Not really any more, but it definitely used to be very profitable.The dealers get a cut of the financing - in some case it can be more profitable than the sale of the car.
Not really any more, but it definitely used to be very profitable.
This used to be the case when banks were providing the finance; you'll still see it a bit in the finance arranged through independent dealers. But with the brands it's either white labelled at very low margin, or the car brand has set up a bank itself. It's an enabler to sell cars, with rather than commission driven.
You are aware that the dealership doesn’t do the finance, so they don’t care? They want to sell the car, for whatever price makes it a good deal to them.
I have yet to see actual proof that you get a significant better price by offering to pay cash than getting a finance deal.
But going back to the OP: there is no benefit getting finance from your credit union over a bank, unless you pay less interest.
As others have said, finance deals are built into the ticket price - whether it's a car or a suite of furniture.
Finance companies are looking for 6% apr according to a dealer next door to me. Whereas for furniture and white goods they are looking for 10%-12% (flexifi)
The dealer / retailer can make up any rate they like.
0% car finance on 12 monthly payments will cost 3.3% of ticket price.
0% car fiance on 36 payments will cost 9.5% of ticket price.
So if a garage is offering 3 years 0% finance, haggle for 10% discount if you are paying in full yourself
Very true in my experience.
I was offered 0% finance on my last new car, but it was on the recommended retail price. I declined, paid by bank draft and got a €2,750 discount off the recommended retail price.
In my case 0% finance would have cost €2,750.
Which is nothing on your average 30 k new car
Well it's 9.17% to be exact - the only question is going to be what the cash flow is worth to each person. One person might have cash available and 9% is a pretty decent discount. Someone else might value the utility of spreading out the payments.
But it's not nothing
If finance is costing them 3.5% in order to offer 0% finance, then that 3.5% is up for grabs.You won't buy any cheaper by offering cash, they have a floor price either way
The comparison with kitchen appliances is bogus
If finance is costing them 3.5% in order to offer 0% finance, then that 3.5% is up for grabs.
The comparison to white goods was just to show that finance houses work on different rates depending on the product.
Car financing is at the lower cost level