Why does the Finance Manager at auto dealership lie by saying buyer must wait 3 months before paying

The dealership offers $1000 incentive to finance the purchase of a new car thru the manufactures finance company. There is no early pay off penalty. Does the dealership finance manager get a %26quot;kick-back%26quot; from the finance company by telling the the buyer he must wait a few months before paying off the loan?

Why does the Finance Manager at auto dealership lie by saying buyer must wait 3 months before paying off loan?

One of two things are happening. With some finance companies finance rebates are given and applied to the customer%26#039;s purchase. If the loan is paid off within 90 days, the dealer is charged back the rebate from the finance company. The other thing is regarding kickbacks. It%26#039;s not really a kickback, it%26#039;s called finance reserve which the finance mangare gets a commission off of. For example, the dealer may have charged you a 6.99% rate, the loan company gave the dealer a 5.49% rate. The dealership makes a profit off of the mark up of the interest rate which the finance manager gets a commission off of. If the loan is paid off within 90 days then the bank, just like the finance company, charges back the dealer for this profit. That%26#039;s why they advised you to wait.

Why does the Finance Manager at auto dealership lie by saying buyer must wait 3 months before paying off loan?

The longer you keep the loan the more money they make off of you. He may get a cut.. If not maybe he is just an idoit.

Why does the Finance Manager at auto dealership lie by saying buyer must wait 3 months before paying off loan?

I am definetly sure yes they do. 3 months is a bloody joke.

Why does the Finance Manager at auto dealership lie by saying buyer must wait 3 months before paying off loan?

There is a clause in the finance contract that says that if you pay the loan off before 3 months, you are not eligible for the $1000 incentive.

This is so that someone does not take the dealer offered financing, and the $1000 savings, and pay off the loan very quickly. The reason for the incentive is to get the business for the finance source. They want to make sure that the loan stays active for at least a couple of months.

After 3 months, most banks and credit unions will only refinance the loan at a used car rate, which is usually higher that the new car rate. The three month period helps lock in the borrower!!

Why does the Finance Manager at auto dealership lie by saying buyer must wait 3 months before paying off loan?

I currently work in financing at a dealership. No matter what anyone has told you, that financing person is still a salesperson. They get $$ for what is know as back end sales. So depending what you bought at the end of the sale, he may lose his/her $$$ if you pay off or back out of the sale. Plus the lender doesn%26#039;t make as much from you. Other than that, pay off as soon as you want.