>Most make their money in the finance or service department. It was not uncommon for a loan to be 5-6 years long
Yeah, but with the extremely low interest rates we've been seeing the past several years, how are they making money there either?
Yeah, but with the extremely low interest rates we've been seeing the past several years, how are they making money there either?
0 percent brings in good credit buyers who might otherwise buy a different car, or who might just keep driving their old cars.
They will, but not necessarily with the same lender. Lender A giving out 0% loans is not getting money from lender B giving out 15% loans.
>The finance guy has contacts with a dozen or more lenders.
Exactly. So what's the incentive for bank A to lend at 0%? They're not going to see any of the profit that other lenders get. In fact, they're not going to get any profit at all, unless the buyer defaults early or misses payments. It seems to me that the whole 0% loan thing is a way for dealers and mfgrs to keep their inventory moving, and perhaps make money just on the regular mark-up of the car itself (which isn't much with new cars these days), and hope the buyer comes back for overpriced service.
You should get a bigger cash discount to buy the car outright, instead of financing through them.
Instead, that buyers is more likely to be trading that car in 2-3 years at which point the dealer can make more off the car again.
If you have shitty credit, that 0% loan pops up to 8-11%.
Besides, it doesn't matter what the prime interest rate is - the consumer rate is always (prime + markup)%.
(Of course, if you miss a payment, that 0% rate will jump to 12%.)