We’ve got a big Financial Conduct Authority investigation going on in the UK at the moment as dealers had been selling finance at artificially inflated interest rates to earn more commission without the buyers knowing they could have been offered better interest rates.
Here in the US dealers are legally allowed to mark up an interest rate 2 points to well qualified buyers. Depending on the bank many will instead of letting you do that, will pay the dealer a flat profit for giving them the business.
Not to be confused with a bank allowing a finance manager to extend a term from 60mo to 66 or 68 mo and maintain the same rate, IF a warranty or gap or other type of product like this is included. This is a method finance managers use to keep the payment where it was agreed to prior to submitting for financing, while still giving a dealership the ability to sell back end products. Typically extending the term will include an increase in the interest rate due to increased lender exposure. Allowing F&I to extend the term with no rate change, exclusive to a product purchase is acceptable and typical. Ex: you agree to $750/mo@60 mo. Finance manager comes out and says "I can sell you wrap and your montly will be 800, or I can extend your loan to 68mo, sell you wrap AND keep your payment at $750/mo." The math doesn't exactly math there, but that's the gist of it.
Is this also true with the Lincoln CPO rates. I used to sell used Lincoln’s and my boss told me you had your buy the CPO to get those rates. Was that not true?
This is true. Nothing wrong about that at all… honestly if you’re borrowing a lot of money you should get GAP anyways to protect yourself. You can always cancel it after you start getting close to even or once you have equity.
When I was selling appliances we would bundle an extended warrantee into the final price. We had leeway with the price of the item but our commission would be cut If we discounted. What I would do was discount the fridge or stove or whatever the amount of the extended warrantee effectively making it free for the customer. My commission on the item would be shit but the commission on the warrantee more than made up for it. Id make more that way than just selling the item at full price. Thats skirting the law because technically it’s not illegal to bundle things like that. If the customer said no I don’t want the extended warrantee but I want to keep the discount on the item I would have to give it to them and this did happen from time to time. Thats where it’s illegal. You can offer a special price if they buy the warrantee but if you say without the warrantee I’ll have to charge you full price your in violation of the law.
What about when a dealership asks you to bring the car back claiming that financing fell through with the bank but we can put you on new payment but it's going to be more than the original payment.
Legend has it Russ is still walking.
We’ve got a big Financial Conduct Authority investigation going on in the UK at the moment as dealers had been selling finance at artificially inflated interest rates to earn more commission without the buyers knowing they could have been offered better interest rates.
Here in the US dealers are legally allowed to mark up an interest rate 2 points to well qualified buyers. Depending on the bank many will instead of letting you do that, will pay the dealer a flat profit for giving them the business.
Thank you for all you do Russ!
Happened to me. The bank actually said they weren't paying for the warranty. So they had me go in a redo the contract.
Not to be confused with a bank allowing a finance manager to extend a term from 60mo to 66 or 68 mo and maintain the same rate, IF a warranty or gap or other type of product like this is included.
This is a method finance managers use to keep the payment where it was agreed to prior to submitting for financing, while still giving a dealership the ability to sell back end products. Typically extending the term will include an increase in the interest rate due to increased lender exposure. Allowing F&I to extend the term with no rate change, exclusive to a product purchase is acceptable and typical.
Ex: you agree to $750/mo@60 mo. Finance manager comes out and says "I can sell you wrap and your montly will be 800, or I can extend your loan to 68mo, sell you wrap AND keep your payment at $750/mo."
The math doesn't exactly math there, but that's the gist of it.
Jeep dealership manager said that to get the 4% interest i needed to put 2k down, or it would be 6% with no downpayment. 😅😅
Is this also true with the Lincoln CPO rates. I used to sell used Lincoln’s and my boss told me you had your buy the CPO to get those rates. Was that not true?
Well, seeing how you can cancel the warranty at any time… not to mention you have 60 days to cancel it for a full refund
I have heard them say to customers they have to get gap to get approved but that was with a really high rate and that completely makes sense lol
This is true. Nothing wrong about that at all… honestly if you’re borrowing a lot of money you should get GAP anyways to protect yourself. You can always cancel it after you start getting close to even or once you have equity.
@@youknow12341000 exactly I agree
Isnt this packing or tied selling ? sounds illegal to me. If so, shouldnt dealership be fined ?
When I was selling appliances we would bundle an extended warrantee into the final price.
We had leeway with the price of the item but our commission would be cut If we discounted.
What I would do was discount the fridge or stove or whatever the amount of the extended warrantee effectively making it free for the customer. My commission on the item would be shit but the commission on the warrantee more than made up for it. Id make more that way than just selling the item at full price.
Thats skirting the law because technically it’s not illegal to bundle things like that. If the customer said no I don’t want the extended warrantee but I want to keep the discount on the item I would have to give it to them and this did happen from time to time.
Thats where it’s illegal. You can offer a special price if they buy the warrantee but if you say without the warrantee I’ll have to charge you full price your in violation of the law.
Who can we report these dealerships to in the US that do this?
Cant believe he doesnt pay his cameraman to walk backwards all over the lot
Lincolns aren’t selling? Lots of them sitting
Would be great if you hold your phone sideways for video recording on long form content.
What about when a dealership asks you to bring the car back claiming that financing fell through with the bank but we can put you on new payment but it's going to be more than the original payment.
You wearing lipstick today?
❤❤truth
First Comment!