ADMs dropping
Drifting
Joined: Aug 2004
Posts: 3,453
Likes: 1,969
From: new york
If I’m gonna pay full cash with $20k ADM, but dealer says if I finance, they’ll do $15k ADM and the cost to finance temporarily and turn around to pay it right off is say $2k, I’d still be ahead $3k at the end. Yes, there’s a $2k “back door ADM” in this scenario but you’d still be ahead. The only question is whether my numbers are roughly accurate in this scenario. That’s why I’m wondering if there’s a prepayment penalty if you pay before a certain number of months (say 3 months). If someone who’s done Porsche financing could speak to that, it would be really helpful!
Instructor
Joined: Aug 2020
Posts: 228
Likes: 90
If I’m gonna pay full cash with $20k ADM, but dealer says if I finance, they’ll do $15k ADM and the cost to finance temporarily and turn around to pay it right off is say $2k, I’d still be ahead $3k at the end. Yes, there’s a $2k “back door ADM” in this scenario but you’d still be ahead. The only question is whether my numbers are roughly accurate in this scenario. That’s why I’m wondering if there’s a prepayment penalty if you pay before a certain number of months (say 3 months). If someone who’s done Porsche financing could speak to that, it would be really helpful!
there are no prepayment penalties. As someone mentioned the dealership loses the over base rate money that’s made on the back end. So they lie and tell you you can’t pay it off before 3 months. You can in fact pay it off the next day with no recourse
Burning Brakes
Joined: Apr 2021
Posts: 1,211
Likes: 494
From: Southern California
So this seems to be the way to go. If you feel sorry for your dealer, I like the strategy of paying almost all of it off right away to avoid the interest then waiting 3 months to pay off the little bit that’s left. Seems like a win-win except for the hit to the credit score (which if I’m at 840 and this causes me to go to 830 isn’t a big deal).
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Joined: Sep 2005
Posts: 18,909
Likes: 14,967
I don’t understand taking the dealer preferred financing.
If you’re borrowing, you’re missing on the opportunity to get your best rate. A 3 month old car is no longer a “new car”. You put yourself in the refinance or used car interest rate tier.
If you’ve got the cash, you’re better off just paying cash and a modest cash ADM. It will be better for your credit report, because even the quick payoff won’t offset the hard pull to get there. Why go through that?
You’re not getting the car for MSRP if you’re forced to use expensive financing. ADM comes in many forms: cash, financing, watches, PPF, etc. If you didn’t want it and forced to do it to get the car, you’re getting back door ADM.
If you’re borrowing, you’re missing on the opportunity to get your best rate. A 3 month old car is no longer a “new car”. You put yourself in the refinance or used car interest rate tier.
If you’ve got the cash, you’re better off just paying cash and a modest cash ADM. It will be better for your credit report, because even the quick payoff won’t offset the hard pull to get there. Why go through that?
You’re not getting the car for MSRP if you’re forced to use expensive financing. ADM comes in many forms: cash, financing, watches, PPF, etc. If you didn’t want it and forced to do it to get the car, you’re getting back door ADM.
So I financed it, made the first payment just to qualify for the 2000 cash back and paid off the loan after that and pocketed a net of about 1900.
Dealwr even suggested I do this. They win because they get a point for getting a customer to finance with BMWFS and what happens after the loan docs are signed (be it default, payoff, or somewhere in between) is largely irrelevant.
So it’s a win win for everyone.
Burning Brakes
Joined: Apr 2021
Posts: 1,211
Likes: 494
From: Southern California
I took the dealer financing with BMW a few years back because they offered $2000 cash back if you financed the car with BMWFS for 60 months. There was no prepayment penalty.
So I financed it, made the first payment just to qualify for the 2000 cash back and paid off the loan after that and pocketed a net of about 1900.
Dealwr even suggested I do this. They win because they get a point for getting a customer to finance with BMWFS and what happens after the loan docs are signed (be it default, payoff, or somewhere in between) is largely irrelevant.
So it’s a win win for everyone.
So I financed it, made the first payment just to qualify for the 2000 cash back and paid off the loan after that and pocketed a net of about 1900.
Dealwr even suggested I do this. They win because they get a point for getting a customer to finance with BMWFS and what happens after the loan docs are signed (be it default, payoff, or somewhere in between) is largely irrelevant.
So it’s a win win for everyone.
Burning Brakes
Joined: Mar 2022
Posts: 906
Likes: 886
From: Greater Houston Area, TX
I bought my base 911 in March 2022. I had the intention of buying it cash, but my SA offered lowering the ADM if I took some of the money on loan. I paid $100k cash and put $43k on a loan at 2.99%, which felt high at the time (I got my BMW M4 at 0.9% over 60 months). Interest rates started going up shortly after. I never paid off the loan. I thought I’d do better with the money in the stock market. Needless to say, that wasn’t the case either.
Next one will be paid cash. This time around the dealership isn’t offering to reduce the ADM if I take a loan. Plus, according to my SA, they are currently seeing 7.99% APR with excellent credit.
Next one will be paid cash. This time around the dealership isn’t offering to reduce the ADM if I take a loan. Plus, according to my SA, they are currently seeing 7.99% APR with excellent credit.
Burning Brakes
Joined: Apr 2021
Posts: 1,211
Likes: 494
From: Southern California
I bought my base 911 in March 2022. I had the intention of buying it cash, but my SA offered lowering the ADM if I took some of the money on loan. I paid $100k cash and put $43k on a loan at 2.99%, which felt high at the time (I got my BMW M4 at 0.9% over 60 months). Interest rates started going up shortly after. I never paid off the loan. I thought I’d do better with the money in the stock market. Needless to say, that wasn’t the case either.
Next one will be paid cash. This time around the dealership isn’t offering to reduce the ADM if I take a loan. Plus, according to my SA, they are currently seeing 7.99% APR with excellent credit.
Next one will be paid cash. This time around the dealership isn’t offering to reduce the ADM if I take a loan. Plus, according to my SA, they are currently seeing 7.99% APR with excellent credit.
Burning Brakes
Joined: Mar 2022
Posts: 906
Likes: 886
From: Greater Houston Area, TX
That’s exactly what I’m saying! Sorry the stock market didn’t play along for you but you got a better deal on the car. I’ve heard the 7% Porsche APR now too. I wonder if it’s better to lock in whatever price at time of ordering without discussing cash/finance, then when car arrives saying you intend to pay cash unless they lower ADM if you finance? Or better to negotiated with the financing/maintenance package, etc. first before locking in the deal?
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Three Wheelin'
Joined: Feb 2016
Posts: 1,570
Likes: 1,021
I don’t understand taking the dealer preferred financing.
If you’re borrowing, you’re missing on the opportunity to get your best rate. A 3 month old car is no longer a “new car”. You put yourself in the refinance or used car interest rate tier.
If you’ve got the cash, you’re better off just paying cash and a modest cash ADM. It will be better for your credit report, because even the quick payoff won’t offset the hard pull to get there. Why go through that?
You’re not getting the car for MSRP if you’re forced to use expensive financing. ADM comes in many forms: cash, financing, watches, PPF, etc. If you didn’t want it and forced to do it to get the car, you’re getting back door ADM.
If you’re borrowing, you’re missing on the opportunity to get your best rate. A 3 month old car is no longer a “new car”. You put yourself in the refinance or used car interest rate tier.
If you’ve got the cash, you’re better off just paying cash and a modest cash ADM. It will be better for your credit report, because even the quick payoff won’t offset the hard pull to get there. Why go through that?
You’re not getting the car for MSRP if you’re forced to use expensive financing. ADM comes in many forms: cash, financing, watches, PPF, etc. If you didn’t want it and forced to do it to get the car, you’re getting back door ADM.
If the dealer forces the customer to use their financing to get an allocation or a lower ADM, then the customer can take the dealer loan and then refinance using a credit union for a better rate shortly after taking delivery of the car. The dealer may say the customer has to wait 3 months, but PFS has no such restriction and the dealer will have no recourse. This is a better deal than paying a higher ADM in return for using outside financing. A couple hard pulls won't affect anyone with good credit, the score may take a temporary hit while there are two large auto loans out there but once one gets reported as paid off that should reverse.
Burning Brakes
Joined: Apr 2021
Posts: 1,211
Likes: 494
From: Southern California
Last edited by SS22; Mar 26, 2023 at 11:57 PM.
RL Community Team
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Joined: Jan 2019
Posts: 6,080
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From: Doylestown, PA
If you made a deal with the dealer that you would keep the loan open for 3-6 months, you should do that, because word is bond, yo. A deal is a deal — even if it’s just a handshake.
Be aware, that paying off a car so early into a loan can have negative credit consequences as well.
IMHO. Seems like a lot of hassle for a couple of grand. YMMV
Be aware, that paying off a car so early into a loan can have negative credit consequences as well.
IMHO. Seems like a lot of hassle for a couple of grand. YMMV
Burning Brakes
Joined: Mar 2022
Posts: 906
Likes: 886
From: Greater Houston Area, TX
If you made a deal with the dealer that you would keep the loan open for 3-6 months, you should do that, because word is bond, yo. A deal is a deal — even if it’s just a handshake.
Be aware, that paying off a car so early into a loan can have negative credit consequences as well.
IMHO. Seems like a lot of hassle for a couple of grand. YMMV
Be aware, that paying off a car so early into a loan can have negative credit consequences as well.
IMHO. Seems like a lot of hassle for a couple of grand. YMMV
Burning Brakes
Joined: Apr 2021
Posts: 1,211
Likes: 494
From: Southern California
If you made a deal with the dealer that you would keep the loan open for 3-6 months, you should do that, because word is bond, yo. A deal is a deal — even if it’s just a handshake.
Be aware, that paying off a car so early into a loan can have negative credit consequences as well.
IMHO. Seems like a lot of hassle for a couple of grand. YMMV
Be aware, that paying off a car so early into a loan can have negative credit consequences as well.
IMHO. Seems like a lot of hassle for a couple of grand. YMMV
Rennlist Member
Joined: Nov 2021
Posts: 466
Likes: 293
If you made a deal with the dealer that you would keep the loan open for 3-6 months, you should do that, because word is bond, yo. A deal is a deal — even if it’s just a handshake.
Be aware, that paying off a car so early into a loan can have negative credit consequences as well.
IMHO. Seems like a lot of hassle for a couple of grand. YMMV
Be aware, that paying off a car so early into a loan can have negative credit consequences as well.
IMHO. Seems like a lot of hassle for a couple of grand. YMMV
It’s also not always true that you get worse financing after you pay cash for a car. You can get a title finance that will get the discounted rates as long as the car is less than a year old and has less than x miles (I think the miles depends on the lender). A buddy of mine did this in 2021 where he was essentially able to arb the lender by taking the cash and just putting it in a high yield savings account.
Last edited by av12345; Mar 27, 2023 at 12:31 AM.