brand new 2013 Ti 5 door

Salesguy said:

The chargeback will be whatever dollar amount in reserve that was held by the dealer.

In most cases this can be (estimated) anywhere from 1000-2000 dollars, depending on what the interest rate/amount financed/backend products, was etc. It can vary widely between deals. On a focus, you can bet on the lower end, since the dollar amount financed will be lower.

For most dealerships (I cant comment on all dealers pay plans) this will go against the finance persons total gross profit amount, on which he gets paid a percentage. What also happens is that a lot of the times, the finance guy can be paid on the deal already, and when the chargeback comes from Ford, the finance guy is paying back money he has already 'earned' via his paycheck, on his current pay period. So, hes counting on X amount of dollars and finds out his paycheck is smaller than it should be because of a chargeback.

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Held by the dealer? I don't get it. Ford Credit sends the dealer a check for the amount I financed right? I would think Ford Credit would hold back a portion of that amount for 3 mos. to see if I refinance right away. If I don't, they send the dealer the rest of the money. That would make sense to me. How is it the dealer holds something in reserve?


In any case, that's funny since the salesman was like 'yeah wait a month or two to refinance or Ford will charge you a $75 fee.' Haven't seen any backup of that on the internet. But the finance guy said like half a dozen times "You absolutely have to wait until after the 3rd payment to refinance. In fact, give it a week after the 3rd payment before you refinance to make sure the payment cleared and everything." I said what happens if I don't, and he said Ford could come after you for that $500 rebate back - essentially add it to the payoff amount. Lying through his teeth. Makes sense that he's personally affected by the "chargeback" or whatever you call it. Also makes me feel less guilty about refinancing now...

kam327 said:

Held by the dealer? I don't get it. Ford Credit sends the dealer a check for the amount I financed right? I would think Ford Credit would hold back a portion of that amount for 3 mos. to see if I refinance right away. If I don't, they send the dealer the rest of the money. That would make sense to me. How is it the dealer holds something in reserve?


In any case, that's funny since the salesman was like 'yeah wait a month or two to refinance or Ford will charge you a $75 fee.' Haven't seen any backup of that on the internet. But the finance guy said like half a dozen times "You absolutely have to wait until after the 3rd payment to refinance. In fact, give it a week after the 3rd payment before you refinance to make sure the payment cleared and everything." I said what happens if I don't, and he said Ford could come after you for that $500 rebate back - essentially add it to the payoff amount. Lying through his teeth. Makes sense that he's personally affected by the "chargeback" or whatever you call it. Also makes me feel less guilty about refinancing now...

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Before I start here, let me just disclaim that the numbers I am throwing out here are just for example, and don't represent actual dollar amounts etc.

OK so, here is how it works. When you finance with a dealer, the bank that you finance with (regardless of being Ford Credit or not) gives the dealer a 'buy rate'.

The 'buy rate' and the rate you are given are two different things. So, say the buy rate is 2.9% from Ford credit. The dealer marks it up to 4.9% and that is what you as a customer pays. Any difference in the total dollar amount that will be financed is given to the dealer. That is his reserve. So - Say at 2.9% you would be paying say 1800 bucks in interest over the life of your loan, to where at 4.9 its now 3300. The dealer receives the difference in a check up front, since you are paying to the credit provider. As I said before, this reserve amount has a lot to do with total amount financed, monthly payments/term, and the difference in buy rate and contract rate. Typically its 1-2% in rate.

Now, before you cry foul about marking up rates, know that the buy rate from the bank is generally cheaper than anything you might get from going to your own bank. For example, you walk into your bank and set up your financing at 4.9%. If the dealer set it up via the same bank, same car, and everything, the buy rate they are given will be lower than the 4.9% you get as a customer walking through the door. This is because the bank wants the dealer to make money, so that the dealer will continue to feed them deals that they normally would not see. If that makes sense.

Now, in not every single case is the buy rate cheaper than the rate you would get. But most cases by far it is so. In your case you are saying you can get 1.9on 72 months from your credit union. When you get down into the 1.X% in rate its hard to get a buy rate much cheaper than that, but sometimes it can happen.

So, that's how dealer reserve works. Once its cleared the 3 month threshold, Ford no longer charges the dealer back in the event of the customer trading/refinancing etc. They do however make risk assessments based on all of the data provided, so the more people that cost them money in reserve, the more that risk weighs on what they can provide as interest rates to others etc.

As for Ford coming after your $500 rebate. Not a chance. The $75 fee sounds like BS too but I can't comment on for certain, because in rare cases you will have a small fee like that. Most loans are simple interest and have no repayment penalties.

edit: Also there are fees and other things that come OUT of the dealer reserve, so the dollar amount the dealer gets isn't the exact difference in the buy rate and contract rate, but a portion of it, and every lender and dealer have different contracts set up regarding buy rates etc. I cant say what Ford Credits actual reserve percentage pay out is, but you can think 80-90% of the reserve amount is actually paid out to the dealer in most cases.

As far as rates go I have no credit and got 1.79%...

Is it the DCT or the 5spd MT?
Beware!

boombots said:

As far as rates go I have no credit and got 1.79%...

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Geez! I got 4.99% 48 months

hi guys ,i went ahead and bought the 2013 5 door i got them down another $500
in the end or should i say i got to keep another 500 in my pocket i was just over looking at cars and driving around dealers , i paid $ 22,200 & got $2000 in rebates 6yr interest free, a full tint job & 5 free oil changes ,and the ttl & doc fees ate up my 1500 dn payment but it was all about the monthly payment for me , sweet ride though a big step up from the nissan versa she was driving and its only $ 68 a month more than that slow ass thing