"Finance Only" Car Dealer

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Not knowing...... I stopped at a "Finance Only" car dealer to look at a Blazer. I figured the Blazer was worth anywhere from $6000-$7500. The guy I spoke with said it was $13,000 at 22% interest. I was like "what" "what" then I asked how much it was with cash. He said they don't accept cash. I'm guessing this dealer targets people with bad credit and can't get a loan from the bank. Sound Right?
 
Originally Posted by Warstud
Not knowing...... I stopped at a "Finance Only" car dealer to look at a Blazer. I figured the Blazer was worth anywhere from $6000-$7500. The guy I spoke with said it was $13,000 at 22% interest. I was like "what" "what" then I asked how much it was with cash. He said they don't accept cash. I'm guessing this dealer targets people with bad credit and can't get a loan from the bank. Sound Right?

Back on 2001 I walked into a very large and popular motorcycle store here in southern California with a wad of cash. I tried to buy an ATV with cash. They would not let me! I had to finance it then pay it off the following month.
 
The buy here-pay here type car lots around here very much prefer that you finance through them directly instead of a bank. They buy a junk car for $1,000 and list it for $3,995 with $1000 down at some insane interest rate. First buyer pays his down payment and defaults within a few months when it breaks down or they miss their payment for whatever reason. That's okay for them. They got their money back already from the down payment. They come repo the car, jimmy rig it to run again, and throw it right back on the lot and repeat the process with the next buyer. They will sell that same car numerous times. Way more profitable than a one time cash sale.
 
Fisher83- absolutely correct. I watched an interesting news bit on this a few years ago.
The value to the dealer is not in the car but in the financing and for these buy-here-finance-here types, 15%+ annual returns is better than the stock market.
Throw in a few repo's here and there and they are sitting on a goldmine.
 
There use to be a "buy here, pay here" lot up the street from me that I would pass by every day on my way to and from work.

They always seemed a bit shady to me in the first place-they'd tend to get a lot of higher end/"luxury" cars(they were always stuffed to the gills with Cadillacs, Lincolns, Lexuses, Mercedes, BMWs) but they would always be older and/or high miles.

Ignoring my reservations about the lot, though, I stopped in one day to talk to them about a car I was potentially interested in on their lot-an e39 540i M-Sport, a moderately uncommon car and one that gives you a lot of the benefits of an E39 M5 without the price tag or the notoriously high strung engine. I stopped in and asked for a test drive, and was given what I thought was a bit of a lousy excuse but was promised that I could drive it if I came back the next day. I also asked for a cash OTD price, which they reluctantly gave me and I thought seemed reasonably.

I showed up the next day with the intent to test drive a car and also $1K in cash to leave a deposit if I liked the car(we hadn't previously discussed that, but I thought that was a reasonable amount given the ~$10K price I was quoted). They hemmed and hawed a bit, and finally told me that they don't allow test drives on manual transmissions. I pointed out that I had driven there in a car with a manual, and that I was fine with a ride-along, but that I wasn't going to buy ANYTHING, much less a manual, without a test drive. They said no. Given that the car had ~150K miles, I still wonder if the clutch was going out on it, and they didn't want me to test drive it because of that. Given what a BMW clutch will cost, even as a DIY, I wasn't about to buy a car without finding out about that. So, I walked on that one.

A year later, I saw a kind of beat up but still solid and rust-free 90s Ranger sitting on their lot. I figured I'd give them another chance and talked to them about it. It was a standard cab, 2 wheel drive, plus a 4 cylinder, manual, and basically no options-in other words just a plain old truck, which is exactly what I wanted. Their $1500 and some change OTD cash price sounded reasonable, and since it was close to closing time and the truck was buried at the back of their lot, I agreed to come back the next day for a test drive and told them that I'd have cash in hand and be ready to buy if I liked it. So, the next day, I showed up with $1550(more than what they'd told me) in a bank envelope in my pocket, and asked to test drive it. They gave me the same run-around about no test drives on manuals, so I showed them the cash and asked if that was enough to get a test drive. I then got "Oh, sorry, we made a mistake when we told you that price-it would take $1900 today to buy it." The $1500 price I was quoted(maybe like $1525 with taxes, etc) was not just an off-handed number they gave me-I watched them look it up in the system and spend a minute crunching numbers before giving me that price, so I don't think it was a case of simply telling me the wrong price(plus it was easily the least expensive vehicle on the lot). So, I walked out and never looked back.

That left me with a sour taste of any lot that advertised "Buy here-Pay here"
 
A rather simple rule is that any reputable dealer (as car dealers go) will have cash asking prices posted on each car. Not down payments or monthly payments, but a cash price.
 
We have a few dirtbag places around here like that, but we also have some pretty nice ones as well

Even had a local place that gave a neighbor's son a decent deal on a newer Sentra with low miles and a decent rate (10 percent) for someone who had made a ton of mistakes and was trying to get his life back together. Even gave him tips on how to improve himself (like make some payments then go to a credit union to refinance). As well....

Guess it helps the guy a a regular in one of the local churches.....
 
There is no law against buying the car, signing the finance papers and paying it off a week later. Just be certain there are no prepayment penalties, or any other catches with the loan. Me I'd pass on that dealer, prepayment penalties or not.
 
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Originally Posted by Fawteen
There are two types of people when it comes to personal finances.
Those who understand interest and collect it, and those who don't understand interest and pay it.



Very well said!
 
Originally Posted by Danno
Correct, so much money is made off financing side.
And scary how much and how many are under water in their car loans.

It is very scary. What's even scarier is the real estate market. People and lenders are going right back to doing what collapsed the real estate market the first time around back in 2008-2009. They didn't learn a thing. They are loaning overly large amounts of money to people who, "have no skin in the game", so to speak.

I did some research before we moved and put our home up for sale. In the last 2 years on my block alone, 3 homes were sold, (not including mine). The one on the corner was sold with $0 down. The one on the opposing corner sold with only $2K down. My neighbor next door sold to a buyer with $4K down.

My home just sold to buyers with $4K down. Mind you all of these homes were near or over $250K. Nothing special. By the time these people fork out closing costs, home inspection fees and warranties, ect. They all will have essentially put nothing down, and many are already under water before they move in. And God only knows what other debt they are carrying. Driveways on my block look like used car lots on the weekend, there are so many cars parked on them.

You tell me what's going to happen if the housing market drops 20% or more? And that's only 4 homes on one block. This is happening across the nation. It's not IF we're going to have another housing crash, but rather WHEN. I just don't see how any market can endlessly survive, when it's packed with nothing but paper, and possesses no real value.

40 years ago a bank would not even talk to you about a conventional 30 year mortgage, unless you were coming in with at least 20% down. And you had better not have any other outstanding debt associated with that 20%. Today people are cash poor. And the lenders don't seem to care.

Cars are the same way. People are willingly signing on to these double digit, insane interest rates, for a vehicle that will lose 20% or more of it's value in the first year. And no one in their right mind pays 22+% interest on ANY asset. Let alone a depreciating one. Years ago the Mafia went to jail for charging those kind of interest rates. Today it's the norm. And these idiots are standing in line left and right to sign on.

I don't blame the lenders. "Predatory Lending" is a bunch of nonsense. The last thing to appear on the last page of any car loan, or home mortgage is your signature. People don't have to pick up that pen and sign. They do so willingly, because their wants override financial common sense. That is enough to crash ANY market.
 
I had that happen with a Chrysler dealer. Wanted to buy a towncar with cash. Was a low mileage car in great shape. The salesman wouldn't let me buy it outright, told me it was a better deal if I financed. Yeah ... no thanks.

There's one around the corner from me now that advertises weekly rates on vehicles. Sells a ton. Specializes in trucks and SUVs.
 
Originally Posted by billt460
What's even scarier is the real estate market. People and lenders are going right back to doing what collapsed the real estate market the first time around back in 2008-2009. They didn't learn a thing.
The mortgage lenders learned PLENTY last time, they learned that they can get away with doing this with NO negative ramifications. The last time this happened... nobody was charged, nobody went to jail, nobody was fined, the Federal Government bailed them out, the bankers involved gave themselves big bonuses for the "trouble" (even though their activities crashed the economy), and no new laws were passed or rules made to prevent them from doing it again, and they are doing it again!
 
I used to work with an engineer who's brother had a buy here pay here lot. The engineer drove beaters, his brother bought cheap at the auction. One with good tires and still functioning AC would come in and my co worker would snap it up. He did nothing to them other than keep oil antifreeze and safety stuff like brakes. When asked why he told about the nice car he had that he loved to drive, so he fixed it up nice, spent about 1K on it (this about 1982 ish) and the transmission promptly crapped out. He jinxed it.

I met his brother, ex college football player, nice guy unless he was repossessing your car. Some of the cars he sold were going to their 3ed and even fourth owner. Even after he repaired the previous owners neglect they were still very profitable. He knew all the good backyard mechanics, upholstery and paint guys. His upholstery guy used the foam he used on airplane and semi seats to make me a great motorcycle seat cheap (like 100 then) Profitable business as long as you can deal with taking away people rides.
 
In the UK you have 14 days to cancel any indemnity, insurance or finance policy.

In 2012 I purchased a 3 year old Ford Mondeo with a 1.8 turbo diesel engine. It was up for £7,500 and once I mentioned I wanted to pay cash the dealer wouldn't budge on price at all. I ended up taking out finance and an extended warranty, getting the car down to £5,900 and the day I picked up the car I cancelled/paid off the finance and cancelled the extended warranty for a full refund.
 
In general, the folks that shop there desperately need a car and have no other options due to a lack of down payment, a poor credit history and a spotty employment history. There are quite a few folks in these circumstances, hence the number of these buy here pay here lots.

If they had a down payment, good credit and a steady job they would go elsewhere to be welcomed with open arms by the more reputable places.
 
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