in the hole when it comes to car buying.

 

[SoonerP226]

What do you mean that's all they are in for? How can that be? Some places are offering 1000 down on new cars. Well that's what they advertise

"Tote the note" lots (what 348 was referencing) aren't selling new cars.

 

[Fyrtwuck]

About four years ago, I was looking for a good used car for my youngest son. I stopped and looked at a car in a lot at SW 29th and Penn. There was a price on the windshield that looked like a fair price. The salesman came up and did his introduction speech and I asked him the cash price for the car. He told me the price on the windshield was the down payment, that they did not sell for cash and notes were usually carried for ten years. I said thanks and left.