Bank PO = Discount from Dealer

**shadrach** · March 16th, 2010 07:09 AM

I signed my loan docs yesterday for a Honda Jazz 1.5. What's interesting is that the amount to be paid to the dealer is about 40,000 pesos lower than my loan amount.

Although SA's have always denied that banks get a discount, Now I'm sure that the banks do not pay the same amount as a cash customer.

Too bad, the dealer do not pass that kind of discounts when a customer is paying straight out cash.

**shadrach** · March 16th, 2010 07:11 AM

To add...

WOW...the bank is really making a lot of money on this one transaction..

Interest, chattel mortgage and dealer discount....Just amazing!

**Horsepower** · March 16th, 2010 09:38 AM

Banks need to make money whenever there's an opportunity. That's the nature of its business.

**shadrach** · March 16th, 2010 09:52 AM

Not against profit per se...but its seems to be double dipping for the bank and a little dishonest for the dealer.

The discount should be transferred to the buyer and it should be fully disclosed.

**kishAn** · March 16th, 2010 10:29 AM

sir where did you apply your loan. directly from the bank?or from the dealer? in the first place you shouldn't signed the promissory note. the bank will never know if the unit you want to buy has a cash discount, if you personally know it you should have told it so that the bank can give you option to wether apply your cash discount to your down payment or to the unit price.

di naman siguro dudungisan ng banko ang pangalan nila just to get additional income.

**shadrach** · March 16th, 2010 12:23 PM

Originally Posted by kishAn

sir where did you apply your loan. directly from the bank?or from the dealer? in the first place you shouldn't signed the promissory note. the bank will never know if the unit you want to buy has a cash discount, if you personally know it you should have told it so that the bank can give you option to wether apply your cash discount to your down payment or to the unit price.

di naman siguro dudungisan ng banko ang pangalan nila just to get additional income.

I guess I wasn't clear.

I applied direct with my bank. Got a good rate of 29% for 60 months.

I then found a honda dealer who had a unit allocated.

I signed the docs yesterday and expect the car today.

During negotiations with the dealer, I asked if there are any discounts on the Jazz..and of course, they said no, honda never discounts. I asked since I handled my own financing, is there a discount a la cash buyer...again the answer was no.

So yesterday, when signing the docs, one of the sections spelled out how much the check BPI was cutting to the dealer minus my downpayment. And again, the difference was 40k pesos.

I had always suspected that the bank receives a fleet discount on anything they buy but this is not disclosed and even the dealer hides this fact.

I'm just saying from a consumer standpoint, this is bordering on fraudulent since the loan amount I am signing up for is not what the bank is paying the dealer with. They already made money on the interest charges and chattel. I guess they also make a profit on the actual cash transaction between them and the dealer.

**Galactus** · March 17th, 2010 02:50 PM

ask any banker... they'll tell you car loans are a large portion of their loan portfolio

that's why banks reward dealers with dealer's incentive

Jeez, there's a lot of patting-themselves-over-the-back here.

I work for a bank/financing company. And I can tell you from real experience that auto loans do not form a large portion of a bank's loan portfolio. They generate revenue more from traditional lending (commercial loans), although consumption loans (which include auto loans), do form a sizeable portion.

Actually, some KB's and savings banks don't even engage in auto loans. Too risky (as in our case), so we've limited borrowers to those within the group employees. And the auxillary services related to managing the portfolio (filing cases, repossession and warehousing expenses, etc.) can be staggering. We did explore the option of setting up and talked to several dealers. And from our experience, certain concessions on both sides were demanded and given. Everybody won. Too bad the negotiations fell through.

i understand you but you seem unwilling to open your mind to my view

i know what happened in the States

i know all about the credit crisis

ako pa

Great. Just what the world needs. A Mister-know-it-all.

Everybody's an expert after the fact. A Ben Bernanke-Joseph Stiglitz-Edward Prescott-Paul Krugman-Robert Barro-"Peter Schiff" all rolled into one.

What a crummy life we lead. Ho-hum. Pity the ignorant masses.

Even those people would be the first to claim they don't know everything about the crisis.

And yet here in our backyard, lies the Economics Messiah.

All hail!

**boybi** · March 17th, 2010 06:33 PM

Originally Posted by Galactus

Jeez, there's a lot of patting-themselves-over-the-back here.

I work for a bank/financing company. And I can tell you from real experience that auto loans do not form a large portion of a bank's loan portfolio. They generate revenue more from traditional lending (commercial loans), although consumption loans (which include auto loans), do form a sizeable portion.

Actually, some KB's and savings banks don't even engage in auto loans. Too risky (as in our case), so we've limited borrowers to those within the group employees. And the auxillary services related to managing the portfolio (filing cases, repossession and warehousing expenses, etc.) can be staggering. We did explore the option of setting up and talked to several dealers. And from our experience, certain concessions on both sides were demanded and given. Everybody won. Too bad the negotiations fell through.

Great. Just what the world needs. A Mister-know-it-all.

Everybody's an expert after the fact. A Ben Bernanke-Joseph Stiglitz-Edward Prescott-Paul Krugman-Robert Barro-"Peter Schiff" all rolled into one.

What a crummy life we lead. Ho-hum. Pity the ignorant masses.

Even those people would be the first to claim they don't know everything about the crisis.

And yet here in our backyard, lies the Economics Messiah.

All hail!

Let's hear from the horse's mouth since Galactus is working for a bank/financing company:

Do banks get discounts from car dealers for financing it for a car buyer?

**Galactus** · March 18th, 2010 12:30 PM

Originally Posted by boybi

Let's hear from the horse's mouth since Galactus is working for a bank/financing company:

Do banks get discounts from car dealers for financing it for a car buyer?

Well, as I've said, negotiations fell through. We just offered car loans to employees of the group (totalling over 1,000 employees), but we were only able to market it to less than 10% of them, mostly used cars pa, or pre-owned company vehicles, hehehe.

On our side (bank/finance), we demanded exclusivity or near-exclusivity agreements, kami lang ang magfi-finance, pero almost always, di pumapayag ang dealer, ala in-house financing. They wanted the customer to have wider and better financing options, so parang free-for-all.

To answer the question directly, I believe there is no clear-cut answer. Various dealers, especially independent ones (those not owned by local zaibatsus or chaebols

), get varying concessions. Ibang usapan na yan pag Ayala-owned dealer tapos Ayala-owned bank ang magfi-finance, uso talaga ang intercompany transactions.

But it may be equated to credit card accreditations. Merchants, in exchange for the use of POS cc machines and an alternative form of payment, give the banks "commission," ranging from 3 to 8%. Kaya merong surcharges noon (actually kahit ngayon, despite the law banning it).