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SVTPerformance's Chain of Restaurants
Road Side Pub
Q & A Session... - Ask a Ford Dealer
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<blockquote data-quote="13COBRA" data-source="post: 15266608" data-attributes="member: 138337"><p>Great question.</p><p></p><p>When you pay cash, the dealer makes money on selling you the car. When you finance, the dealer can make up to 2.5 points on a loan. 2 points on a loan of $50k is about $1900.</p><p></p><p>Meaning, the dealer would be better off selling you the car losing $500 on the deal and making $1900 in finance, than he would if they sold it and made $1000 when you paid cash.</p><p></p><p>Back in the day, the cash is king statement, was dominant because financing was a lot harder to achieve than it is now. With financing being available to nearly everyone, a cash contract or finance contract both mean the same in terms of instant money to the dealer.</p><p></p><p></p><p></p><p>As far as avoiding the back and forth, it will depend on what type of dealership you are dealing with. More traditional dealerships do just this, they go back and forth not to give up gross profit.</p><p></p><p>More modern dealerships, like mine, price their vehicles extremely competitive on the market. We justify our prices to the consumers and explain where they are compared to our competitors and so on. For example, on pre-owned vehicles, we barely negotiate, maybe a few hundred dollars or so. The reason we are able to do this is from the time it gets on our lot until the time it leaves, it is priced competitively against our competition's prices.</p><p></p><p>It makes for much smoother transactions, customers tend to be happier and everything is just easier. Every once in a while I'll still get an older farmer that wants to negotiate thousands on a used truck...he either allows us to explain how we price, or he gets mad and leaves. That's very rare though.</p></blockquote><p></p>
[QUOTE="13COBRA, post: 15266608, member: 138337"] Great question. When you pay cash, the dealer makes money on selling you the car. When you finance, the dealer can make up to 2.5 points on a loan. 2 points on a loan of $50k is about $1900. Meaning, the dealer would be better off selling you the car losing $500 on the deal and making $1900 in finance, than he would if they sold it and made $1000 when you paid cash. Back in the day, the cash is king statement, was dominant because financing was a lot harder to achieve than it is now. With financing being available to nearly everyone, a cash contract or finance contract both mean the same in terms of instant money to the dealer. As far as avoiding the back and forth, it will depend on what type of dealership you are dealing with. More traditional dealerships do just this, they go back and forth not to give up gross profit. More modern dealerships, like mine, price their vehicles extremely competitive on the market. We justify our prices to the consumers and explain where they are compared to our competitors and so on. For example, on pre-owned vehicles, we barely negotiate, maybe a few hundred dollars or so. The reason we are able to do this is from the time it gets on our lot until the time it leaves, it is priced competitively against our competition's prices. It makes for much smoother transactions, customers tend to be happier and everything is just easier. Every once in a while I'll still get an older farmer that wants to negotiate thousands on a used truck...he either allows us to explain how we price, or he gets mad and leaves. That's very rare though. [/QUOTE]
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Q & A Session... - Ask a Ford Dealer
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