Off Topic Dealerships need to end

[theblooms]

I recently read something in a Mazda group:

"I'm a finance guy in the car business and a BIG fan of service contracts"

Well of course they are, the back room add ons and financing percentage hold-backs is where they make all of their money.

It should be *ILLEGAL* for a car dealership to offer financing on a car. Why? Because pretty much every single time they write a contract, they steal from the customer. Bank offers 4% but they tell the customer 8%, and then pocket the difference. That's straight up theft.

They're called "stealerships" for reason. Hell, the whole dealership model needs to be put out to pasture. It has zero use in the 21st Century other than stealing from people.

 

[Conrad 16.5]

Caveat Emptor

 

[theblooms]

Caveat Emptor

Which is exactly why I never walk into those places.

 

[Ninja_Matt]

I recently read something in a Mazda group:

"I'm a finance guy in the car business and a BIG fan of service contracts"

Well of course they are, the back room add ons and financing percentage hold-backs is where they make all of their money.

It should be *ILLEGAL* for a car dealership to offer financing on a car. Why? Because pretty much every single time they write a contract, they steal from the customer. Bank offers 4% but they tell the customer 8%, and then pocket the difference. That's straight up theft.

They're called "stealerships" for reason. Hell, the whole dealership model needs to be put out to pasture. It has zero use in the 21st Century other than stealing from people.

While I cannot entirely disagree, I do think there is also a lot of misunderstanding combined with anecdotal abuse that happens and causes a lot of mistrust between dealers and customers. For example, while yes dealers can mark up interest rates, typically that is maxed out to 2% but sometimes less and also depends on the bank underwriting and the term (length of loan). Most markup I've ever seen in my 11 years in this industry is 2.5% allowed on a max of 60 months, but some approvals especially on longer, higher risk loans are capped at 1% or even no markup allowed (bank provides a flat commission based on amount financed). As a matter of fact, for subprime customers many don't know dealers are usually charged large bank fees and are not typically allowed to pass the cost on to the client legally (at least not directly, queue bad dealer practices of throwing in extra finance products to offset this cost). Also, because dealers can mark up finance products for profit (and yes, unchecked can really abuse this depending on state regulations) this does not inherently make the finance products bad or not valuable. Not sympathizing for dealerships but hoping to be informative!

Most important thing is being an educated and informed buyer, when you understand how the game works you can strategize and play back to your benefit. Does GAP insurance make sense on a car you put 20% down on at a cost of $1,000? Probably not. Does GAP insurance make sense when you put little to nothing down at a cost of $400-$500? Absolutely.

All of that said, the dealership model is very outdated, bloated with costs and overcompensation and our company Auto Ninjas partners with trusted dealerships nationwide to provide an easy, transparent buying experience while offering the best discounts out there. We are a new vendor on Mazdas247 (although we have been operating since 2019!) and look forward to bringing value to these forums for anyone looking for a new Mazda or anyone just wishing to become a more informed buyer!