Commission on car loans

[Ann-Marie]

I have a question. We are in the process of buying a new Explorer. Ford offered us a deal of $3,500 rebate and a 60 month loan at 5.9%, or no rebate and a 60 month loan at 3.9%. We choose the rebate, and got our own car loan at Bank of America for 4.7%. The Ford dealer seems a little annoyed that we did not take the Ford financing. Bank of America told us that Ford receives 1% of the loan as a commission from BOA. What would the commission be if we took the Ford financing? Also, who does that commission go to? Our salesperson, or the dealer? Our salesperson did not push the Ford financing at all. It seems to be the manager that is upset. Thanks for your input.

 

[Rose Pink]

Not sure on all the ins and outs, and I assume it may be different at different dealerships, but when my dd bought her car she had a big mess with the finance officer at the dealership. DD had arranged for her own loan with her credit union. The finance officer said, "no problem we can finance with your credit union" and then proceeded to generate a new loan through them. This was all confusing to my daughter who after a week got a call from the loan officer at her CU branch wanting to know why the dealership had not sent the title to them. I went with her to the dealership and that is when we realized what the dealership person had done. She was furious that dd had her own loan, called the CU loan officer and threatened to have her fired, hung up on her and generally acted like a total b**** to me for not backing down. Seems dealership officer was out her commission.

Now, both loans were through my daughter's credit union. It seems that who got the commission depended on who generated it, the dealership or the loan officer at the CU. There are so many underhanded games played, imo, with the finance officers that I am reluctant to deal with them. OTOH, my husband had a very pleasant experience with a different dealership but we are paying too high an interest rate (BoA) considering that they have now fallen and I am waiting for our CU to follow suit on car loan interest rates so we can refinance with them.

 

[nightnurse613]

I send my husband out to buy a new car for me. The last time he went to the credit union and got a preapproval for 5 percent while anticipating a higher rate at the Chrysler finance officer's desk. When he walked in, they had the paperwork all drawn up at 4.75 percent (no prepayment, declining balance, etc) so my husband just kept the information in his pocket! A couple of months later the very same credit union offered to finance recent purchases with a special we will beat it or give you $100. So, my husband went in, knowing that previously they would only give him 5 percent and expecting to make a quick $100. Twenty minutes later he walked out with a 4.5 percent loan (and I had to pay for my own lunch, drat)! :annoyed: Go figure!

 

[Ann-Marie]

I think the dealer did not believe us that we got a 4.7% loan. Today we went in with the committment letter. Two of the salesman and the finance manager all looked at the letter and looked amazed. They asked us if it was a internet special rate. Beets us! All we know is that we are happy.

 

[Bucky]

I have a question. We are in the process of buying a new Explorer. Ford offered us a deal of $3,500 rebate and a 60 month loan at 5.9%, or no rebate and a 60 month loan at 3.9%. We choose the rebate, and got our own car loan at Bank of America for 4.7%. The Ford dealer seems a little annoyed that we did not take the Ford financing. Bank of America told us that Ford receives 1% of the loan as a commission from BOA. What would the commission be if we took the Ford financing? Also, who does that commission go to? Our salesperson, or the dealer? Our salesperson did not push the Ford financing at all. It seems to be the manager that is upset. Thanks for your input.

This is just a little confusing to me. Why would BofA pay Ford 1% of your loan if you got the loan directly from BofA? Never heard that one before.

Auto dealerships receive some type of compensation on every loan they generate and process. Depending on the buy rate from the lender it may be as little as what is called a flat rate of usually $100 per contract. These fees go to the dealer. On a flat rate of the example of $100 the salesperson may get $10 of it and the rest goes into the Finance pool of money that most F&I managers are paid out of. Most F&I managers will try to bump the rate as much as 3% if you let them. Then they get a commission from the lender on that 3% charge you just accepted. Always go into the dealership prepared. Know the best rate you can get from your own sources before going to the dealership. If the dealership can beat the best rate that you can get on your own, who cares what they make?

The dealerships will also try to sell you Life and A&H Ins. This is truly a scam. Also watch out for the extended warranties. They like to charge you as much as they think they can get away with. Typically they will offer you a 100K warranty for say, $1295. Cost to the dealer is probably $700. Also make sure that if you decide you need an extended warranty that you buy a manufacturers warranty, not some after market company that dealers like to sell. They like to sell these because they are basically self insured and it's almost pure profit to them. Buyer beware.

 

[Ann-Marie]

Thanks for your reply. Very helpful.

 

[LUVourMarriotts]

When we bought out last car about 2.5 years ago, the dealer laid out all of our options with financing through them. I had already checked the available loan options at our credit union, so I told the finance manager that I would call him later that day to either tell him we were doing our own financing, or to proceed with the best offer they gave us. When I called to tell him we did our own financing, he was really upset and gave me about 10 reasons why we should not finance through a credit union. Luckily, the finance manager at the CU prepared us for all of these "reasons" and highlighted the fine print which would prove that the dealer finance guy was not being truthful. I didn't need to waste my time, and could have just said, we're doing it our way. But, I like proving people wrong when they are being jerks about things. It's fun.

 

[Gordo1111]

Finance through a credit union - better rates, trustworthy etc....your an owner of the credit union vs "the dealer" who only cares about them.!

 

[Ann-Marie]

In this case, the credit union was higher than the bank. AAA was also higher.