Requesting Clarification from Those of You Who Paid ADM (you know who you are)

[combatninja]

Might be a dumb question but here goes: Assuming a fair number of Bronco buyers are financing these purchases (not an insult, just looking at the blue collar demographics and general marketing of the vehicle, it's not a Ferrari after all), so how are you guys handling ADM? No way everyone is coughing up $5-20K in cash, I refuse to believe that. I was in the car business for years, ask a customer who makes $100K to come up with $20K cash and they'd look at you like this was impossible. Are you guys telling me that banks are financing these things at up to $20,000 OVER MSRP!? Not being ignorant, just genuinely interested to see what banks and buyers are doing. I have no issue believing that buyers are dumb enough to do this but having a hard time believing banks would assume this risk. However, see also subprime mortgage crisis of 2008.

If the economy normalizes in the next year and Broncos are on lots at invoice (or even have $2500 Rebates for July 4th or whatever), some of these ADM guys are going to be so upside down in these cars they will never be able to trade out.

I doubt anyone id going to raise their hand and admit that they paid $15,000 over sticker, got milked for $2,000 cash down, bought some B.S. wheel and tire insurance, etc. and are going to tell the class that they are sitting in their Outer Banks for almost $70,000 financed but thought I'd ask.

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[rustedgoat]

I asked how can they finance for more than the value of the vehicle. They said they do it all the time sometimes people are upside down with what they trade in. I think she said they could do up to 25% over value. It's still a loan that you have to qualify for. To a point they could care less about your financial position just that somehow you "qualify".

 

[Snydermann]

I doubt anyone id going to raise their hand and admit that they paid $15,000 over sticker, got milked for $2,000 cash down, bought some B.S. wheel and tire insurance, etc. and are going to tell the class that they are sitting in their Outer Banks for almost $70,000 financed but thought I'd ask.

This should be a good thread.

I'm sure there is a Ritchie Rich at the yacht club bragging how he paid 30k over msrp so he didn't have to wait in line for his Bronco like a plebian (auto trans, of course).

Two classes of people. Those with so much money it just doesn't matter, and those that suffer from poor financial acumen and lack of self-control when it comes to instant gratification.

 

[RagnarKon]

Actually asked my dealer this question while I was there on Friday. They don't charge above MSRP on retail orders, but they have a fair amount of stock vehicles that are going for above MSRP--including a First Edition for $95,000 that was abandoned by the original order holder.

The finance manager said in the "normal" times it was extremely common for people to be underwater on their vehicle loans the moment they drive off the lot. So being instantly underwater on a Bronco loan in the current market is really nothing new. That combined with the current used vehicle market and most banks are fine with loaning people for above MSRP as long as they have solid credit history and a decent income level.

Admittedly I felt a little bit like an idiot, as I knew that most people in the past would be underwater on their car loan the moment the drove off the lot. But for some reason it just seemed different when vehicles were being sold over MSRP. But... when you think about it... it really is no different.

He also mentioned that the vast majority of people who have bought a Bronco are either paying entirely in cash or show up with massive down payments. Makes sense, for many people the Bronco isn't a "necessary" vehicle, it's a fun vehicle. So if they are looking to buy a Bronco they are likely already financially solid, and thanks to the production delays they likely have been able to save up for quite some time.

They've only had one person who was denied credit, and he honestly had no business buying a $40,000 vehicle based on his credit score and income level.

 

[bigblueboing]

Nah they’re leasing them. Just increasing the down payment. The dealer shows that the price is x and they take the profit off the top. And lower the residual.

 

[wetdog]

Saw this Saturday

 

[Koz44]

I purchased a dealer mannequin from an out of state dealer. I took months trying to locate a 2dr at msrp and did find 2 but they weren’t what I was looking for. At the end I went back to one of the first dealers I spoke with who wanted $5k over (on my original call) but was ready to meet in the middle.

I was originally dead set on only paying MSRP but after speaking with dealers in 20+ states it was time to spend a little extra to get the Bronco I wanted so I did.

I was never in the market for one at $10-20k over msrp so not sure how people finance those. I put a little more down to cover the ADM, came up with a monthly payment that worked and off we went. This was an out of state purchase so it has a temp plate on it and I’ll have to pay the NY tax when I register it (and that was factored into what I put down).

For what it’s worth, these listings you see all are marked up 5, 10, 15k etc but that doesn’t mean they are all selling for that much over. Plenty of dealers were willing to come down off those numbers (there were also plenty that were not).

 

[ausherpharmd]

This should be a good thread.

I'm sure there is a Ritchie Rich at the yacht club bragging how he paid 30k over msrp so he didn't have to wait in line for his Bronco like a plebian (auto trans, of course).

Two classes of people. Those with so much money it just doesn't matter, and those that suffer from poor financial acumen and lack of self-control when it comes to instant gratification.

I agree. And there are a lot of Ritchie Riches in this world and they must have what they want instantly. Then there are those that just can't help themselves and convince themselves that this was a lifelong dream and nothing can stop them, getting wrapped up in the emotion. Then there's the group that really truly has no ability to understand personal finance. And these dealers take advantage of all of them.

 

[ausherpharmd]

I agree. And there are a lot of Ritchie Riches in this world and they must have what they want instantly. Then there are those that just can't help themselves and convince themselves that this was a lifelong dream and nothing can stop them, getting wrapped up in the emotion. Then there's the group that really truly has no ability to understand personal finance. And these dealers take advantage of all of them.

Oh, and of course the banks eat the latter two for breakfast. They don't care as long as the person qualifies.

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