apollo18

hello, im talking to a dealer here in canada regarding a mercedes and they stated that the best they can do as a discount/bargaining on the vehicle is let me use the 2% loyalty rate reduction on the finance since I already own a mercedes. They are saying the savings I am getting from the rate reduction is taken from the dealer so they will lose that $ which means they cannot discount me more. This sounds like bogus to me but wanted to confirm with you guys. As far as I understand/assume, MBFS/mercedes corporate is giving the discount on there end because I own a mercedes and am getting another one since I am being loyal to the brand/corporate mercedes. I don't see how the dealer has anything to do with that and I don't see why MBFS would take the savings from the dealer, that doesn't really make sense. I have a sense that they are trying to use car sales tactics on me hoping I just agree and buy the car. Is this possible as in could the dealer be telling the truth? or am I correct in assuming they are 'lying' to me and that I should technically be able to get a tad more of a discount from the dealer

Thanks

W205C43PFL

Ya that doesn't sound right, what are you trying to buy, did you try a different dealership?

carlosinseattle

That might sound bogus, but it's also could be true. Whenever a loan is originated, the originator has the ability to make money on the financing, which I think is fair. In lending, there is something called a yield spread premium, which is based on the qualifying rate vs a higher or lower interest rate. The dealer can make money if they charge you a higher interest rate than your qualifying rate. And the dealer makes less money, or pays the bank fees, if you get a rate that is lower than your qualifying rate. So, if the price you're getting for the cars is too low, then the dealer has to make more money on the financing.

In your case, you're getting 2 points lower than the qualifying rate, which costs the dealership money. So it actually is fair for them to only discount their car so much that they can still turn a profit. Hope I explained that well.