Bank PO = Discount from Dealer

[shadrach]

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]

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]

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

[shadrach]

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]

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]

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.

[shadrach]

hmm..hw did that happened sir?
from which bank did you applied your car loan financing?

BPI is the bank..what do you mean how did it happen? I'm sure this practice has been going on for quite some time now. I just found proof of it finally.

Think about it, a bank like BPI handle's thousands of car transactions like this yearly. I'm sure the discount they get is part of the an industrywide practice. I was just thinking such discounts should be passed on to the buyer since the car price negotiation is between the buyer and dealer.

[_Qwerty_]

from Honda's point of view.. why would they give BPI a discount? what would they get from that?

[uls]

doesnt make sense

why would honda give the bank a discount?

the bank actually has to give honda a dealer's incentive

[uls]

if i was honda (or any other car dealer) and i had to give banks big discount, then that would discourge me from selling cars to customers who will go thru bank financing

i'd prefer cash buyers nalang who i don't have to give big discount to

but car dealers prefer customers who buy cars thru bank financing coz they get a dealer's incentive for every car sold thru bank financing

banks give dealer's incentive to encourage dealers to refer more customers (borrowers) to them

win-win

the story above doesnt make sense

[tigkal]

Maybe banks have an agreement with the dealers. Since it is the bank who is buying it di ba? If you went through the dealer, and the dealer refers you to the bank, the dealer/Sales Rep gets a commission. If you went to the bank directly, the 40k was supposedly for the dealer's commission. Baka walang commission yung dealer, they just subtracted the commission from the payment. At any rate, since you agreed with the terms and condition between you and the bank, out na tayo sa agreement between dealer and the bank. O kaya baka yung may ari ng bank and car dealer is the same and may prior arrangement na sila sa mga ganyang bagay.

I suggest just enjoy your new ride.

[shadrach]

if i was honda (or any other car dealer) and i had to give banks big discount, then that would discourge me from selling cars to customers who will go thru bank financing

i'd prefer cash buyers nalang who i don't have to give big discount to

but car dealers prefer customers who buy cars thru bank financing coz they get a dealer's incentive for every car sold thru bank financing

banks give dealer's incentive to encourage dealers to refer more customers (borrowers) to them

win-win

the story above doesnt make sense

Why doesn't it make sense? Banks bring thousands of pesos of revenue to dealers. Getting a fleet discount is standard practice. What I am surprised about is that this is kept hidden from the general public even to the point that the SA's lie about it and tell the paying customer that even banks do not get discounts from the SRP.

I guess I'm still learning the in and outs of Philippine retail industry. I'm from the US so my understanding of the car financing business is a little different.

[kishAn]

no offense sir but i totally disagree with that. although im not from BPI but i do work in a bank.

i had client before who questioned the PN(promissory note) that i prepared. she's a lawyer thats why she read the whole docs before signing
and questioned me that the amount in the PN was different from what shes paying, may be around 20k+++. just simple its the PPD (prompt payment discount) wherein if you paid late youre PPD will be cancel. instead of paying the usual low NMA(net monthy amorts) the client will be paying a much higher monhtly amorts(GMA). lets say 500++ will be added to your usual monthly amortization.

what im tryin to say here is.. maybe the amount that the you saw was the gross amount due.

as for BPI, in any case that your in doubt you always have the liberty to question them of all the gray areas that you see.

peace sir enjoy your ride

[uls]

Why doesn't it make sense? Banks bring thousands of pesos of revenue to dealers. Getting a fleet discount is standard practice. What I am surprised about is that this is kept hidden from the general public even to the point that the SA's lie about it and tell the paying customer that even banks do not get discounts from the SRP.

I guess I'm still learning the in and outs of Philippine retail industry. I'm from the US so my understanding of the car financing business is a little different.

it's the other way around

car dealers bring a lot of customers (borrowers) to the banks

banks love car dealers coz car dealers bring in a lot of business

car loans make up a lot of banks' loan portfolios

the last thing banks wanna do is discourage car dealers from doing business with them

if banks force car dealers to cut prices as a condition for doing business with them, that's a disincentive

car dealers would then prefer to deal with cash buyers instead

BTW, unless a bank buys a fleet of cars for their own use, you can't call banks fleet buyers

the car buyers are the dealer's customers

the banks are not the buyers

just coz a bank pays the dealer doesnt make the bank the buyer

the bank is the facilitator, not the buyer

instead of handing the money to the car buyer and the car buyer pays the dealer, the bank shortened the process and pays the dealer directly

just to make sure the money goes to the dealer

there must be something wrong with your interpretation of the figures you saw

[uls]

Maybe banks have an agreement with the dealers. Since it is the bank who is buying it di ba? If you went through the dealer, and the dealer refers you to the bank, the dealer/Sales Rep gets a commission. If you went to the bank directly, the 40k was supposedly for the dealer's commission. Baka walang commission yung dealer, they just subtracted the commission from the payment. At any rate, since you agreed with the terms and condition between you and the bank, out na tayo sa agreement between dealer and the bank. O kaya baka yung may ari ng bank and car dealer is the same and may prior arrangement na sila sa mga ganyang bagay.

dealers do not get commission when customers go to banks directly?

that's strange

if that's the case, then those customers are even less preferable that cash buyers

at least with cash buyers, the dealer gets paid full amount agad

pag direct-to-bank, the dealer gets part of the payment from the customer, then the dealer has to go thru the hassle of dealing with a bank to get the other part of the payment... tapos wala pa commission

if i'm a dealer, i would prefer cash buyers nalang over direct-to-bank customers

and naturally, my first choice would be customers who would get financing from a bank that would pay me commission

[shadrach]

I think its you who is misunderstanding how things work in the car selling business. As much as you think there is a whole lot of cash buyers around, the reality is that the recent boom in new car sales in the past few years has been facilitated by easy loans from banks and lending institutions.

Dealers need bank loans to fuel sales...that why you always see promos on financing on slow selling models.

Again, my issue is not with the bank getting a discount...but with potential cash buyers getting the same discount and being treated as equals with Bank PO orders.

it's the other way around

car dealers bring a lot of customers (borrowers) to the banks

banks love car dealers coz car dealers bring in a lot of business

car loans make up a lot of banks' loan portfolios

the last thing banks wanna do is discourage car dealers from doing business with them

if banks force car dealers to cut prices as a condition for doing business with them, that's a disincentive

car dealers would then prefer to deal with cash buyers instead

BTW, unless a bank buys a fleet of cars for their own use, you can't call banks fleet buyers

the car buyers are the dealer's customers

the banks are not the buyers

just coz a bank pays the dealer doesnt make the bank the buyer

the bank is the facilitator, not the buyer

instead of handing the money to the car buyer and the car buyer pays the dealer, the bank shortened the process and pays the dealer directly

just to make sure the money goes to the dealer

there must be something wrong with your interpretation of the figures you saw

[viper2lt]

that's new... ask you bank re the discount. in my case, i got the unit already and i was informed by bpi that they received around 40t discount and the monthly was lessened.

[shadrach]

Once I get a copy of my docs, I will scan it and post it for everyone to see...but it clearly states that my loan amount is for 630k and the amount to be paid to the dealer is 589k plus my downpayment.

no offense sir but i totally disagree with that. although im not from BPI but i do work in a bank.

i had client before who questioned the PN(promissory note) that i prepared. she's a lawyer thats why she read the whole docs before signing
and questioned me that the amount in the PN was different from what shes paying, may be around 20k+++. just simple its the PPD (prompt payment discount) wherein if you paid late youre PPD will be cancel. instead of paying the usual low NMA(net monthy amorts) the client will be paying a much higher monhtly amorts(GMA). lets say 500++ will be added to your usual monthly amortization.

what im tryin to say here is.. maybe the amount that the you saw was the gross amount due.

as for BPI, in any case that your in doubt you always have the liberty to question them of all the gray areas that you see.

peace sir enjoy your ride

[lui]

weird nga ata ito. alam ko kasi samen kapag bank P.O. d naman nakikialam ang bank sa agreed price ng dealer and buyer. if ever wla pang dealer na kausap ang buyer pdeng magpahanap nalang sya kay bank. pero all discount is given to the customer if ever meron. tapos dun sa loan amount may D.I. pa or dealer's incentive na ibibigay ang bank sa dealer usually 1%...

[shadrach]

car dealers would then prefer to deal with cash buyers instead

That is so not true...dealers prefer people who buy cars with financing arranged by the dealer and not direct thru the bank. That's why you always see threads here in tsikot of in demand models and the first ones in line are those who are financing thru the dealer.

Cash buyers don't bring anything extra to the dealer's profit margins.