auto manufacturer financing question

Looking at buying a new VW. Dealer 1hr away has best price in the area & my preferred color. I email local dealer to let them know the colors I'm interested in and the best price I've found. They get back with a "we'll match that price but only if it's cash sale or you bring outside financing can't use the VW financing at that price". VW has 1.9% apr special thru end of Oct, best I've found locally so far is 3.24% ... all that aside, is it common for the dealer to be incentivized to NOT use the manufacturers financing? He came back later with a "price is good until end of the month due to current dealer cash" which is supposedly why the price is so good.

 

Why not just drive an hour and get the car and good price?

 

Fine print on the good price 1hr away said the same thing which I didn't notice until AFTER the local dealer brought it up. I'm hoping one of the dealership insiders on here can shed some light on this as I'm genuinely curious. It never occurred to me that incentives would be tied to NOT using the available manufacturers financing.

 

Price quoted could include rebates from manufacturer that are not valid with special financing rates. An either/or special. Pretty normal.

 

Yeah, you can either get a rebate from VW or the finance special apr. Not both. Not uncommon and the dealer will always advertise the lowest price, which would be with the rebate.

 

That makes sense now. The rebate wasn't explicitly stated, I had to really dig to find it. I'm used to seeing that offered as a big either/or statement.

 

Carvana?

 

Das Auto? Nein gut, ja? Ja!

 

The only thing that's weird is most dealers are hooked up to several lenders, not just manufacturer captive finance. In the past 10 years, probably 10 cars I've purchased, they always meet or beat my best outside rate using their database of lender offers. Sometimes with the same lender I found.

So the either/or offer is normal, but since dealers usually get a spiff from lenders for placing a loan requiring you to bring in outside is weird.

 

VAG is preserving even last $1 they can and for the short term don’t want to finance.

 

That’s what I was thinking too. The finance dept at the dealer usually has x amount of lenders and usually will guide you to the one that’s favorable to your credit rating (or maybe how much they get for “admin” fees.

 

Uhh, the finance mgr guides you to the one that allows them the largest holdback for the day. The loan may be sold at ~6% to the customer, but, the dealership may get 1.5% back to them (< arbitrary numbers). If a lender has plenty to lend, the rates may be better than for one who is strapped. It just depends each day, who is going to do what. However, if you have really shitty credit that might limit who is willing to take the risk. It’s just simple credit, so bad credit isn’t really as big of deal on a vehicle as it’s made out to be. It’s more about getting the perception out there of poor credit means higher interest, so the banking industry can break it off even deeper in the consumer who doesn’t manage finances very well....and rightfully so, for the risk.

Likewise, extended warranties are sold to the customer at whatever the dealership can get out of them. That book/file they open and show different packages and prices is smoke and mirrors. They may be able to buy an extended warranty for $200. But, if they can sell it to the customer for $895, they just put an additional chunk in their pocket.

The finance department is the biggest money maker in any dealership. The more opportunities they can come up with to fleece the customer (paint protection, rustproofing, extended warranty, etc), the more places they can make a buck on each item and the larger the amount financed, which means a larger holdback to the dealer.

 

yeah depending on the what company is giving the dealer what...at the end of the day, I went with the higher interest rate, lower payment because the dealer was able to sell the car to me cheaper. I can then refinance that as soon as I walked out the door, but I think the dealer needs you to have the loan for a few months for them to get their money from the lender, but that's on you for when you want to do it.

tl;dr the principal price is the most important, because you can refi. Difference between 3.24 and 1.9 isn't much on a car loan.

 

Negative. Service dept is.

 

edit, found the answer

 

Are you buying an Atlas by chance? If so, I can make you a much better deal!

 

I agree.

When some high roller says “cash talks, I only pay cash, blah, blah”, I SMH. Paying cash only removes profit potential from the dealer, meaning paying more elsewhere. Always use financing for leverage, then, refinance elsewhere or pay it off. Whatever works best in one’s favor.

Where I worked, the GM said finance dept was the most profitable (net). It makes sense, when the only investment is a bit of square footage, fixtures, and a few employees churning margin. The service department requires massive floor space, equipment, training, office space, numerous employees, and so forth.

 

Not to nitpick, but finance is part of sales dept. Our dealership is the #1 Ford service dealership in the United States. So we may be different.

 

Our’s was separate, which was probably a good thing, given some of the janky crap that was going on in the sales department.

Are you at Athens Ford?