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Discussion Starter #1
I recently bought a new Focus ST. I intended to pay cash. Dealer offered extra $500 off for financing with Ford Credit. So I financed minimum ($5k) and paid that all off with first payment. Dealer encouraged this.

This seems good for me, and maybe for the dealer too, but not for Ford Credit. Did I miss something?
 

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No. The dealer gets incentives from Ford credit for providing their financing. Ford credit is happy that you purchased a car. I have 0% financing through them, it is the same situation as you are in that they are not making money on the financing portion off of me.
 

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Nope, you did good. I did the same. My dealer claimed that I needed to pay 3 months of payments to keep them from being penalized. I was going to but they jerked me around with a paint issue, so I paid it off immediately.
 

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I recently bought a new Focus ST. I intended to pay cash. Dealer offered extra $500 off for financing with Ford Credit. So I financed minimum ($5k) and paid that all off with first payment. Dealer encouraged this.

This seems good for me, and maybe for the dealer too, but not for Ford Credit. Did I miss something?
I cant fathom the finance guy telling you to do this, only someone who doesnt know how the finance guy is paid.

If the customer pays off/refinances the car before 90 days then the dealership not only gets charged back the 500 dollars, but any flat that Ford paid for the financing.

Does not affect the customer, but DOES affect the finance department gross.
 

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Discussion Starter #5
I cant fathom the finance guy telling you to do this, only someone who doesnt know how the finance guy is paid.

If the customer pays off/refinances the car before 90 days then the dealership not only gets charged back the 500 dollars, but any flat that Ford paid for the financing.

Does not affect the customer, but DOES affect the finance department gross.
What you say makes sense to me. But both the sales guy and the finance guy encouraged this even though I made clear I intended to pay if off immediately.

(Of course the finance guy tried to write it up as financing the full amount, but I insisted on financing the minimum, which was $5k.)
 

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What you say makes sense to me. But both the sales guy and the finance guy encouraged this even though I made clear I intended to pay if off immediately.

(Of course the finance guy tried to write it up as financing the full amount, but I insisted on financing the minimum, which was $5k.)
He must be new lol
 

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Think he might have played the percentages?

Some keep financing they don't "plan" on keeping once it's in place.
 

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Think he might have played the percentages?

Some keep financing they don't "plan" on keeping once it's in place.
True, but even if he was doing that you would think he would still push the keep it for 90 days deal.

Dunno. As I said, it does not affect the customer one bit, only the finance office.
 

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Discussion Starter #9
He must be new lol
'fraid not. The finance guy has been there for decades. The sales guy for at least a couple of years, probably longer.

I've got to believe that they understand the implications and believe this works out to their benefit.
 

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'fraid not. The finance guy has been there for decades. The sales guy for at least a couple of years, probably longer.

I've got to believe that they understand the implications and believe this works out to their benefit.
oh well, they take the loss.

The only benefit I can see would be some kind of internal bonus program where they just needed the number. Or, maybe they have a pay plan thats numbers only and not finance gross etc.

Either way, Ford docked em~
 

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Interesting to discuss, how long have these 'rebates" for financing been used?

I'm more familiar with the low interest promotions, and sometimes those were instead of a cash rebate.

If a bonus is based only on the number financed "in house" or through Ford, all that matters today to the finance guy is how many finance contracts he can write.

That could change if early payoffs/refinancing becomes as common as I've seen it mentioned here during the last year.
 

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Interesting to discuss, how long have these 'rebates" for financing been used?

I'm more familiar with the low interest promotions, and sometimes those were instead of a cash rebate.

If a bonus is based only on the number financed "in house" or through Ford, all that matters today to the finance guy is how many finance contracts he can write.

That could change if early payoffs/refinancing becomes as common as I've seen it mentioned here during the last year.
The rebates have been being used at least going back 5 year or so, maybe longer.

The interest in lieu of rebates deal is separate.

And no, typically finance bonuses are not based on units. I was just trying to grasp at something to make sense on why a finance guy would deliberately tell a customer to do that, because he WILL be charged back not only the 500, but any flat finance fee. It ONLY works against his finance gross, which in actuality, is how finance commission is calculated.

Even if the guy didn't care about the finance gross, I am not sure why he would encourage a 500 dollar loss against the dealership.

Dunno, doesn't make sense to me.

Also, when people brag about how they refinanced or paid off the vehicle before the date, and they know that it hurts the dealership and the finance guy, it makes me a little sick. Its stealing IMO. If they don't know, its one thing, if they do it just to be a dick or to 'show them whos boss' its pretty dirty.
 

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Thanks for the reply, it's always interesting to know more about how things typically work.

Never was involved in the Finance end of a Dealership, mostly Service & a little Sales at Cycle shops.

Small places at least sometimes have odd preferences as to where costs are assigned, whether it's a discount, trade allowance, or "extras" thrown in to make a deal. One location I remember well preferred to show sales at or close to full list price, with the deals being made on high trade in values, extra parts/accessories, service giveaways.

This made it interesting at times, with used inventory valued too high for quick sale & "service" absorbing so many costs it could never show a profit (everything from new vehicle prep. to building maint. was a service cost). All internal bookkeeping, but it can affect how things are done.

This experience made me wonder if that particular Dealer would rather show a loss in the Finance area than an extra discount in Sales to close a deal, particularly since they could blame the customer for cancelling the finance early. "Hey, I sold the financing but some will pay off early/refinance no matter what".

It makes a LOT more sense to pay Finance based on real income there as you mentioned rather than artificial targets.
 

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I recently bought a new Focus ST. I intended to pay cash. Dealer offered extra $500 off for financing with Ford Credit. So I financed minimum ($5k) and paid that all off with first payment. Dealer encouraged this.

This seems good for me, and maybe for the dealer too, but not for Ford Credit. Did I miss something?
I did the same back in January when I bought my ST. The smallest financing was 7K though. Talking to the finance dude, he said he would set it for 7100 or so (not just 7000 even) so that it doesn't look too suspicious to Ford and that I could pay it off right away if I wanted to (Financing companies can't prevent you from paying off your loan early in CA).

I paid it off when I got my first bill from Ford Financing. Easy $500 off [twothumbs]
 

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Also, when people brag about how they refinanced or paid off the vehicle before the date, and they know that it hurts the dealership and the finance guy, it makes me a little sick. Its stealing IMO. If they don't know, its one thing, if they do it just to be a dick or to 'show them whos boss' its pretty dirty.
Stealing? Really? [scratch]

Let's look at the situation where someone takes a minimum loan and pay it over 60 months as it's currently set up.

Minimum loan amount: $7000
Payments length: 60 months
Rebate: $500
Interests Paid over the 60 months: ~$700

So, in reality, the buyer ends up paying $200+ more than he would have if he had paid all at once. Who's the thief?
 

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Stealing? Really? [scratch]

Let's look at the situation where someone takes a minimum loan and pay it over 60 months as it's currently set up.

Minimum loan amount: $7000
Payments length: 60 months
Rebate: $500
Interests Paid over the 60 months: ~$700

So, in reality, the buyer ends up paying $200+ more than he would have if he had paid all at once. Who's the thief?
You are looking at it all wrong. You don't understand how the finance guy gets paid, nor where your interest money goes when you pay it.

First. We are talking about paying 3 months in interest so that the dealer doesn't get charged back. Not the full amount of interest, since it can be paid off any time after 90 days with NO repercussions to any party involved.

Second. Certainly not the finance guy or the dealership, since they don't get any of that interest money. It goes to Ford Credit. Not to mention, you sign up for those terms in black and white. The finance guy does not get paid on the interest, they get paid either a flat $ amount, or a % of that finance reserve.

Now on the other hand, when a customer knows that they are getting the 500 Ford Credit money, and that the dealer gets charged back that money if they refinance before 3 months, and the customer has agreed to pay out the 90 days, but then turns around and pays it off like 'oh yea I got you guys HAHA' yea, that's as good as stealing. Not only does the dealership have to pay Ford back the 500$, the finance guy probably made a $200 flat (from Ford) as his only commission for that deal, which he now loses. In some cases, the finance guy has already been PAID that $200 before it comes back out of his next check.

If Ford where to do the opposite to the customer, would it be stealing? Think about it. If Ford said well hey, since you refinanced before 90 days we are going to go ahead and tack 500 dollars plus whatever we payed the dealer onto your pay off, knowing that you knew, and that you could do nothing about it. How would that look?

The ONLY person that loses in that situation is the finance guy/dealership. The salesperson still gets paid, Ford gets paid, the customer gets what they want, but the finance guy and dealership gets stuck high and dry.

If the customer doesn't know that's one thing, but if they know, and they agree to pay for the 3 months so that the dealer/finance guy doesn't get this charge back then pay it off. I would call it stealing. not to mention, 90% of buyers dont just pay it off, they just refinance it, so they are still paying out some interest to some 'thief' lender.
 

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And to clarify, I don't mind when customers pay off a vehicle like this, but if they verbally agree to make the 90 days of payments (actually TWO payments, so negligible amount of interest) and then go and pay it off, knowingly costing the dealership/finance guy money, all while bragging to their friends about how they screwed over someone that lives, works, and spends money in the local community. Yea, it kind of makes me sick.
 

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Works both ways. I told them I intended to pay it off immediately, they asked me to wait 3 months or they would be penalized. Meanwhile I had a paint issue with the new car, sales guy said he'd take care of it, I'd be getting a call to bring it in. After a month no call. Called him up, Mr. Sales guy who loved me when I was buying didn't have the time to talk to me about it, just cold transferred me to the body shop. Then when I took it in they didn't ever fix it correctly. He never even told them what the issue was. Had to take it back a second time. Called the sales manager about lack of service after the sale. He could have cared less.
So heck yeah I burnt them on the rebate! Reap what you sow!
 
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