Chase "Car Buying Service." WTF.

[Sidewinder]

Oh boy, I am "prequalified" for $44,000 according to Chase auto.  (I have three credit cards from Chase and given them nothing to regret.)

 

I really don't understand what this "car buying service" is - AAA has one as well, so does American Express.  Unless I'm missing something big; these programs don't do anything but limit your choice of dealerships.  (FAQ: How does it work?  A: 1-2-3!!  1 - Shop for a car from a participating dealer; 2- Finance (apply online or at the dealership); 3 - Drive - finish up with the dealership and get on the road.  (This is different from the Sidewinder Car Buying Service how, exactly? ))

 

But the fine print that I don't understand from the Chase auto website is:

To finance a new or used car with JPMorgan Chase Bank, N.A. ("Chase"), you must purchase your car from a dealer in the Chase network. The dealer will be the original creditor and must assign the financing to Chase. All applications are subject to credit approval. Additional terms and conditions apply

 

To finance with Chase; the dealer is the original creditor?  Does Chase not originate car loans?  What does "assign the financing" mean; they have to sell the loan to Chase right after they originate it?  If so, what's in it for them, why sacrifice all of that interest revenue?

 

Also I'm eyeing a Mazda CX-5; as well-reviewed a model as it is I think $14,000 is an attractive price; it's high-mileage but from what I've read these Mazdae last from 200K to 250K. 

Go or no-go?  Haggle or offer the 14K?

 

 

[MarvBear]

34 minutes ago, Sidewinder said:

But the fine print that I don't understand from the Chase auto website is:

To finance a new or used car with JPMorgan Chase Bank, N.A. ("Chase"), you must purchase your car from a dealer in the Chase network. The dealer will be the original creditor and must assign the financing to Chase. All applications are subject to credit approval. Additional terms and conditions apply

I am choking on my saltines.  I gotta get a glass of sweet tea!  I am choking from reading this.  I'm sorry I am laughing.  I'll be right back.

[MarvBear]

That little blip I quoted is the bank telling you to do an indirect loan.  NOT TO APPLY DIRECTLY YOURSELF.

These disclaimers that have to go in these things.

 

In the reading and resources section of this forum, there are two threads that you can look up.   One is INDIRECT LENDING and the other is DIRECT LENDING.

[Sidewinder]

On 3/5/2024 at 5:22 PM, MarvBear said:

I am laughing.

 

Because?

[MarvBear]

14 hours ago, Sidewinder said:

 

Because?

 

Because it amuses me the steps banks take to obfuscate their real reasons and confuse the heck out of an ordinary consumer.  Between banks and dealers they weave a murky mess, that they try to hide with disclaimers.  Those disclaimers end up costing the consumer in the end.

[Sidewinder]

On 3/5/2024 at 5:47 PM, MarvBear said:

That little blip I quoted is the bank telling you to do an indirect loan.  NOT TO APPLY DIRECTLY YOURSELF.

These disclaimers that have to go in these things.

 

In the reading and resources section of this forum, there are two threads that you can look up.   One is INDIRECT LENDING and the other is DIRECT LENDING.

 

I am inclined to believe that indirect lending is a silly, silly thing.

 

See, Investopedia says:

Dealerships often have lending networks that include a variety of financial institutions willing to support the dealership’s sales. Oftentimes, these lenders may be able to approve a wider range of borrowers due to their network relationship with the dealer.

 

 

This is how we're widening the swath of eligible borrowers?

 

How does the lender having a "network relationship" with the dealer improve anyone's creditworthiness, or other attractiveness as a borrower?

[hdporter]

2 hours ago, Sidewinder said:

How does the lender having a "network relationship" with the dealer improve anyone's creditworthiness, or other attractiveness as a borrower?

 

Who said anything about "improved creditworthiness"?  My guess the relationship works "to approve a wider range of borrowers" through means that all serve to deteriorate loan portfolio quality.

 

Being the preferred lender for a dealership is an advantageous relationship.  Borrowers at dealerships are often presented auto price/loan proposals that are less scrutinized than loans written on the direct market.  I guarantee there's a lot of fat to share between dealer and bank as a consequence.

 

I suspect signing a dealer to a preferred lending contract is the jewel in the crowd for a bank underwriter.  That puts a lot of incentive on the bank rep to sustain the relationship, including approval of sub-prime applic as nts that might otherwise be rejected in a direct app to the bank.

 

I'll own up to a fair amount of informed speculation in these thoughts.  But I expect zi've nailed the majority of the picture.

 

 

 

Edited March 11, 2024 by hdporter

[MarvBear]

The only way a bank is a preferred lender is that they also have the floorplan line of credit.

In my opinion all the car buying services are a consumer rip-off since the dealership pays a fee to engage with the bank/lender in their car buying service.  So, in essence the consumer is paying for the service.

 

I've signed up for these services before and I can truthfully state that any consumer with a modicum of intelligence can do a better price on their own with a wee bit of research.