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| Three Generations of Service  |
I've always assumed that the money they "lost" by not charging interest on the loan was just written into the price of the vehicle. I mean, nobody in their right mind is going to let you use their money for 5 years for nothing, right? Be careful when following the masses. Sometimes the M is silent. | ||
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The Unmanned Writer |
If they're paying less than 1% for he money they are lending you, and their built-in profits are higher than thier cost of the money, it makes sense for them to advertise 0%. Life moves pretty fast. If you don't stop and look around once in a while, you could miss it. "If dogs don't go to Heaven, I want to go where they go" Will Rogers The definition of the words we used, carry a meaning of their own... | |||
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| I believe in the principle of Due Process  |
It’s merely the time value of money. A dollar a year from now is worth a bit less, by the amount of the appropriate interest rate, called the “present value.” You can google time value of money the basis of all finance, and learn all about it, monthly payments, annuities, pay downs. It is quite fascinating! Luckily, I have enough willpower to control the driving ambition that rages within me. When you had the votes, we did things your way. Now, we have the votes and you will be doing things our way. This lesson in political reality from Lyndon B. Johnson "Some things are apparent. Where government moves in, community retreats, civil society disintegrates and our ability to control our own destiny atrophies. The result is: families under siege; war in the streets; unapologetic expropriation of property; the precipitous decline of the rule of law; the rapid rise of corruption; the loss of civility and the triumph of deceit. The result is a debased, debauched culture which finds moral depravity entertaining and virtue contemptible." - Justice Janice Rogers Brown | |||
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| Member |
This is 100% right. Most manufacturers offer thousands in rebates, or 0%. You would almost have to be an idiot to take the 0% over the rebates. | |||
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Corgis Rock |
Add in the service revenue. I think car places make me ch of their money when the car goes into the shop. “ The work of destruction is quick, easy and exhilarating; the work of creation is slow, laborious and dull. | |||
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| His diet consists of black coffee, and sarcasm.  |
Zero percent APR is usually in lieu of rebates or other incentives, if any. They are often only for 36 months (there is a trend toward longer terms), which still makes the payment high. And only people with the very best credit are going to get that rate. | |||
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Dean of Law |
It's usually the choice of 0% financing or a several thousand dollar rebate. Often the best thing to do is take the rebate and finance with an outside lender if you have great credit. | |||
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| I Am The Walrus |
Have a friend who worked for years as the manager of parts departments at a couple of dealerships to include Honda and Hyundai/Kia. She said that service was the bread winner for a dealership. I believe her. How many cars can a dealership sell in a month? Compare that to how busy their service department is. Don't forget warranty work which is reimbursed by the manufacturer. Parts no only sell over the counter but also to body shops. Part of me wonders why a smart dealership doesn't blow cars out of the door with the theory being that customers come back for service. What I have read being done was a Toyota dealer selling the extended warranty at cost or $100 over cost. Their theory was that they would sell a lot of them and collect on the huge bonus Toyota was paying out for selling so many extended warranties. _____________ | |||
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| You can't go home again  |
Auto makers use 0% interest rates to move cars that are selling slower than they would like or when they need to move excess inventory. They actually pay the finance arm to do this via what's called subvention. The finance arm buys the money they lend at a certain interest rate. For every loan they make at 0%, the manufacturer pays the finance arm the difference to get to the 0%. The cost of the 0% isn't baked into the car, it's a sales tool used as an incentive to get us as consumers to buy the car just like a rebate. It helps the factory move more metal. Same exact thing is happening when you see .9% or some other very low rate being advertised. The cost of processing and servicing the loan plus buying the money is more than the .9% but the factory asks the finance company to do it and then pays the difference. Sometimes you'll see either rebate or special finance rate offered but not both. That's because both cost the factory money. What dealer will typically do in that case is put you through a bank or credit union with a very low rate and then apply the rebate toward the car. With interest rates where they have been, this often is the smarter way to go in this case. --------------------------------------- Life Member NRA “If you realize that all things change, there is nothing you will try to hold on to. If you are not afraid of dying, there is nothing you cannot achieve." - Lao Tzu | |||
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Oriental Redneck |
I'm not a business person, but I'm quite sure that a business' goal is not to lose money. Any money they "lose" in one place is more than made up by profits made elsewhere. Q | |||
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| stupid beyond all belief  |
ZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZ  Been there done it in courses. Quite a few insomniacs on the board, just google this when you're tired!What man is a man that does not make the world better. -Balian of Ibelin Only boring people get bored. - Ruth Burke | |||
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Member |
Not really. i have more than a few friends with less than stellar credit scores who have qualified for 0% financing for as much as 72 months. Consider. Most people don't keep a car through the entire length of their loan. In two or three years they'll be looking to trade and buy new again. As such, dealers get some profit on the sale of the first car, good money on service for a couple years, good money on the trade, and some profit on the sale of a new car as the cycle starts over again. They also benefit from sales volumes with the manufacturer. All in all, they do just fine without making big loan profits. ----------------------------- Guns are awesome because they shoot solid lead freedom. Every man should have several guns. And several dogs, because a man with a cat is a woman. Kurt Schlichter | |||
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| Member |
It is almost always in leui of a hefty rebate that you'd get if you paid cash or financed at normal interest rates. | |||
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Hoping for better pharmaceuticals |
Manufacturer incentives to the dealers may play a role in the financing options the dealer offers. Getting shot is no achievement. Hitting your enemy is. NRA Endowment Member . NRA instructor | |||
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| Member |
In any case - of course it makes sense to run the numbers and see which gets you the best overall deal. ------------------------------------- Proverbs 27:17 - As iron sharpens iron, so one man sharpens another. | |||
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