Also, I had the impression that if you took the superior finance rate, you had to buy at msrp which is usually a rip off. DRE
-----Original Message----- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] Sent: Monday, June 30, 2003 5:34 PM To: CF-Community Subject: Re: New car 1) Cars have a fairly large profit margin. 2) At this point in the economy, auto manufacturers care about moving lots of cars. 3) Having cheap interest rates entices people to buy new cars. 4) The amount of cars being sold outweighs the loss on lent money. 5) Only the best customers get the "1.9%" interest rate. Everyone else gets gouged. ----- Original Message ----- From: jon hall <[EMAIL PROTECTED]> Date: Monday, June 30, 2003 5:31 pm Subject: Re: New car > Ok...forgive me if this is econ 101, but I got another one :) > > So in essence the lending branches of the auto manufacturers are not > traditional banks in that banks borrow money from the government, and > these guys lend money out of their own pockets...so they do not have > to worry about the prime rate. > > Wouldn't they still be vulnerable to inflation though? I mean...if > they loan money out at 1.9%, and inflation >= 1.9%, the the real money > that the car buyer is paying for the car is actually amounts to > less than the sticker price + interest rate...or not? > > If I'm not way off base...my whole line of thinking is that the auto > manufacturers are betting that inflation remains in check for at least > the next 4 years...and for inflation to remain in check, there can not > be a big economic improvement...which usually from what I've read, > will cause inflation to rise until the Fed checks it with interest > rate hikes. > Even if inflation is about 1.9% for the next 4 years...doesn't that > make the lending branches of these companies a lot less profitable, > meaning they have to raise prices on the cars...meaning the inflation > rate goes up even more if we get too fast an increase in > inflation, or > it stay too high too long? > > Good god...this stuff is confusing :) > -- > jon > [EMAIL PROTECTED] > > Monday, June 30, 2003, 6:52:02 PM, you wrote: > CG> Your understanding would be correct if it was straight > financing, but it > CG> isn't, so,well,it isn't. > > CG> These are promotional rates and have nothing much to do with > actual intrust > CG> rates like the "prime" rate and the overnight rate. They are > usually funded > CG> by the manufacturer, but usually the dealer has to kick in > something as > CG> well. Most of the big auto companies have their own lending > arm, and,oddly > CG> enough, it is often the most profitable part of the company. > > CG> There is no line relationship between interest rates and > inflation. > CG> Cary Gordon > > CG> At 06:16 PM 6/30/2003 -0400, you wrote: > >>Congratulations :) > >> > >>I want to branch a little though...isn't 1.9% less than inflation? > >>Doesn't that mean that over time, if interest rates rise, they > will be > >>making less money? Especially considering the fact that with all > this>>built in economic stimulus...we are bound to see a really > big uptick > >>in inflation if/when everything starts to turn around. > >> > >>Or is my understanding of how this works incorrect? > >> > >>-- > >> jon > >> [EMAIL PROTECTED] > > > CG> > ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| Archives: http://www.houseoffusion.com/cf_lists/index.cfm?forumid=5 Subscription: http://www.houseoffusion.com/cf_lists/index.cfm?method=subscribe&forumid=5 Host with the leader in ColdFusion hosting. Voted #1 ColdFusion host by CF Developers. Offering shared and dedicated hosting options. www.cfxhosting.com/default.cfm?redirect=10481 Unsubscribe: http://www.houseoffusion.com/cf_lists/unsubscribe.cfm?user=89.70.5
