Quote:
Originally Posted by Derek Sutton
There is a number of reasons for this wich serve to help both the buyer and the dealership
1) Cash deals are very rare at a dealer, like 10% is a high rate for cash deals
2) Cash deals make very little sense if you are financing at a subvented rate you are going to be further ahead collecting 2.5% on your money if you can finanace at 0%
3) If they are on a budget, they've likely already decided what they want their payment to be
4) Some customers can't figure that $350 a month will not get them a $40,000 vehicle
5) Dealers prefer customers to finance
discussing Payment is also away to avoid sticker shock, $50k is alot of money, but $625/ month sounds a lot better doesn't it? How about $285 bi weekly? isn't that even better? Just $144/ week? So instead of going out for dinner Friday nights wouldn't you rather be rolling around in your new SUV?
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The problem with this though, people are latching on to the payment aspect without considering the purchase price, interest cost ect. They end up with these disgusting 8 years loans at 5-7% interest that they are upside down in for the entire ownership period. It's borderline predatory nonsense.