Dealership Finance Managers HATE when you know these 6 things!

Hi everybody, I'm Kimberly and welcome to Autofinance Sense where I help you make sense of the dealership finance office the next time you buy a car. Let's get started. Today I'm going to let you in on a little secret of six things that a finance manager hates to hear you say. Are you ready? Number one, I'm paying cash. So why does the finance manager rub his temples whenever he hears those dreaded words, I'm paying cash? Well, it's pretty simple. Most finance managers make the bulk of their money from finance deals. First, they generate income from the reserve, also known as yield spread, which is the difference between buy rate and sell rate. But the biggest reason is that the opportunity to present and sell additional optional products to in terms of payment is lost. To many people, seeing the benefits wrapped into payments is much more digestible, but that's a great advantage to the finance manager. Now, I've had more than a few people say to me, well, Kimberly, I always pay cash for my cars. So why does the finance manager fight so hard to want to finance me even if it's zero percent? Well, this is why. Your cash deal turns into a payment presentation. And this is also why I teach that if you're going to finance with a dealership and you don't see the actual price of the products on the menu, then you ask the finance manager to write that price next to each benefit shown. It's the average buyer that shops without all the numbers being fully transparent. And that's not you. There's also a psychology at play here, too. So, for example, on cash deals, some finance managers will set the prices of each product so that the final lump sum payment at the bottom of each column on the menu shows a round figure. Our brains have a much easier time with that even round number than an odd number with some change, therefore making it easier to write a check. Number two, the finance manager hates it whenever you say, let me phone a friend. Let's say that you're going over the menu and there are a couple of products on there that interest you a little bit. And then you say, well, let me get my spouse on the phone. You know, he or she, they know more about this than I do. Or my friend is really good with this stuff. So let me call him or her real quick and see what they have to say. Well, unless the person on the other end of that phone has had a positive experience with one of these products, that's generally going to be a loud, no, don't buy any of that stuff. And sometimes that person won't know what to say and feel a little put on the spot and then turn the phone over to a different person. Now, obviously this is going to frustrate the finance manager. They've lost a sale to someone that they didn't get to explain the benefits to or how these things work. However, here's the thing. I wouldn't want you, the buyer, to hand over your decision-making power, your knowledge, your control to someone because you're feeling like you don't know what you're doing. If you feel the need to phone a friend, I would put that person on speakerphone so that you, your friend, the finance manager, can discuss and be transparent. This puts the finance manager in the hot seat in case you don't have a second set of ears physically sitting next to you the whole time. For example, you might be in the position where GAP coverage could be very beneficial to you. Well, I would want you to know the questions that you should ask regarding GAP and negotiate the price. See my video on GAP. The link is in the description box below. Number three, finance hates to hear, I'm putting down a large down payment. You see, the more you finance, the more money is made by the finance manager. Now, some banks will have a minimum amount of finance, and that might be $5,000, $7,500, $10,000. But if the finance manager is, let's say, marking the buy rate up from 6% to 7%, well, $20,000 amount financed will make them more money than $10,000 amount financed. Now, if this is a subvented loan, like a 2.9 from the manufacturer, and no markup can be made, then the finance manager will get paid something called a flat. And that could be anywhere from like $100 to $300 or so. But some lenders make that flat payout according to the amount financed. And once again, $10,000 is going to pay less than $20,000. So, each lender is different. A 72-month, $40,000 amount financed loan with a marked up buy rate pays a lot more than a 36-month, $10,000 loan at buy rate. Number four, the finance manager hates to hear, I'm already approved at my credit union for X amount interest rate and X amount term. Now, approved means you've already gone through the application process at your credit union, and you have a solid approval in your hands or in your email on your phone. Not that you are pre-qualified or pre-approved, because finance managers can be pretty successful at overcoming that objection. See my previous video where I went over pre-qualifications and pre-approvals. Having a solid approval usually comes along with you, the buyer, saying something to the effect of, I know my credit well, I stay on top of it. So now, most finance managers are going to work hard to try and convert you from your credit union to their financing by offering to match or beat their rate and term. Also, by letting them know that you know your credit well, you've pretty much made it clear to them that you are a savvy buyer in control of your finances. But if you don't allow the finance manager the opportunity to try and beat your credit union, then it's just a cash deal for them. Okay, number five, the finance manager hates it when you say, I think I'll take my time and call other manufacturer dealerships and ask the finance manager what their prices are on some products, because I know that they all have them too. So tire, wheel, vehicle, service, contracts, paint, interior, denting, whatever the product may be, with the exception of Gap, you can always take your time, think about it, do your research and shop around. Now, the finance manager may try and overcome this objection by saying, well, you know, you're going to have to pay for those products outside of your loan and probably have to put them on a credit card. But you already know that. Again, you're not the average buyer here. Once you know the right questions to ask about each product, which are in my other product videos, then you can call four or five other manufacturer dealerships in your area or in your state, tell the receptionist that you want to buy an extended warranty. That way you'll get directly through to the finance manager because they don't often like to take phone calls and let them know what you have. Be prepared with your VIN and how many miles are on your car currently. And just say, by the way, I'm calling four other manufacturer dealerships, so give me your best price. My point here is that if there's something that you feel fits your life and your driving habits and the protection makes sense to you, then this is the way, a good way, to open the door to negotiating a much better and fair price right then and there. Remember, the finance manager needs you for their pay plan and they want to do business with you. You've heard me say this before in my other videos that with the exception of forced front-end ads such as theft and nitro, products in a manufacturer dealership finance office are not bad products. It's just up to the finance manager as to how much they mark those products up and that's just too darn high. Number six, the finance manager hates it whenever you walk in or call and say, I want to cancel those products that I bought. You bought your car about 30 days ago or so and maybe the finance manager talked you into buying some products that you didn't do your research on first and then you get home and you realize that all these products add up to over four thousand dollars on your loan. So you go back in and you say, I've changed my mind. I don't want all of this on my loan. I want to cancel these. So why does the finance manager hate it when you say this? Because if you cancel your products within a certain period of time, like 60 or 90 days, the money that he or she made on those products gets sucked right back out from the golden pot of finance money from which they get paid and that's called a chargeback. Now depending on when you cancel these products, the finance manager might sit on that cancellation until the next month. Do be aware though that when you cancel products that are wrapped up into your loan that amount of money will come off the principal amount of your loan so you will owe that much less but your payment will stay the same. The loan contract is not rewritten so be sure that you read the cancellation clause in your specific product contract. As a side note, when a finance manager tells you that there's no prepayment penalty on your loan but you can't refinance it or pay it off for 90 days or six months or whatever time they give you, then it's very important that you say, okay, circle where it states that for me or highlight it on the bank contract so that I can see it clearly. Unless there is a specific document here between you and the dealership regarding this, when a lender does not have a prepayment penalty and most do not but you always ask, that means that you can put additional money on principal at any time or pay that loan off in full at any time you'd like. The finance manager simply wants you to keep that loan for a certain period of time so that they don't get hit with that chargeback. Chargebacks are not only from the cancellation of products but they also come from the money that is made between the buy rate and the sell rate, also known as reserve or yield spread. So there you go, there are six things that a finance manager hates to hear in the dealership. If you feel like you've gotten any kind of knowledge from this video, would you mind hitting that thumbs up, subscribe, and notification bell so that you get notified whenever I put out new videos. Thank you so much and I will see you soon. Bye-bye!