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Car Dealer's Bank Fee?!?

Car Dealer's Bank Fee?!?

Old Nov 11th 2013, 8:12 pm
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Default Car Dealer's Bank Fee?!?

Hi all,

After many ups & downs and many uncertainties I've made it to the US. It's been a few weeks and I'm about to buy a car. I'm thinking about financing 25% of it so that I can start my credit history and establish a good credit score by paying the installments on time. I've a question about the dealer, though:

I negotiated the price of the car. They were willing to drop it for $500. I insisted on a $1000 reduction and they ended up by saying OK. However when I turned up to sign the papers, I noticed that the price-drop was only $500. When I asked about it, they said that the additional $500 was their bank fee. Not only this looked suspiciously like the amount they dropped when I insisted on but also I was paying sales tax on it. They describe this fee as their "bank fee" because I'm financing a part of the price with a loan. I'm also paying them a "dealer service fee", which is separate. So, to your knowledge, do car dealers charge a "bank fee" that is separate from their "dealer service fee"?
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Old Nov 11th 2013, 8:58 pm
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Default Re: Car Dealer's Bank Fee?!?

What state are you in?
New or pre owned car?
Buying from a chain of dealerships or a mom and pop store?
Are you financing through the dealer or a third party?

You really don't give enough information to get a good answer!
NB- if you're leasing a car there's a 'bank acquisition fee', usually around $800 something depending on the brand of vehicle.
HTH
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Old Nov 11th 2013, 9:43 pm
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Default Re: Car Dealer's Bank Fee?!?

Depends on the state.

But the fiddle all sounds about right, just make sure the sales tax is put on the car price, not the total price, because a shifty dealer would pocket the excess they collect.
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Old Nov 11th 2013, 10:45 pm
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Default Re: Car Dealer's Bank Fee?!?

Originally Posted by siradams
So, to your knowledge, do car dealers charge a "bank fee" that is separate from their "dealer service fee"?
Car dealers will charge as many fees as they can get away with ...
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Old Nov 11th 2013, 11:35 pm
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Default Re: Car Dealer's Bank Fee?!?

Thanks for all the answers.

It turned out that there was no such fee, as I guessed. A few hours after getting a deal (that I thought) closed they rang me and told me that "the big boss" told them they can't sell that car to me at that price. So they were bulls**tting me all along. Unbelievably unprofessional, though, even for stereotypical car salesmen.

Basic information: I live in Colorado. I was looking to buy a one-year-old car. I'm a cash buyer but I decided to finance a small part of the price just to get my credit history started. The loan was to be financed by a credit union through the dealer.
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Old Nov 11th 2013, 11:57 pm
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Default Re: Car Dealer's Bank Fee?!?

Originally Posted by siradams
Basic information: I live in Colorado. I was looking to buy a one-year-old car. I'm a cash buyer but I decided to finance a small part of the price just to get my credit history started. The loan was to be financed by a credit union through the dealer.
Might be easier to finance the whole car in that case and then pay most of it off straight away, leaving you with a minimal amount to pay over 12 months. Just check there isn't a early pay out penalty.
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Old Nov 12th 2013, 12:06 am
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Default Re: Car Dealer's Bank Fee?!?

There's no early pay out penalty in Colorado (I was told) but it looks like I need to pay at least 12 installments not to be negatively impacted by an early pay off.

But I don't see how it could be easier to get a 100% loan rather than 25%. With a 75%-down-payment it's a very low risk loan that, I'm hoping, financial institutions won't refuse. Am I missing something? Just have in mind that I've been here only for a month and I have no credit history.
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Old Nov 12th 2013, 12:21 am
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Default Re: Car Dealer's Bank Fee?!?

Closer to the end of the month is the best time to make a better deal, especially as a cash deal. Sales managers are more concerned with volume out the door than with profit margins.
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Old Nov 12th 2013, 1:07 am
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Default Re: Car Dealer's Bank Fee?!?

Originally Posted by md95065
Car dealers will charge as many fees as they can get away with ...
So will banks. Where the business of car dealers intersects with banks, you can imagine what will invariably happen!

Originally Posted by siradams
...... Unbelievably unprofessional, .....
An "unprofessional" car dealer, are you sure? I find that very hard to believe.

Last edited by Pulaski; Nov 12th 2013 at 1:11 am.
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Old Nov 12th 2013, 1:18 am
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Default Re: Car Dealer's Bank Fee?!?

It's fairly common for car dealers to play games like this. It's just dishonesty, nothing more than that.
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Old Nov 12th 2013, 1:41 am
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Default Re: Car Dealer's Bank Fee?!?

Originally Posted by siradams
There's no early pay out penalty in Colorado (I was told) but it looks like I need to pay at least 12 installments not to be negatively impacted by an early pay off.

But I don't see how it could be easier to get a 100% loan rather than 25%. With a 75%-down-payment it's a very low risk loan that, I'm hoping, financial institutions won't refuse. Am I missing something? Just have in mind that I've been here only for a month and I have no credit history.
The dealer makes money off the loan as a commission, so if they know you're taking 100% loan, they aren't going to mess you about as much :/

Paying the remainder off over 12 months is the minimum to build up credit history....there's a chunk in the wiki here that goes over this.
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Old Nov 12th 2013, 1:57 am
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Default Re: Car Dealer's Bank Fee?!?

Originally Posted by Bob
The dealer makes money off the loan as a commission, so if they know you're taking 100% loan, they aren't going to mess you about as much :/
Yes - even if you intend to pay cash for the whole thing, never bring that up until you have beaten the price down as far as possible,
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Old Nov 12th 2013, 6:32 am
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Default Re: Car Dealer's Bank Fee?!?

Originally Posted by siradams
There's no early pay out penalty in Colorado (I was told) but it looks like I need to pay at least 12 installments not to be negatively impacted by an early pay off.

But I don't see how it could be easier to get a 100% loan rather than 25%. With a 75%-down-payment it's a very low risk loan that, I'm hoping, financial institutions won't refuse. Am I missing something? Just have in mind that I've been here only for a month and I have no credit history.
There shouldn't be pay out penalty (alot may be due to charges are based on arrears), but if it were a lease then there may be such pay out, but that'd more than likely be calculated in the payments. To pay off within the 12 installments would be a breach of the term of the note and possibly be subject to -ve impact ... a prepayment penalty is not always solely a monetary surcharge but can be a blemish ramification on your credit history instead. So, its best to set up automatic w/draws to pay for the car and then pay it off when allowed to do so. ...
It may be is easier to get 100% financing b/c its more profitable for them to do such loan ... all in all, its the yield spread and interest payments that matters to them, there is little money to be made on a small principle amount loan.

Bank fee and/or dealership handling ... bull. Technically, if its listed as a bank fee they could justify it b/c its a loan charge and outside of, and nothing to do with the sale price of the car. But, none the less its a garbage fee and padded profit margin (as is 'handling'). Never should you go through a dealership for financing; more than likely its in-house anyway. Besides, a dealership enquiry on your credit is one of the biggest hit and dent on your credit so never have them pull your credit .... (one other one is a store charge card which they try to offer at checkout) they'll also try to do pull credit for a test drive but only to try to pre-qualify you during a test drive and also try to get as much out of you in ''financing".

... "the big boss" told them they can't sell that car to me at that price" ... bollox on their end, imo. Sweat tactic. Besides, if you initialed, and they did as well, then you'd probably have a case to press them to stick to that price. Initials based on good faith are setting up a precedent of meeting of the minds and creates a contract term, (as evident of initials). If you don't have a copy of the paper then its hearsay. If things really get sh!tty, tell them you'll lodge a complaint with DORA and go after their license.

Overall, just as well you walked. $1000 off is not the best they can do, imho. There is a good amount of markup on used vehicles, especially if they got it as trade. Do your diligence.

End of month, end of quarter is favorable time periods to buy a car.... even better if its end of fiscal year, too. Sept/Oct is common for fiscal year but it usually ties in with model year roll out; but every dealership is different with their book keeping. What Denver dealership was this??

Last edited by Tarkak9; Nov 12th 2013 at 6:34 am.
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Old Nov 12th 2013, 7:31 am
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Lightbulb Re: Car Dealer's Bank Fee?!?

Some useful tips here when buying a car (used or new):


http://www.carbuyingtips.com/used.htm

http://www.carbuyingtips.com/vehicle-history-report.htm

http://www.carbuyingtips.com/used-ca...egotiating.htm

http://www.carbuyingtips.com/used-ca...d-car-sale.htm

Hope this helps
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Old Nov 12th 2013, 11:44 am
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Default Re: Car Dealer's Bank Fee?!?

If they will not stick to the agreed deal walk away. There are some honest dealers out there.
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