formula79

We all know GM's business plan is to sell cars at atificially high MSRP's and mark them down has the market requires to move cars. That being said, the GM at a local dealer I know told me how he can get anyone approved at 125% of MSRP. On the Trailblazer we recently bought, the sticker was $42,000 (we obviously paid nowhere near that), so that means the dealer could get someone fianced for $52,500 for it . That being said, current KBB on our car with 4,000 miles on it, in perfect shape is $22,500. That means that the vehicle lost 50% of MSRP simply by driving it of the lot. One thing GM dealers like to do is use those rebates to put people in cars they should not be in, and get people out of upside down loans. If I was a bank, I would think financing a GM vehicle at even 100% of MSRP is damn risky. I always think of "All Corvettes are Red", where GM exec explained that Chevy's are for people who have trouble paying thier bills. Makes me wonder if GM has a higher default rate than other makers? Either way, in the case of a default, and bank is in a much worse situation with a GM vehicle than a Nissan because of depriciation. All of this makes me wonder when the banks are gonna wake up and start slapping some kind of restrictions on how much they loan for GM vehicles. It would certainly end the rebate mess...no matter how strong GMAC is. Imagine when your bank says they will only finance 75% of MSRP on GM vehicles?

On a side note, I test drove a 2005 Nissan Pathfinder with a friend a few weeks ago. The truck stickered for $33,000 and had every option our Trailblazer has (minus Nav), and then some (mp3 player, third row seats, rear cargo area with composite lining). It was so reasonably priced, and such a nicer vehicle, I felt like a complete idiot for buying or TB, and dealing with the ugly interior and nasty resale.

BTW, I really think GM needs to dump rebates and use the money to lower MSRP and really beef up warrentees (8 years, 85,000 miles at least). That would go a long way towards fix GM's real problem, which is percieved quality. When Hyundai did it, they had cheap cars and shoddy quality, so it was harder financially. GM vehicles cost more and have better quality, so i think it would work well.

2MCHPSI

I agree totally about lowering MSRP and better warranty

BTW, did you ever get the Trailblazer bought back?

Jason E

I said awhile back I'd rather see longer warranties and lower rebates, too. Better piece of mind, better resale, image, etc.

I am shocked ANY bank will do 125% of MSRP. My main lender is Citizens, and they go 110%. I doubt banks will have any reaction to this...they simply don't pay attention, honestly. My main job is at a bank...I have a little insight here

BTW, for the love of god, STOP using KBB!!!!!!!!!!!! KBB is asinine...nadaguides.com is what dealers normally use. I am reasonably confident your truck is worth more than $22,500, honestly...

falchulk

Hmm, that price seems like a tahoe rather then a trailblazer. They usually come pretty loaded in the 20's!

ronssito

Not only GM...that sounds like marketing 101.

Josh452

The thing you have to remember is that GM sells, I'd say 99% of their cars through GMAC finance. Meaning, they are directly tied to General Motors. What's making the money right now for GMNA? It's GMAC.

I've been working at a dealership for months now and can honestly tell you I've never seen a person come in with financing from another bank. They all go through GMAC. They can approve for whatever amount above sticker. They will get their money eventually from you.

guionM

So in essence, regardless as to the sticker price on the vehicle, General Motors will get their money from you by making it up through GMAC financing??!

INGENIOUS!!!

formula79

I think it depends alot on the dealer. The dealer I know here is the largest in Baltimore, and he often finances through other banks and has alot of pull with them. If you take the rebates and not the special financing rates, GMACs rate are actually a bit higher than that. I know on my fiances truck, we took rebates, and GMAC came back with a 7.5% rate. He shook his hard and ran it through the other banks and git several rate offeres in the low 5% range. I would imagine the dealer makes more selling a GMAC loan than a normal bank loan. It's funny most people don't realize that new cars make more money in F&I than they do on the actual vehicle.

Also, I would imagine the use of GMAC varies by region. In Detroit people are a bit more loyal to all things GM or Ford then they are in the rest of the country.

While we are at it, does GM NA give GMAC a kick back when someone chooses 0% financing over rebates? Also, how many people actually qualify for 0%...I have never met someone who actually has?

smackkk

I got 0% on my Mazda 6.

The rebate game can be dangerous because it gives some people the false illusion of getting out from being upside down. Example you want a 30,000MSRP vehicle that you can buy for 22,000 after rebates and getting close to dealer invoice. After getting close to invoice they are going to try and squeeze you on your trade. You owe 10,000 but they will only give you 5,000. You think well, i'll still be 3,000 under MSRP at 27,000. Only problem is, any dealer can buy that vehicle for 22,000 minimum so if you went straight to another lot and tried trading it in, you'd probably only get 19,000 for it. A truck that stickered for 30,000 an hour ago....So now you're 8,000 upside down and its only going to get worse the rest of the year.

Now that I think about it. I wonder if that's part of GMs strategy. To keep alot of buyers upside down so they have to come back to GM to use rebates to get them in a new car.

Brandens right about making money in F&I. I dont think most people realize you can deal on the price of the warranties and insurance the finance guy will try to sell you. I just traded in my Blazer on an 05 Dodge Ram Hemi (making good on my letter to GM not to buy another product until I got a Camaro). The guy wanted to sell me a $1799 warranty and $899 gap protection. He came to the table with 7.24% interest through DCX but said he could get us 6% if we got the two add ons. I told him I wasnt interested in the add ons but if he could do 6% with them he could do 6% without.(both me and my wifes credit scores are above 700). He eventually gave us the rate and had dropped the price of the warranty to $999 and the gap to $699 which we still declined both. We took the extra $1500 rebate for financing with DCX and went straight home and financed at the local credit union for 4.19% and added the gap protection at $250. The credit union guy says since they are not for profit they sell it at their cost which is $250.

WERM

Unless these people get so upside down that they start defaulting on their loans en masse. We don't want another Mitsubishi scenario on our hands. They may not survive.

formula79

You can get GAP insurance for $299. I always threaten to buy warrenties and insurance on the internet and it seems to work great..especially since even if they make no money on it...they get bonuses on how many they sell. I also always bring in the new car financing specials that my credit union sends to use as leverage when they try and mark your loans up a few percent. Nothing a dealer hates worse than not being able to finance the loan at all.

Josh452

People on the internet are knowledgeable car buyers and do their homework and research on issues such as gap coverate and warrenties. This is in no way a slam on the general public, but many are uneducated when it comes to things like this. My brother being one. He got raped when he got his gap coverage, and paid dearly for it.

I think it's pretty safe to assume that most people that purchase a GM vehicle do finance through GMAC, and not only in the Detroit area. GMAC is making the money for GMNA, not the car side, but the financing side. To do that, more people than just the Detroit area finance through GMAC.

Chrysler is making lots of their money the same way. It's all made back through the interest rate.

Jason E

I don't know what's in the water out there in MI, but the only time I put a customer through GMAC is either because 0% works better than the rebate or when GM gives extra incentives to go through GMAC...at which point, I tell the customer to make their first payment then refinance somewhere else

GMAC's Northeast buy rate right now is near 7% on a new car...I have lenders that are over 2.5% LESS...why the hell would anyone pick GMAC?? I'd never finance anyone!

formula79

That has been my experiance. Me and my fiance have great credit, but everytime GMAC comes with a rate it is in the 7% range. That is why both our vehicles have went through local banks that offered us 5%. The GM at our dealer said they are higher because GMAC does not want to appear to be competing with banks by having lower rates. He also said that when they offer bonus cash for financing through GMAC specifically that is just GM trying to subsidize the higher loan rate.

redzed

I drove a 2005 Pathfinder SE 4X4 with an Equinox-sized MSRP of about $28K. That represents an incredible deal. Think about it....Equinox money for a vehicle that's better than a Trailblazer EXT. That said, I wouldn't have taken the new Pathfinder over my Armada. For the extra $10K, the bigger, quicker Nissan is worth every penny.