@KeithW wrote:We recently traded my wife's vehicle for a new one. She and I trade every 3-4 years, so we have a lot of experience with the process. This time was strange in that our salesman claimed to have 26 years experience, but seemed incompetent. We are in a small city and the GM at the dealership is an acquaintance it is usually a quick process since we each know what to expect. The salesman right off the bat seemed shallow and higher pressure. I told him we always went through Ford Credit and liked them. He told me Ford would make the loan, which seemed very strange, but we agreed to go through Santander at 8% interest. We signed the papers and left. A few days later I setup my online payment account and find out that it says we are being charged 9% interest. I called the salesman and he says it was a clerical error and they will fix it. At this point I emailed the GM and asked for his assistance. He says he will look into it and fast forward a couple weeks and the ask is to come back in and sign new contracts. They said they were able to get us the loan with Ford Credit and the rate dropped to 7%.
I am suspicious that we always could have, but that the salesman had an interest in going through Santander. Am I being paranoid?
I remember your thread and I suggested you go through the GM of that store. They likely flat cancelled the Santander contract and rehashed your original approval with Ford Credit. Basically, the GM pulled a string. Salespeople don't have a commision tied to a bank. They may get a spiff if you finance versus paying cash so I think you may be referring to the Finance Manager. If that's the case, they're normally paid a commission on a spread (sell rate minus buy rate) regardless of the lender. The dealer likely had a better buy rate with Santander than Ford Credit at the time of your approval and the dealer was able to capitalize on that when you originally contracted your car. After your email to that GM they likely rehashed the approval (think reconned) and got the rate down to put you on contract at 7%. Who knows what buy rate they got but your rate is a point lower than you were expecting anyway and if they're going to call and have you go through the trouble of re-siging, you may as well make it worth your time and better than you expect.
It isn't really a salesman incentive. Some lenders will allow the dealer to tack on points. When I worked at Chase we allowed up to 3 points. So, chase could approve you at 4.99 and the dealer could tell you it was 7.99. But, at least at Chase, they had to run it by us first. Depending on dealer and rate, we might only allow 1 or even none.
No such thing as being paranoid at a car dealer...
@Brian_Earl_Spilner wrote:It isn't really a salesman incentive. Some lenders will allow the dealer to tack on points. When I worked at Chase we allowed up to 3 points. So, chase could approve you at 4.99 and the dealer could tell you it was 7.99. But, at least at Chase, they had to run it by us first. Depending on dealer and rate, we might only allow 1 or even none.
How long were you with Chase? One of the Cali offices or Texas (or Wisconsin - I think I remember there was one there)?
Max markup these days with Chase is usually 2 points up to 72 (you could do 2.5 before), after that it's 1 1/2. If it's Senior UW or VP overide, it's buy/sell the majority of the time but each brand may have a different standard for different teams, for example Subaru Motors Finance allows a half point on leases but Jaguar Land Rover Financial Group allows a full point. It's all set by agreement by Chase and the brands they subvene (if there is any subvention).
