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Originally Posted by MrChrisLS3

I too was thinking WTF at that post until I realized what he was talking about.

Financing through a dealer, especially if you have Tier 1 credit can be beneficial to you. First, the dealerships have contracts with several lenders. Whereas, if we, the customer, go to our own bank, we are going to get a rate that is profitable to the bank. The only thing a bank does is sell money. However, a dealership has more bargaining power with lenders because dealers generate more business for them.

There is truth that a dealership can bump the rate up to 2 points. However, how that really happens is not that raise your rate, they negotiate with the bank to lower the buy rate for the dealer. This is why many people show up with pre-approval from their bank at 3or 4% and the dealer gets them out of finance at 2.5 or 2.9%, from the same bank. The dealer negotiates the buy rate down. Sure, dealers are out to make money, they are not 501c operations, and neither are the banks.

Very well put! Been at a chevy dealer for years and yes we consistently get the same or better rates than when people come with pre-approvals. Banks reach out to us and let us know when they're willing to get more aggressive on loans since they haven't been receiving as many as usual. We call them and let them know to match or slightly beat your rate and they usually give us a small flat fee. It's a win-win