Ford Eyes Use of Customers’ Personal Data to Boost Profits

Agreed, I would love to retrofit an electric power train in a mk2 Supra - attach the motor directly to the rear diff and fill it with batteries to the weight of the ICE/gearbox plus full fuel tank, and it could be a really potent sleeper.

The cost of those fancy showrooms, flag-and-tinsel-bedecked lots, television and radio ads, and well-dressed sales staff is baked into the sticker prices of the cars. If you instead buy from someone that gets their stock from auctions and trades, and has to get a small-business loan to even offer dealer financing, you don't have to pay those costs. With those dealers, you can always get better financing on your own than they could offer you, because they have to make money on the financing side as well as the sales side in order to stay in business. And they might also include shady clauses like requiring tracking devices in the car for possible repossessions, which might happen after a single missed or partial payment.

I actually forgot that people can get repair service and financing from a manufacturer-affiliated dealer. They do advertise 0% financing on television sometimes. They still have to make money through another part of the deal in order to do that. No dealer is sitting on a pile of cash large enough to self-finance all their sales. Where is that money coming from? It's still you, the customer. If you somehow avoid paying it now in cash, you will pay with the value of your time and personal information.

In the financing application, you have to tell them the information they need to assess your default risk, which is also the information they need to figure out how much car you can afford now, and how much you can likely afford in the future. If they can't leverage that on the current sale, you have still given them everything they need to advertise to you, and then upsell you next time you come back. That's my whole point. The bank doesn't care what car you drive, so long as it gets you to your job, and you make the payments on the loan until it's paid off. The dealer wants you to make payments on more car than you can afford, of their brand, continually, until you die. The money you "save" on the sweet financing deal is (on average) getting sucked out of your pocket from a different vector. You may be able to beat the average individually, but as a broad generalization over the whole market, I stand behind my previous statement. Don't take dealer financing, ever.

If you can't buy a car without dealer financing, you should be buying a cheaper car. Buying the best car you can afford with cash on hand, minus the projected cost of several months of maintenance that you set aside for it, is ideal. Otherwise, finance through a lending institution that does little more than place a lien on your title, and would have to sue to foreclose in order to take possession of the vehicle. The bank or credit union has no reason to hide the true cost of the loan from you, or to recover it by other means. Their business is loans, and the way they make their money from loans is clear to everyone.

No matter how you structure the deals, cars flow one way, and money flows the other way. Everyone involved in supplying the car has to get paid, and that money ultimately comes from customers. Everyone you see in the business is ultimately being paid something by you. Everyone you don't see that is facilitating the purchase process is ultimately being paid something by you. Financing from a manufacturer-captive company is only added to the sales business because it results in more total money flowing from customer to car business. It enables higher sale prices on the cars. The business has to make money somehow, or it stops existing, because those people handling money and reviewing paperwork have to be paid, too, and if they don't get paid, they leave.

Comparing the costs of loans of varying interest rates is just a time value of money calculation. It is easy to offer a zero-interest loan, by pre-computing the value of the interest you otherwise would have charged, and adding it to the principal at the start.

If you buy a car for $12000 with no down payment and a 24 payments at 0%, that's $250/month and a total cost of $12000. If you get a loan for $9250 for 24 months at 4% and make a $2000 down payment, that's ~$209/month and a total cost of ~$12032. If you make even a single payment earlier than scheduled, you will end up paying less.

When you are offered a 0% loan, know that the interest you would have been paying is probably implicitly being added to the purchase price up front, as a means of paying for the lending. You would be well justified in pressing for a discount for paying in cash (or bringing your own financing), and you will have more leverage to do so, because the dealer will not know exactly how much is in your budget.