I have never had a dealer volunteer the fact that they make money on the finance side. If, during the negotiation, that becomes a point brought up as a quid pro quo of lowering the sale price to make the money back from a bank commission, I could see wanting to stand by your word. Short of that rare circumstance, dealers tend to be pretty guarded about all the different angles they have for profit. They'd rather you think they sold it for a loss than have you know they got such and such kickbacks from wherever.
When negotiating the price, I always tell them that they know the money on their side of the deal and what they can sell it for and I know what I can buy it for. A dealer that sweetens the deal without disclosing they're going to just try to get the money from you another way isn't entitled to extra secret profits at your expense. I once had a F&I guy act like he had done me a favor to do the financing and that I owed it to him to go in on some warranties and junk.
If you make a gentleman's agreement with a dealer as part of your deal so they can count on profit from some kickback, more power to you. Just know that dealers are almost never that forthcoming with us regular folks.
Stuart appears to be taking the "moral high ground/man of integrity" position in his debate here. And while that is indeed a "high bar/lofty" position to aspire to - we are talking about CAR DEALERSHIPS HERE - who are most often stacked right along with Plumbers and Telemarketers - when it comes to having integrity themselves.
I relate this to a close friend of mine, who was an "investment banker". Back in the days of the mid-2000's, he was steering all his clients into "mortgage backed securities" (all that B & C paper, and negative amortization HIGH RISK paper that was being bundled and FLUSHED by the "smart banks" to reduce their risk). When everything went belly up, and the housing values crashed (more like "adjusted to their REAL VALUES - instead of the inflated values the banks pushed them to - in order to push more paper/$$ onto the street and fatten their take) - I made the decision to do a "strategic default". Not that I couldn't AFFORD to keep paying mortgages on a home that was now worth less than 1/2 the paper I was carrying - it just didn't make strategic/financial sense to keep doing so. Now - he railed on me, for not having integrity - I MADE AN AGREEMENT and was not keeping my end of the deal. In a sense, this is true. But in another sense - it was simply a BUSINESS DECISION. My question to him was: DID YOU GIVE BACK YOUR COMMISSIONS TO ALL YOUR CLIENTS THAT LOST THEIR INVESTMENTS? That's what a "man of integrity" would do. No response to that one. There's was no "malice" against the banking industry, for putting the entire economy in a tailspin. I was angry WITH MYSELF, for falling into a trap I considered myself "smart enough to see coming" (a $200K house is not worth $500K in 3 years, no matter how good the neighborhood is), and overleveraging myself. And my "friend" made millions pushing paper that HE WAS SMART ENOUGH TO KNOW, wasn't sustainable. The market ALWAYS CORRECTS ITSELF. Watch out - it's happening AGAIN.
Unless you are a "close personal friend" of the GM - there is NO DEALERSHIP that's going to stay in business - by letting inventory walk off the lot AT A LOSS. Can they do one or two, once in awhile - and balance against the higher margins on "regular deals"? Sure they can. But pretty much every salesman/manager is going to use the "I'm selling this to you at a LOSS" line, in negotiations - when we ALL KNOW that's nothing more than a BOLD FACED LIE - PURE AND SIMPLE. Where's the "integrity" there? ALL DEALERSHIPS ARE MAKING MONEY - both on the front and back end - and I DON'T BEGRUDGE THEM THIS. It's "just business".
So should WE BE EXPECTED to take the "moral high ground", and hold onto a note that is not to OUR ADVANTAGE - simply because the dealer might lose a few $$ on their commission?
In my case - at 8.9% - out and out THIEVERY for someone with decent credit (and two paid off car loans in the last 5 years - plus coming in with over 50% cash & trade) - the ONLY REASON I TOOK THE LOAN, was to push my expenditure out until next tax year (and to get out of the dealership after spending 4 hours there). And the finance manager was trying to TALK ME INTO BORROWING MORE.
And I'll pay it off early - with ZERO CONSIDERATION as to whether the dealer or Chrysler Finance gets upset about it. In the 6 months I plan on keeping the note (maybe less) - I'll have paid $826 IN INTEREST ALONE - 5% of the amount financed IN SIX MONTHS. If I keep the note for 72 months - I will have paid close to $6K in interest (finance charge), on $19K borrowed - which "looks like" 30% interest, but in reality is the 8.89% in a "simple interest loan".
Another "little known fact". The order in which documents are signed in a car deal "closing" are done in a specific order. Part of the reason is - the IMPORTANT STUFF (the small print stuff), is saved for last, when the purchase is so "burnt out" from reading and signing - that they are no longer even really absorbing what's being read/signed at this point. I lost count at 20 signatures, and wasn't even through the title/trade-in paperwork. It's done this way FOR A REASON. No matter WHAT the closer tells you VERBALLY - WHAT YOU SIGN IS WHAT'S ENFORCEABLE UNDER THE LAW. And the CLOSER THEMSELVES probably wasn't told the "psychology behind" why documents are executed in this order - just trained that this is the way you are supposed to do it. BUT THERE IS A PSYCHOLOGY BEHIND IT.
So - for the original poster - as far as the LAW GOES (without passing judgement on your "integrity"), regardless of WHAT YOU WERE TOLD - if he LEGAL DOCUMENT YOU SIGNED says there's a charge for pre-payment (as heinous as a $750 charge appears), the dealer DOES HAVE LEGAL RECOURSE TO COLLECT IT. Whether or not they exercise the option (that is, take it to court to be enforced), beyond a nasty letter demanding payment - remains to be seen.
Rick
