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Old 05-17-2020, 06:00 PM   #32  
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Joined APC: Dec 2017
Position: Retired NJA & AA
Posts: 930

Dealers do often make more on financing than on the new car. They give so much business to their bank that they get good incentives, plus they can often beat your own bank on interest rates. In my case I froze my credit with all 3 bureaus back in 2016 when my ID was stolen and it's still frozen. So it's a hassle to unfreeze, although Transunion and Experian are pretty easy but Equifax is totally incompetent. Depends on which bureau they use. If there had been a nice $$$ incentive if you financed it might have been worth it as long as no early payment penalties. You also have to look at how much interest you might pay in that 1st month. Could offset any $$$ incentive.

BTW, it's pretty easy to freeze your credit and in many states they can't charge you for doing it.

Originally Posted by 742Dash View Post
There was a WSJ piece a few months ago about this. The bottom line is that the dealerships make more money on the financing than on the actual sale, which is often only a few hundred dollars. And they don't just make it on their internal financing, apparently kickbacks from local banks and credit unions are common.

I have worked with a local VW dealership for years. Small, no advertising, relies on repeat customers. Anyway, the GM told me upfront that he could take another $500 off if we financed it. So we did, and paid it off 2 months later.

It is even worse if you try to shop the higher end cars. BMW/Auid/Volvo do not seem to want cash customers at all. Cash buyers do not support the lease/CPO system where they sell the same car twice, get the financing incentives and have the buyers tied to the dealership.
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