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It's a well know fact that car dealership make the most profit from financing, so lets say i want to buy a 2019 Nissan Rogue Sport AWD S, say the best price for the car i can negotiate is $21,265, taxes, $1,275, say the final price is $22,700 with title and other fees. Now say I have the cash to buy the car outright, but instead of using my cash, I tell the dealer I want to finance, with the goal of using a dealerships greed to get me into a loan to lower the overall price of the car. So the dealer tells me that with a down payment of 2k, a 84 month loan at 4.5% interest rate is going to be $288 a month.
Whoa! I can't afford that. I can do maybe $250 a month. (This now makes my final cost $21,000, yes interest makes the final pay off much higher, but soon sign the loan documents and get a loan number, I can send the financing company $21,000 cash is instantly pay off the loan, no 4.5% interest rate at 84 months for me.)
Is this a sound negotiating tactic, what I'm really looking at the final price, but telling the dealer I need a lower payment, the interest rate is irrelevant to me. I'm just looking at the # of payments times the payment amount to get me the final price that's more favorable then just paying cash outright. The dealership is getting kickbacks from the Financing company, so they have motivation to write the loan, it's just a question will they take a loss on the price of the car to get a loan signed.
The short answer is, you betcha. And you can use the same thinking to go clean out the tables in Vegas, not to mention walk away with every grimy dollar in back-alley crap games.
Yes, except you are supposed to walk out after negotiations and say you will need to sleep on it. Half of the time they will call you having found additional super secret incentives just for you.
It's playing poker with someone who not only does it all day long, but knows everyone's cards including yours. Knowing they just discarded the two of clubs is not a surefire way to beat them.
It's a well know fact that car dealership make the most profit from financing, so lets say i want to buy a 2019 Nissan Rogue Sport AWD S, say the best price for the car i can negotiate is $21,265, taxes, $1,275, say the final price is $22,700 with title and other fees. Now say I have the cash to buy the car outright, but instead of using my cash, I tell the dealer I want to finance, with the goal of using a dealerships greed to get me into a loan to lower the overall price of the car. So the dealer tells me that with a down payment of 2k, a 84 month loan at 4.5% interest rate is going to be $288 a month.
Whoa! I can't afford that. I can do maybe $250 a month. (This now makes my final cost $21,000, yes interest makes the final pay off much higher, but soon sign the loan documents and get a loan number, I can send the financing company $21,000 cash is instantly pay off the loan, no 4.5% interest rate at 84 months for me.)
Is this a sound negotiating tactic, what I'm really looking at the final price, but telling the dealer I need a lower payment, the interest rate is irrelevant to me. I'm just looking at the # of payments times the payment amount to get me the final price that's more favorable then just paying cash outright. The dealership is getting kickbacks from the Financing company, so they have motivation to write the loan, it's just a question will they take a loss on the price of the car to get a loan signed.
So why would they lower the price versus offering you a 96 month loan instead to get you the same monthly payment? They also have wiggle room on interest rate to get you hooked.
Have you heard of the 4 square method that dealerships use for negotiating? If not check it out:
Like you mentioned, you should only focus on the price. The dealership will try to get you to think about down payments, interest rates, monthly payment and trade-in, but never the price.
I just recently bought a used minivan for my wife. I did not discuss a trade-in because I wasn't trading in anything. I was selling the other car myself to a coworker. All I worked on was the price since I had already had my financing lined up with my credit union (3.24% @ 60 months). I wasn't interested in paying in cash even though I had the money in hand. I had downloaded this car loan calculator app (https://play.google.com/store/apps/d...oanpmtcalcfree). Once I had settled on the price of the car, I plugged in the purchase price and I was pretty close to the eventual monthly car payment that financing gave me. The only thing I hadn't factored in was DMV registration/titling fees etc. I was $3 off my estimate.
Once you've negotiated the price, I don't believe financing in house will THEN come into play. I have heard that you generally do get the best deal when using their financing so I think you should tell them that during negotiation so they can factor that in when meeting your lowest price.
Once you've negotiated the price, I don't believe financing in house will THEN come into play. I have heard that you generally do get the best deal when using their financing so I think you should tell them that during negotiation so they can factor that in when meeting your lowest price.
That's not always the case from my experience. When I bought a car in 2015, my credit union beat out the dealership. I gave the dealership an opportunity to at least match it, but they couldn't. It was only a .5% difference but they wouldn't budge so I used my CU instead.
The last car I bought, the dealership could at least match it. So I let them do the financing since it would end up being less paperwork on my end versus my CU.
Both cases were the same CU and I have excellent credit. My last purchase the credit score they showed me was 851.
We tend to focus on the total price and will only finance if it's reasonable, like 0% or 1.99%. If it starts getting to be more than that, we'll just pay cash, but only for the price we are willing to pay. When we go into the dealership, we've already got a price in mind and won't go above that, period. We usually have two or three models we're willing to buy, and we have no problem with walking out without making a purchase.
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