go to a smaller dealer and ask them to buy a car from wholesale auction for you and you cover their costs. that way their margin js transparent and is negotiated upfront. You will be lucky to get 5-10% discount from retail prices, but wholesale prices at Manheim can be 15-30% less than retail, even more if you are willing to buy less than perfect condition car
https://www.econtalk.org/cole-on-the-market-for-new-cars/
One interesting point was letting the buyer successfully negotiate to an absolute rock bottom price, but then making back the margin on financing.
The car business is a giant recursive function where cost can be added at every step.
The sales price may have been low but the dealer has lots of ways to add pure profit:
* sub-prime loans with high interest
* gap insurance
* alarm systems
* extended warranties
* window tints, undercoats, towing hitches, etc.
The buyer might also have a trade in which conveniently starts the whole process over again.
The "Forbes list of Billionaires" has several car dealers in it.
Also 1% sounds too low for an independent bank loan, even with the now-cratered loan rates. I am guessing that is probably a subsidized loan through a manufacturer's bank. Manufacturers have long offered artificially low rates through their own banks to help move product.
Dealerships TOTALLY make money on the financing. In your example, it might be $1000 - it sounds like you have pretty good credit, and the margins are thin there. You should remember that if someone is leaning YOU money, they just want a reliable investment for their portfolio - they'll make their money on the next guy.
If you are getting <1% offers, that is probably financing from the manufacturer (that is, Toyota Financing is lending money for a Toyota, at a Toyota dealership). These deals are HOT because Toyota Financing's #1 job is to sell Toyota's - making money is #2 or #3.
Also, did you buy a warranty or gap coverage? Cause that is profit for the dealer, too.
You probably think you got the "best rate" because you SAW ALL THE OFFERS. Nope. Dealerships see the rate from the bank and can bump it up. Did Wells Fargo offer you 2%, well, let's show him 3% and I keep the difference.
Also, yup, getting a "direct rate" is difficult. The bank doesn't really know the car you are buying, and they might see that you were already approved at the dealership and give you a WORSE rate DELIBERATLY simply to maintain a relationship with the dealership.
I worked in counterintel for a while, so I have had a lot of fun with car dealers over the years. I won't buy a new car (still drive an 87 Suburban Diesel) but from time to time my wife let's me know it's time for her to get a new car. Anyways knowing that they can and do run surveillance can actually be used to your advantage.
Try it one time, when they go back to the manager, say to the person with you, let's leave, I am not going to get what I want here and restate what you know the car is worth based on research. Leave enough meat on the bone for a decent commision and profit, but cut it close to a good deal. Get up and watch them be on the other side of the cube before you can even fully stand up. Manager will have miraculously come back 10-15% over the amount you stated. If you are not willing to walk from the deal, you are not getting a deal.