Is money down on a car deal a SCAM? How dealers turn your cash into PROFIT!

hey everyone welcome back to the channel I hope you are having a fantastic day again another little jury day here in Louisville right before Thanksgiving and I want to say thank you so much for all the love you've been doing in the last videos this video is just to kind of give back to you and some of the scams that car dealers do with your down payment the video I'm going to show you was recorded in my car I know I'm gonna get some people out there to say hey listen why are you recording in your car it's unsafe ah well I did have a camera mounted in there and obviously I'm not gonna do anything to jeopardize my safety or anybody's safety out there are usually don't record videos for YouTube in my car like that but in this case I did because I was recording this video for the private only members group of my youtube section so if you'd like to become a member of it there is a join button right next to the subscribe button so make sure you hit that subscribe button and turn your Bell notifications on as well and if you don't see the join button there is a link in the description so I do kind of things like this all the time for the members only section of the channel I try to interact with those people a little bit more one-on-one and obviously there's a cost to do so so it's a way to support my channel as well so I'm going to show this video in its entirety no cuts from what I publish to them I just want to be able to show you so you can see something I do for the members only section and of course if there's anything I can ever do don't hesitate to reach out to me at chevy.com don't forget also we got the last few days of the Chevy dude Apple watch for giveaway that link is in the description as well so make sure you enter to win that Apple watch here's the video enjoy good morning Chevy dude insiders member's group I told you I would do behind the scenes as part of your membership with the channel well I'm gonna do this video down the road I'm gonna give you some insight on car buying process before I release it to the public so money down you hear me talk about money down all the time it's very very important with money down when I I'm coming to you and saying I want money down it's for one reason that's to benefit you the most however there are many dealerships out there who want money down to create gross profit and their car deal and you're like well how does me putting money down create gross profit for the car dealership it's kind of confusing right well the car business is a little confusing it's sad that it's confused it should be more transparent should be more easier to buy a car but this is how money down helps the dealership make more money on your car purchase tip number one money down automatically decreases the monthly payments so therefore if you walk in and say hey I've got five thousand down and I've got you know X amount of you know payment blah blah blah they're gonna hear that but they're probably going to ignore it so what's gonna happen is a lot of old-school dealers will pencil you pencils when you take the first numbers out to you so I got in the industry the trade the terminology is called pencil so when they pencil you your payment they're typically going to come at you with 30% down yes 3 0% down where most people are not putting big money down that creates a wave in their thought process a hiccup if you will and now that customer is going to be focused on other things rather than the things they should be concerned about so they're gonna be focused on the down payment they're not gonna be focused on the payment they're not going to focus on the price or not gonna be focused on several factors so when the dealership pencils you at 30% down you're like oh wait a second I'm not putting $12,000 down I don't I don't have any money whatever the case may be I only have a thousand I told you up front I've got 2,000 whatever the case may be that's that's what that is so that gets you to focus on that so that way they can sit there and be like okay perfect if you can do 2,000 down at a 400 our payment will make that happen after a long process so with that being said if you think that have got you to $400 a month with 2,000 down the very first time they should have done so but they don't because they set there and play the games and see how much money they can get out of you Oh tip number two for how dealerships create gross profit with your money down would be with the bank so obviously with the bank's loaning money they reward you with several factors obviously credit be in one of those but we're going to talk about that today they're gonna reward you as a consumer with big money down loan-to-value being an eighty percent or lower they're gonna rewards you with better interest rates so therefore if the dealership can work out with banks to get lower interest rates says you can only get 4.9 it's your dealership well they can get 4.25 they can mark that loan up and make money on you now that's not a bad thing if you're not eligible to get 4.25 and the dealership can get you for nine what the dealership make the money right I get it we all want to save money we all don't want to spend the money we don't want to I get it a hundred percent but the fact of it is it does help them out because a lot of dealerships now will sit here and have flat systems set up with the banks and that means that regardless of what rate they tell the dealership they pass that rate along to you as well so therefore if they can get 4.25 percent then they're gonna pass it on to you because it doesn't make them any more money to mark up the rate so that's something that's changed a lot in the last few years but it does still happen and that's the way they also make money on you is with the rate tip number three it's all about leasing leasing is the best way dealerships can make gross profit off you with your money down so the biggest thing with leasing is these are a lot of terminology that you're not used to selling price is now capitalized cost reduction so so that's a terminology on a sales contract that you simply just don't understand or don't see so you just look at it and you move on typically there's no sales tax on leases sales taxes based off the payment not the price of the vehicle so the sales tax is a lot lower so if you see a goofy number in or around the sales tax number they can kind of hide money in there and you know you were paying profit off of that as well also it allows them to sell the vehicle at a much higher price so if you're if you're looking on the internet and the dealership even minds to speak has a has a price of twenty nine thousand dollars on a vehicle with all the manufacturer rebates well those rebates do not calculate over to a lease now rebates don't create grossa for a dealership yet I'll tell you about that here in a second they are from the manufacturer and they set there and help you with the cost of the car well when you go to at least those don't transfer over there only for the actual retail purchase so with a there are a few rebates sometimes on a lease it's called capitalized cost reduction as well so it's a two term two terminologies for the same thing for different things at the same terminology for separate things is what I meant to say so so that's confusing as well so they can create their or they can set their insult for hire MSRP because you don't know what you're looking for number four let's say you've got a trade cash down can definitely affect what your trade is worth so let's say you've got a trade worth $5,000 lesson at last let's do this let's say you have a trade worth $20,000 and the dealership knows you have X amount of money down they know you have certain payment and they can get there but they only give you $18,000 for your trade now I've talked about this on trade and secret video that I've done that's done really really well back in the summer so it's called scoopy your trade or it's called a holding under trade scooping something else so it's called holding on the trade and that's a way they can make money so if you're one to four in our payment you have a twenty thousand dollar car and they can get there with only using eighteen thousand dollars of the value of your car they certainly will do it because that just increased their profit by two thousand dollars and number five this is a tricky one this is completely 100% unethical but it happens every single day with your money down again with proper qualifying proper interview proper setup from the salesperson they can figure out all the information on your deal and if there are rebates on the vehicle that they have not fully disclosed they can scoop the rebate remember a huge scoop earlier in the video I was thinking this part of the video through is I ad-lib everything and I don't script anything out so yes so they can scoop rebates which in case would be profit to the dealership now scoopy rebates is 100% wrong it's maybe borderline illegal and definitely dealership manufacturers do not want you to do it as a dealership so there's hidden ways that dealerships do it there's all sorts of hidden ways that can I could talk probably three hours of how dealerships hide money from the consumer and stuff like that it's just difficult that's why I do these videos to better inform you when it comes time to purchasing a car so there's your five tips on how dealerships make money based off of your down payment I'm gonna do a better video on this down the road it's a published but this is you know kind of a while I'm driving the work type thing and kind of you know detail-oriented but not so much you know I got some mistakes in here and hiccups and stuff like that and I just don't feel like editing for you guys because you guys are the best and I really appreciate you being part of the channel if there's anything I can do out if there is anything I can do for you just reach out to me Chevy do.com have a great day and drive safely

Channel: Chevy Dude

Views: 770,977

Rating: 4.74575 out of 5

Keywords: bachman chevrolet reviews, louisville chevrolet dealer, louisville chevy dealer, chevrolet dealer, bachman chevrolet new cars, bachman chevrolet used cars, used cars for sale in louisville, mike davenport, louisville chevy dude, bachman auto group, bachman chevrolet, louisville ky, how to buy a car, car dealer scams, cash down on car deals, how to buy a new ar, car buying guide, car buying advice, buying a car with credit, how to finance a used car, how to finance a new car

Id: TaOScCFAWIU

Length: 10min 20sec (620 seconds)

Published: Mon Nov 19 2018