Author Topic: $1750 discount on car purchase for low credit score. Wha???  (Read 2689 times)

spartana

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$1750 discount on car purchase for low credit score. Wha???
« on: March 04, 2018, 03:22:40 PM »
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« Last Edit: June 27, 2018, 02:19:02 AM by spartana »

BTDretire

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Re: $1750 discount on car purchase for low credit score. Wha???
« Reply #1 on: March 04, 2018, 07:08:42 PM »
I'd like to see the logic in it also.
Could be just the high interest rate on the loan. :-(

nick663

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Re: $1750 discount on car purchase for low credit score. Wha???
« Reply #2 on: March 04, 2018, 07:21:00 PM »
The amount of Dodge Journeys I see makes a whole lot more sense now.

2Birds1Stone

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Re: $1750 discount on car purchase for low credit score. Wha???
« Reply #3 on: March 04, 2018, 08:31:51 PM »
The logic? They make their money on the financing, the worse your score, the higher the rate, the higher their cut.

Njdealguy

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Re: $1750 discount on car purchase for low credit score. Wha???
« Reply #4 on: March 04, 2018, 09:06:48 PM »
Wonder if they would still honor this discount if someone came in with the qualifying low credit score but paid cash in full for the car without the high interest financing!

NorCal

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Re: $1750 discount on car purchase for low credit score. Wha???
« Reply #5 on: March 04, 2018, 09:27:27 PM »
Meh, everyone likes a discount.  I bet they have a discount for people with good credit too.

They just set their base price higher than they think they can achieve, then give everyone a discount so they can feel like they got a better deal.  Pricing 201.

I'm a red panda

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Re: $1750 discount on car purchase for low credit score. Wha???
« Reply #6 on: March 05, 2018, 12:16:05 AM »
Wonder if they would still honor this discount if someone came in with the qualifying low credit score but paid cash in full for the car without the high interest financing!

A lot of deals I've heard advertised require dealer financing

boyerbt

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Re: $1750 discount on car purchase for low credit score. Wha???
« Reply #7 on: March 05, 2018, 07:10:20 AM »
Wonder if they would still honor this discount if someone came in with the qualifying low credit score but paid cash in full for the car without the high interest financing!

A lot of deals I've heard advertised require dealer financing

I assume then that these type of restrictions also come with an early payoff penalty then.

alanB

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Re: $1750 discount on car purchase for low credit score. Wha???
« Reply #8 on: March 05, 2018, 08:31:28 AM »
Lax sub-prime auto lending and oversupply of leases has lowered the costs of used cars.  In a world where things made sense, the cheaper used cars would meet the needs of poor people with bad credit.  Haha, sorry, what an unAmerican thing to say!  With the CFPB out of the picture they will probably come up with lots of fun new ideas that will eventually blow up the sub-prime market.

lhamo

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Re: $1750 discount on car purchase for low credit score. Wha???
« Reply #9 on: March 05, 2018, 09:32:21 AM »
They make the money back quickly on the dealer financing deal.

When we bought a car a couple of years ago, we had a loan lined up from our credit union already (didn't really need it but were trying to preserve some cash reserves as I had just left my job and moved back to the US), but the dealer offered a 2k discount if we went with dealer financing.   The interest rate was somewhere around 5%.  I went ahead and took it.  And then paid off the loan when I got the first billing statement.  I paid something like $25 in interest for a 2k discount.

alanB

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Re: $1750 discount on car purchase for low credit score. Wha???
« Reply #10 on: March 05, 2018, 09:34:17 AM »
Lax sub-prime auto lending and oversupply of leases has lowered the costs of used cars.  In a world where things made sense, the cheaper used cars would meet the needs of poor people with bad credit.  Haha, sorry, what an unAmerican thing to say!  With the CFPB out of the picture they will probably come up with lots of fun new ideas that will eventually blow up the sub-prime market.

I work in the automotive industry and can't really say the bolded part is true. Cars, in my opinion, are insanely more expensive than before, specially used ones.  I have flipped three cars in the past two years, all sold straight to CarMax, and I was insanely happy by the offer they quoted me. Which in turns means someone else is going to pay a lot more than I would've thought possible.

Very interesting, I have no data or anecdotes to support my position, that is just what I have read.  What do you think of this alternative hypothesis: poorly maintained used cars are cheap because of negligent owners spurred by easy lending.  People who get repo'd probably can't afford repairs/maintenance.  Hence your ability to make a hefty profit flipping? 

penguintroopers

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Re: $1750 discount on car purchase for low credit score. Wha???
« Reply #11 on: March 05, 2018, 08:20:35 PM »
They make the money back quickly on the dealer financing deal.

When we bought a car a couple of years ago, we had a loan lined up from our credit union already (didn't really need it but were trying to preserve some cash reserves as I had just left my job and moved back to the US), but the dealer offered a 2k discount if we went with dealer financing.   The interest rate was somewhere around 5%.  I went ahead and took it.  And then paid off the loan when I got the first billing statement.  I paid something like $25 in interest for a 2k discount.

I think we paid something like $40 in interest mine, just because we didn't have 100% of the cash ready to go that very moment. I was starting my job in a few weeks and needed the vehicle for that. About a month later I was listening to a Dave Ramsey podcast, and there was a woman in a very similar situation to mine. Dave recommend that she went and RENTED a car for the 1-2 months she would need to save up and buy a similar vehicle to mine outright. I near about threw up hearing him say "Spend $1k on the ability to say 'I don't borrow money! Yay!'"

Nah, I'll spend the $40 instead of ~$1500. Thanks.

Indexer

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Re: $1750 discount on car purchase for low credit score. Wha???
« Reply #12 on: March 05, 2018, 08:47:11 PM »
Another theory:  their target customer might have a lower credit score.

This goes back to a conversation I had with a friend who handled auto loans for one of the big used car companies. He told me yellow car = lower credit score, it's almost always true. Why? Well people with high credit scores tend to think ahead before making decisions, where people with low credit scores tend to be more impulsive. In most cases selling a yellow car in the future will be harder than selling a silver, white, red, black, or blue car. The resale value also might be less because there is less demand. Conclusion: yellow car = impulsiveness > thinking ahead = likely to have bad credit.


Why do I think this would apply to Dodge? Well, going back about a decade, FIAT/Chrysler/Dodge/Ram/Jeep(all the same company) have consistently ranked at or near the bottom for reliability. If you buy a car with the intention of driving it for 5 years or more, you probably aren't buying a Dodge. Buying a Dodge = impulsiveness > thinking ahead = likely to have bad credit.

Dicey

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Re: $1750 discount on car purchase for low credit score. Wha???
« Reply #13 on: March 05, 2018, 10:50:43 PM »
Chiming in to say I chatted with a friend who lives in another state. I asked her what she'd driving these days. (We were both sales reps and only one of us is FIRE, but she is close.) She said she'd bought a Journey and that she loves it! She said she had gotten a deal on it because they're not that popular. She test drove it and fell love with it. She says it's the best rep car she's ever had. I thought that was pretty interesting, so I'm just tossing it into the discussion.

Xlar

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Re: $1750 discount on car purchase for low credit score. Wha???
« Reply #14 on: March 06, 2018, 10:03:10 AM »
Another theory:  their target customer might have a lower credit score.

This goes back to a conversation I had with a friend who handled auto loans for one of the big used car companies. He told me yellow car = lower credit score, it's almost always true. Why? Well people with high credit scores tend to think ahead before making decisions, where people with low credit scores tend to be more impulsive. In most cases selling a yellow car in the future will be harder than selling a silver, white, red, black, or blue car. The resale value also might be less because there is less demand. Conclusion: yellow car = impulsiveness > thinking ahead = likely to have bad credit.


Why do I think this would apply to Dodge? Well, going back about a decade, FIAT/Chrysler/Dodge/Ram/Jeep(all the same company) have consistently ranked at or near the bottom for reliability. If you buy a car with the intention of driving it for 5 years or more, you probably aren't buying a Dodge. Buying a Dodge = impulsiveness > thinking ahead = likely to have bad credit.

I thought the same thing about cars with bright colors having worse depretiation than cars with boring colors but I found out the other day that it's not true! https://www.forbes.com/sites/jimgorzelany/2017/10/18/yellow-is-the-color-of-money-when-it-comes-to-a-cars-resale-value/#71e2be9458ee