Finance Person Question - Do They Get Kick-backs/Bonuses?

[FloridaMan655321]

Long story below, but I'm wondering if the finance person that you deal with has any incentives to have you finance with certain institutions? Such as, do they get extra bonuses or a % kick-back? Does it matter to them if I finance with Chrysler or with a local Bank/Credit Union?

On to the long story. Credit score is perfect (literally 850 when I checked last month). I have a Mojave on order, ETA next week, so I decided to go into the dealer today in order to get some of the paper work out of the way. After talking to my sales person (who has always been great/kept me up date/respectable/etc..) I then went to the finance person to finalize that portion. One thing that was unexpected was that he started out saying "I have two credit unions to choose from" and I stopped him to say that I was assuming I would go with Chrysler as they are offering 0%. He said they aren't offering 0% for the Rubicon. I Told him I'm getting the Mojave and pulled up the Jeep.com website to show 0%/36mo is offered. I told him this was a big reason why I was going with this purchase. He said that Chrysler probably didn't approve because the payment would be high. I said then I'll put more down if that is the issue. He says "well it would be like 5 or 10 thousand", I said "ok....whatever is needed". He then called some lady at Chrysler finance (assuming) and asked her to change it to 0%. He tells me that she is taking it to her manager and will let us know how much I need to put down. So I'm going through the paperwork, lemon law papers, I'll have insurance, etc.., then he gives me the finance sheet as he printed it out and I see it's showing 0% with no required amount to put down. So I ask him about it, he just says that I was approved and will not require anymore down. I found this very strange. I kind of feel like he was straight out lying about this and wanted me to go with a local credit union vs Chrysler. Maybe he just sucked at his job or was lazy, I don't know.

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[kevman65]

Don't know if different States have different laws or not, so this may not apply in your situation.

I know that my State allows them to "shop" a loan app. If they can get you to sign on a higher % rate than you qualify for, they make a profit on the loan.

I am like you, in the 825 area, when I bought mine earlier this year they tried to get me to sign on a loan that was 3% higher than I had already secured. I laughed at them and told them I'd keep my .99% loan thank you.

 

[MrZappo]

Long story below, but I'm wondering if the finance person that you deal with has any incentives to have you finance with certain institutions? Such as, do they get extra bonuses or a % kick-back? Does it matter to them if I finance with Chrysler or with a local Bank/Credit Union?

On to the long story. Credit score is perfect (literally 850 when I checked last month). I have a Mojave on order, ETA next week, so I decided to go into the dealer today in order to get some of the paper work out of the way. After talking to my sales person (who has always been great/kept me up date/respectable/etc..) I then went to the finance person to finalize that portion. One thing that was unexpected was that he started out saying "I have two credit unions to choose from" and I stopped him to say that I was assuming I would go with Chrysler as they are offering 0%. He said they aren't offering 0% for the Rubicon. I Told him I'm getting the Mojave and pulled up the Jeep.com website to show 0%/36mo is offered. I told him this was a big reason why I was going with this purchase. He said that Chrysler probably didn't approve because the payment would be high. I said then I'll put more down if that is the issue. He says "well it would be like 5 or 10 thousand", I said "ok....whatever is needed". He then called some lady at Chrysler finance (assuming) and asked her to change it to 0%. He tells me that she is taking it to her manager and will let us know how much I need to put down. So I'm going through the paperwork, lemon law papers, I'll have insurance, etc.., then he gives me the finance sheet as he printed it out and I see it's showing 0% with no required amount to put down. So I ask him about it, he just says that I was approved and will not require anymore down. I found this very strange. I kind of feel like he was straight out lying about this and wanted me to go with a local credit union vs Chrysler. Maybe he just sucked at his job or was lazy, I don't know.

YES YES YES, they do get a kickback and make A LOT MORE if you finance via another vendor.

Lets be clear that the finance guy is THE BEST SALESPERSON in the dealership ... He/She will try to spin you around and upside down ... And they do a lot of people ...

I've had dishonest finance guys before and recently I had a great one with my truck .. I got the 0% as well but it took him a while to get it done ...

Had he got me financed via someone else (3rd party) he would have made commission and the dealer would have made a few extra grand ...

All of that was BS ... With an 850 credit score, you can get any car company to give you a great deal easily ..

Thank god that you are an educated consumer and pushed back ... Once he realized that it seems that things changed ... Good for you ...

 

[EXTORTION]

In short, YES they do. Same with warranties etc that the finance guy pushes.

 

[CivilJeep]

Yes, absolutely, but not in the way you might think. Because of the volume they finance, a lot of dealerships can get a better rate (called retention) from banks than you yourself. However, they are allowed to increase the rate (usually up to 3 percentage on top of the approved rate), and they get a lump sum payment from the bank after the note has been written. Also, they have relationships with banks, and when an elite score (such as yourself) wants to finance, that is used as a bargaining chip to bundle with someone who has a poor score. Many times a person with a poor credit score will agree to any vehicle price as long as they get financed. So being able to send a 850+ with someone who has a poor score will allow a dealership to make a killing on the vehicle sale to the person with a poor score. That's probably the biggest reason they want to finance you, not because they are going to make much on the rate. You are pulling the weight of someone else with you.

 

[punk'n]

He said Chrysler didn't approve because he wanted you to go with his " two credit unions to choose from" where he was going to make a greater profit.

I do not trust any dealer finance personnel. Ever.

Years ago, I was replacing a vehicle that was stolen, recovered and totaled. I happened to mention that to my salesman, although I told him I was paying cash for the new vehicle (insurance payout covered it). Low and behold, when we are done with the deal he tells me I HAVE to meet the finance guy. I said why, I am paying cash? He says its required. The finance guy then tries to sell my financing. I kept saying I'm paying cash (I literally brought them cash but they refused to accept it- that's another story). Anyway he goes on to tell me that if the new vehicle gets stolen after I pay cash, my insurance could refuse to cover the full insurance coverage amount. But if I financed it though them, the insurance would have to cover it. Wait, what? Since when did the dealership dictate how insurance pays out. Of course, he then tries to sell me paint protection, rim protection, window etching, an alarm system, tire protection, extended warranty etc etc etc.

After many years of vehicle purchases, I am now fully prepared when I go in. I have my credit score ready, what I want for my trade in and exactly what I will pay. If it doesn't match my numbers I walk. If I'm going to finance, I already have financing quotes lined up to make sure the dealer offers a lower one. Of course, I never reveal my finanace % until the dealer reveals his. That bugs the crap out of them. But, they aren't there to help me, just make profit. I also make a habit of saying as little as possible during the whole ordeal. They don't know how to read you then.

 

[XJhawk]

The finance department gets a "buy rate", and they bump it 2-3 "points" (basically 1.25-1.5%)(sell rate)
They get the "reserve" (the difference). between the 2.

Most business managers earn a not quite-livable salary, and a percentage of what they generate in total revenue (most times, 20% of "eat what they kill"). They will also have bonus programs based on the back end products that they sell as a percentage of total finance penetration.

The vast majority of people who say that they are paying cash actually are not using their cash. They most of the time are borrowing the money or leveraging a market account of some form.

My grandfather taught me that if you can use bank money anywhere near what you are making on your money otherwise, borrow it. He called it "keeping your powder dry". He meant keep yourself cash leveraged, which is solid advice.

As for back end products, the retail rub is usually 70-100% mark up. When I bought my Mojave, the finance manager gladly took 60% of what he was asking for an extended warranty. (Pro tip: pay cash for your warranty, it doesn't make sense to roll interest onto back end buys) All it took was letting him know that I would use his financing (no program existed for the Mojave), therefore not costing him finance penetration points on the loan AND the extended warranty. I don't mind him making a good living, but not off of me in a lump sum. He got me 2.25% through Ally.

A great negotiation is when both sides aren't 100% happy with the result. I was still pretty happy.

 

[Kevin_D]

It's soooo much easier to just pay cash.

 

[punk'n]

A great negotiation is when both sides aren't 100% happy with the result. I was still pretty happy.

That's a great statement. I totally agree.

I don't go in trying to beat them up. But, I don't expect to be beaten up either. I know they have to make enough to keep the lights on. But, they don't have to make it all off of me.

The key is to be fully informed going in and not opening up and tipping your hand.

 

[ZTMAN]

Daughter in law leased a VW for four years. VW warranty is bumper to bumper for four years. Finance guy tried to sell her an extended warranty with a straight face.

 

[FloridaMan655321]

Thank you all for your replies. Things are making more sense, such as how his attitude changed. The only thing he tried to sell extra was extended warranty. I said no without looking, but nice to know you can get that at a percentage of what they are asking. I’ve just always said no. Maybe I’ll see if they can sell it to me cheaper once I go to pick it up and just pay cash (if that’s even possible).
As for paying cash, very true, but right now with 0%, I can put that money into a mutual fund and make money off it vs spending it now. Plus it gives me a few months to live if something happens employment wise.
My previous experience was with BMW, which they said right off the bat that I’m qualified for BMW .9%. I might have gave the impression that I wasn’t going to finance though. After I bought a Honda, and they didn’t have any incentives and once I told him my credit union was 1.9%, he was upfront and said the lowest he has seen was 4%. Both of those were in a different area of the state, so maybe they are used to dealing with a different clientele.
Again, thanks for everyone’s insight. It was certainly an unexpected experience, but now I know for the future.

 

[wannajeep]

Daughter in law leased a VW for four years. VW warranty is bumper to bumper for four years. Finance guy tried to sell her an extended warranty with a straight face.

And the thing about extended warranties is they're often presented as what you're paying for the total number of years, not the number of years beyond the warranty you already have.

Rephrased (making up the numbers): Pay $1,000 and you get 8 years of protection. No, if the manufacturer warranty is 4 years, you're paying $1,000 for 4 years.

Similar thing happens with options/packages when you buy. "Upgrade to styled alloy rims for just $500" - what you might forget is that they're not throwing in additional rims for that price. They're also taking back the ones you already would have paid for.

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