[rickyr17]

When I bought my car at the end of December I planned to refinance to a better rate. The finance manager told me I had to wait 3 payments before I could refi or I'd lose the rebate. I'm getting ready to make my 1st payment in about a week. I looked for where that was stated in the contract. I didn't see it so I've been doing a little research tonight. Apparently I don't lose the rebate but the dealer loses their kickback on the financing. I don't mind waiting a couple months but I really don't appreciate being misled. I'm curious who gets the actual kickback? Is it the dealer or my CA?

[Tenac]

This is one reason I really like my dealer, they tell me this crap up front. Yeah I do about the same as you every time I buy one. At my dealer the CA gets a cut of the up sales etc that go on but it is a 90 day or three payment process for them to actually get the funds. So I think its both who benefit the dealer and the sales team. I almost always wait three months anyway but use the pre approval I get from my bank which is 90 days and a 30day extension for a few bucks. It's a credit union. Most time they are about the same on apr but the discount from the dealer with the BMW bank is always more in total.

[Ducks91]

They just lose their cut. I had a dealer do something very similar, at the end they didn't hold up to their side of the bargain (check for half the shipping wasn't mailed), I said screw it and refinanced elsewhere no issues with rebates or anything else.
Side note sending an email to BMW NA helped resolve the shipping issue. All of a sudden the dealer became very responsive.

[bloozemanAZ]

Originally Posted by Tenac

This is one reason I really like my dealer, they tell me this crap up front. Yeah I do about the same as you every time I buy one. At my dealer the CA gets a cut of the up sales etc that go on but it is a 90 day or three payment process for them to actually get the funds. So I think its both who benefit the dealer and the sales team. I almost always wait three months anyway but use the pre approval I get from my bank which is 90 days and a 30day extension for a few bucks. It's a credit union. Most time they are about the same on apr but the discount from the dealer with the BMW bank is always more in total.

Agreed as my dealer/CA are always upfront as well. In fact planned on switching financing for the wife's new LCI 40i this past November but nobody could beat the 60 month loan on it at 3.99 APR I secured via BMW FS. Just checked and it's even worse now. PM me your CU and I'll check it too but at least for now I'm sticking with BMW FS.

[tsbrown]

+1. My dealer told me the same on prior cars. If you pay off before 3 months the dealer loses their cut. So wait until the 4th month and switch or pay off.

[Vic55]

Lets dummy it down...

What the finance manager may have told you is that he is making a split on the rate BMWFS charged you.

EG- the sell rate or the rate on the RIC is 7.99 and his buy rate was 6.99 (FS is a 100 bip cap I think) sooooooooo

you take the payment at 7.99 minus the payment at 6.99 and the difference is multiplied against the term for a dollar amount. Thats the margin but wait there is more!! The dealer only earns a split on that margin and most FS dealers are at a 75/25 split so that finance manger would make 75% of the dollar on margin. But wait there is even more LOL:

EG:

Lets the say the 75% dollar amount is 5000---the finance manager doesnt get that; they get a percentage of that and its normally very small. Sometimes as low as 5%.


That amount is vouchered in his pay and he gets it whenever the dealer process payroll. But FS runs a 90 chargeback in their Master Dealer Agreement meaning if the loan is paid off prior to 90 days from date of contract (or closed account) the 75% split is charged back to the dealer and subsequently that finance manager will get that deduct against a future pay check for what he or she was paid. The dealer usually is on a net monthly payout for reserve from FS so it gets the larger amount on all deals (the 75% part) paid at the end of the month and the chargebacks are hit against that number.

Its really how most finance managers make their money; via reserve (lesser amounts) and a percentage of the net profit on back end products like VSC's, GAP, Mop and Glow LOL, etc.... Most products dont chargeback but VSC's do as they are insurance products and cancelable in nature and so is GAP.

For most larger dealer groups the CA doesnt get much, if any, payout on the back end aka reserve, products but some payplans do include that if they are part of the up front selling process. Their monies are made on a percentage of the gross.

As a buyer your contract is with BMWFS which has no pre pay 90 days or not so that was just the Finance Manager asking for consideration but is up to you. Another thing to ponder is there sales tax in your state. If so you paid it on the original RIC and then most refi lenders will tax you yet again- fuck the double taxation.

[rickyr17]

Originally Posted by Vic55

Lets dummy it down...

What the finance manager may have told you is that he is making a split on the rate BMWFS charged you.
.
.
.
As a buyer your contract is with BMWFS which has no pre pay 90 days or not so that was just the Finance Manager asking for consideration but is up to you. Another thing to ponder is there sales tax in your state. If so you paid it on the original RIC and then most refi lenders will tax you yet again- fuck the double taxation.

This is all good to know. It sounds like it's my Finance Manager who stands to lose out the most if I refi within 90 days. I don't really have a problem waiting 90 days. It just really bothers me that he flat out lied and said I'd lose the rebate if I didn't wait. I feel like that's no way to do business and bad karma in general. If I really want to be an ass, I could set up the refi to occur on day 89. Lol. I'm not that kind of person so I won't.

Oh, I won't be double taxed. My CU will just refi the payoff amt. They even have an offer for $200 cash back on a refi.

[Vic55]

Originally Posted by rickyr17

This is all good to know. It sounds like it's my Finance Manager who stands to lose out the most if I refi within 90 days. I don't really have a problem waiting 90 days. It just really bothers me that he flat out lied and said I'd lose the rebate if I didn't wait. I feel like that's no way to do business and bad karma in general. If I really want to be an ass, I could set up the refi to occur on day 89. Lol. I'm not that kind of person so I won't.

Oh, I won't be double taxed. My CU will just refi the payoff amt. They even have an offer for $200 cash back on a refi.

Yeah he just used the rebate as a hold tactic but the dealer gets spiffed on that when they RS the car and once that happens the rebate is non reverseable unless you unwind the deal which isnt happening in this case.

So the real deal is how much is your payment and whats your rate --- then back it down 100 bps and see what that payment is and follow the formula for what the dealer will make (not sure what the finance guys exact payplan is as that varies). Im assuming he did the max markup on the rate but I cant be sure as I dont know the tier you scored or the buy rate at the time of purchase based on the terms and ltv your exact deal had.

[Moopai]

I did know that one that re-finance with BMWNA to get a better rate! Just so I understand this correctly, after purchasing the vehicle, I have the option to go back and negotiate a better finance rate if the interest drops later on this year! Thanks

[Vic55]

Originally Posted by Moopai

I did know that one that re-finance with BMWNA to get a better rate! Just so I understand this correctly, after purchasing the vehicle, I have the option to go back and negotiate a better finance rate if the interest drops later on this year! Thanks

BMFS wont rewrite their own retail loans but you can find an outside source and pay it off like the OP is doing.

[Moopai]

Sorry guys, I'm new to this, so if I find outside source, how would BMWFS deal with the interest rate that was calculated over 5 years in my case? Would they allow me to walk away and pay the interest todate rather the five years? Thanks

Originally Posted by Vic55

BMFS wont rewrite their own retail loans but you can find an outside source and pay it off like the OP is doing.

[Vic55]

Originally Posted by Moopai

Sorry guys, I'm new to this, so if I find outside source, how would BMWFS deal with the interest rate that was calculated over 5 years in my case? Would they allow me to walk away and pay the interest todate rather the five years? Thanks

Im not sure where you live but Ill assume your contract is simple interest in nature so if you pay off the loan, any unearned interest is not applied in the said payoff.

So it would principal plus any accrued interest from your last payment as long as your last payment cleared all accrued interest to that point.

You can payoff BMWFS any time early with no pre pay penalty and they dont do a precomputed interest RIC so you will be fine.

[Moopai]

Thanks Vic! Hopefully the interest rates starts to drop this summer as the market is expecting!

Originally Posted by Vic55

Im not sure where you live but Ill assume your contract is simple interest in nature so if you pay off the loan, any unearned interest is not applied in the said payoff.

So it would principal plus any accrued interest from your last payment as long as your last payment cleared all accrued interest to that point.

You can payoff BMWFS any time early with no pre pay penalty and they dont do a precomputed interest RIC so you will be fine.