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Old 12-04-2012, 08:28 AM
chrischeung chrischeung is offline
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Quote:
Originally Posted by Chuck W. View Post
Car dealers make money when you finance just like credit card companies make money when you make payments.
Not necessarily. A lot of folks are able to get BMWFS financing at cost. There's nothing in it for dealers, other than a desire to give the customer what they want. I once offered a BMW dealer cash or lease at cost - they took cash. A lot of folks don't want to fork out $50K or more in cash, even if they have it, they value the flexibility that financing offers.

I'm not saying that dealers can't make money with mark ups, it's just that it's not a blanket case that they make money on every deal financed. On the finance company side, factor in that there are often costs to service a loan/lease, defaults, so it's not a given that the finance company will make a lot out of your loan.

The main thing a captive financing company like BMWFS wants, ahead of the profits (they certainly don't want to lose money if possible), is to keep selling you cars in the future (much more profit in that) - and having a financial relationship probably increases that likelihood. Given the choice between selling 3 cars to someone in 10 years with break even or small financing loss, or 1 car for cash, they'd probably choose to do 3 cars financed.
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Last edited by chrischeung; 12-04-2012 at 08:42 AM.
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