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Where would a consumer get the information that a stair step incentive program is in progress?
You don't. All you can bet on is that the dealer won't sell you a car if the deal didn't meet their margin (or put them over the top to qualify for another incentive).
Yes rebates need to be taxed but they can still be applied. If you or your finance department didn't know this then you missed a huge opportunity. It is, has been, and will continue to be a tool to sell to subprime credit.
I made a lot of money doing this for a lot of years. As others have stated, most of what you have posted about auto sales/industry is pure trash. You appear to be clueless so please - stop posting on the topic.
LOL.....I never said it couldn't be applied. I even posted the example of how they are applied and how they are taxed. A bank isn't going to buy a bad bet because of a $500 rebate. The bank knows it isn't their money.
Your not going to know that their are dealer incentives just buyer incentives .But you can usually figure in about july the dealer incentives star coming. You and even the sale person will never known what holdback was sent to dealer owner either. The higher margin vehicles will always have by far the largest incentive in both. Some of the really compact cars have little margin even at MSRP. Take the truck and large SUV profits away and the so called big 3 are in deep trouble .Rebate applied to sell are not taxed; nor trade in here at least. I tried true car and Edmonds; they didn't get within 1500 dollars of what I bought new truck for twice in last six months.My guess is they are just another thing getting a cut when sold.
Where would a consumer get the information that a stair step incentive program is in progress?
You wouldn't - and that's the point! (Unless you know someone who will tell you.)
Walmart doesn't share with us what their costs are on the goods they sell. Neither does Sears, Target, your local furniture store, etc. I don't get why people think they can find everything on the dealer cost of cars on the internet or something. C'mon, people....
Your not going to know that their are dealer incentives just buyer incentives .But you can usually figure in about july the dealer incentives star coming. You and even the sale person will never known what holdback was sent to dealer owner either. The higher margin vehicles will always have by far the largest incentive in both. Some of the really compact cars have little margin even at MSRP. Take the truck and large SUV profits away and the so called big 3 are in deep trouble .Rebate applied to sell are not taxed; nor trade in here at least. I tried true car and Edmonds; they didn't get within 1500 dollars of what I bought new truck for twice in last six months.My guess is they are just another thing getting a cut when sold.
Generally all this is true except:
"But you can usually figure in about july the dealer incentives star coming."
Programs are generally done quarterly and start in January. Occasionally after 2 months in a quarter are over, and a certain vehicle line is not selling as they hope, then they might juice it for the last month of that quarter. Time of year really doesn't matter.
Chances are they will not take a loss unless as I noted earlier, it gets them to the next incentive level which isn't then actually a loss. As an average a dealer doesn't make all that much on the back end of a loan. A few hundred dollars is doing really well and a dealership doesn't stay in business only making that.
Sure, if they are able to sell you everything in the world they will make a bit more but that is pretty rare.
Which is why i mentioned back end products. Going in worrying about stair steps is not going to get you anywhere.
Some good back and forth here. But no one has been able to answer my original question. Maybe some dealers/car salesmen can chime in here; would a dealership willingly let a sale walk because of outside financing? Is it that big? I'm struggling to see how that can be. On a $25,000 car. I'm just making up numbers here so bear with me. If the dealership gets even $10,000 on financing, that still doesn't equate to losing the whole $25K altogether. So why? As I understand it, the manufacturers compensate the dealership on every car sold. It's not as if they don't get paid. They are just losing the gravy.
On another note, this also damages the reputation of outside lenders. I was reassured that the dealers I visited were part of their network and accepted their loans. Bull hockey. It would be interesting to know just what percentage of their loans actually do get accepted by the dealerships.
Finally the dealer that rejected my loan is still emailing me like crazy, saying they can work something out. HA!
If someone has spoken to this, I apologize, but don't have time to read all the pages in this thread.
Ten years experience selling Hondas. First of all, I am the salesman, I do not get into the specifics of what rate a customer will qualify for, but it is proper to ask if the customer is planning to write a check, lease or finance. I also ask the budget range and pull out what we call "the law of averages." Showing the ballpark payment at 60 months for a 20k car, a 25k car, etc, etc. At around 7% interest at 60 months, each $5000 financed will be right at $100 a month. So if you are financing around $25,000, your payment would be around $500.
The same law of averages shows that each percentage point in a rate will change a monthly payment around $8 a month. So if someone has excellent credit and can get a loan around 2%, the difference in the original 7% would be $40, so the payment would be closer to $460. A year in term averages around $60 a month, so extend to 72 mos, that payment would be closer to $400. Shorten it to 48 months and the payment would be around $520.
Every $1000 you would put down or have in the form of a trade will lower the payment $20. If you have a clear title trade worth $5k and another $5k in cash, the payment would then lower another $200.
I never make a promise on what rate a person qualifies for before we check credit. Most of our Hondas will have an incentivized rate that is right on Honda's website. The best rate usually requires a FICO score into the 700s and some solid credit history and a stable source of income (a 20 something college student with a 725 based off one credit card in a part time job probably isn't going to qualify without a co-signer). My finance people don't usually want me offering that up too easily (as I don't know the credit history, it is disingenuous to promise when it is not my place to qualify them) but if the ask, I will tell them the website tells you and then mention the special rate that is available to well qualified customers.
The reason we cover payment as well as price? I am sure most people interested in this particular thread are savvy about car buying, have bought many cars and can figure the stuff above themselves. But in my shoes, you would be blown away on the number of people who are absolutely clueless about payments. I refuse to waste a couple of hours picking out a car and then have someone settle on a top of the line vehicle near $40k settle on price and then be adamant that the will not go over $300 a month, will not go past 60 months and will not put any money down. When I show them basic math (300 X 60 = 18000 at 0%, the car costs close to 40k.... then the make up some story on how dealer X down the street can do that, they will just go there, blah blah... Seriously this kind of scenario happens quite frequently.
In this day and age of everyone having access to car pricing, invoice, dealer incentives and rate readily available on the internet, it is frustrating to read threads like this and see the comments about car sales. Is there any other business that you know all the front and back information on a product? Not really. I know a friend in the furniture business and they tell me most piece of furniture average around a 300% mark up. But I routinely face customers that act like I am ripping them off for offering a price $100 over dealer triple net cost. Go figure.
Thanks for letting me vent.
Oh.... your original question. There are times that the manufacturer will offer cash incentives on certain models that do require you to finance with the manufacturer's lending institution. We have had a recent promotion that gave another $500 for signing up thru Honda. If you paid cash or went outside financing, you would not be eligible. Had more than one customer walk over this, even when we explained that they could get the first statement in the mail and send their check in then. Again, go figure.
That is one instance where the dealership might let a customer go. But you also might have had a jerk of a salesmen. Or a stupid manager. Who knows? But I still don't know why you would get huffy over the salesman offering up the opportunity to match or beat your rate. SMH.
Well, if the consumer can't found out about dealer incentive programs(i never mentioned you could only search the internet), I don't see the point in mentioning it as a factor in shopping for a car.
Anyway, the OP was buying a used car and dealer incentives wouldn't apply to that anyway.
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