By financing people with bad credit for extremely high rates.
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%.