How does the finance person from the dealership I bought my car make his money?

Here is the deal. I kind of got taken from a shady Persian gentlemen who did the financing for me at my local Honda dealership. So he got me for a higher interest rate, lied to me so I would purchase stuff like extended warranty and gap insurance. My question is this: Based on my original loan the total loan amount of my interest would have been like $12,000 spread out over six years. But I went ahead and paid a large portion of that down and refinanced with a third party - therefore reducing the total interest to something like


$3500 over four years. So here is my question. Does this dishonest finance guy at the dealership get a cut of the original $12,000 and get his money up front? Or will he only get a cut of the total amount of interest I paid on the original loan which was about $1300? I want to know if by refinancing through some other lender if I took money away from him that he was expecting would come to him based on the terms of the original loan?|||Auto finance is what I do for a living and like the first poster said, it depends on how quick you refinanced.





If you made at least 12-payments, the F%26amp;I guy got all of his money. If you made less then that he was charged back a small percentage.





When you finance a car and buy what%26#039;s called back-end product like Gap and Service Contracts the F%26amp;I people are paid a percentage of the profit they made off of you the next month. If you do not refinance within 12-months they are free and clear, if you do refinance, they are charged back a percentage based on how quick you refinanced.





The other way that F%26amp;I people make money is they mark up the rate. Say the bank gives the dealer a buy rate of 5.99% they mark it up to 8.99% and this produces whats called reserve money. This also gets charged back if you refinance the loan before 12-months.





I doubt if he actually lied to you. People that do what we do for a living are good at our jobs and lieing to a customer is the fastest way to lose your job. The truth in lending law states that everything you purchase must be explained before you sign the paperwork.|||Actually that%26#039;s true.





Once you purchase a vehicle you have to pay the taxes and bring it up into your name before you can trade it back in to the dealer. Report Abuse
|||It depends on the dealer and how long you waited to re-fi.


You were correct in your assumption that he made a pretty penny on you from all the extras especially the extended warranty and how much he was able yo get you to pay for it. These guys have allot of flexibility in what they charge for these types of extras.