Dealer requires financing in order to reserve an incoming vehicle?

I've been communicating with a nearby dealer rep about buying a new 2023 Tacoma that is currently on the way to the dealer. I told the dealer that I wanted to reserve the vehicle and had no problem putting down a deposit. She told me that reserves were only possible if I financed the vehicle and not for a cash sale. She did say that once financed, I could pay off the loan quickly without restriction.

Is this weird, or am I just out of touch with dealer practices? Having to finance is not a deal breaker, I just didn't want the hassle of applying, getting, paying off, and then title revision. Financing does have a few advantages: I get a $750 discount for being retired military and it would also have a positive effect on my credit score (which is darn good to begin with).

I'm likely to go through with this process, but I wanted to see what the experience of others was.

The truck I'm after is a TRD Sport with some nice option packages. Because it's at a dealership in the state to my north. I'm not shackled to having to pay for some of the things that in-state dealers apply, like ToyoGuard,etc.

 

Their way of making money off of you. Total Bull Shit.

 

They're liars. Go to a different dealer.

 

Not an uncommon practice. If the deal stil makes sense for you then it’s not soin off your back. A few minutes more work than just doing a wire transfer cash payment but not a big deal.

 

How are they liars? They told him the truth up front - if you want to reserve a vehicle you have to finance through them. Sounds pretty upfront and honest to me.

 

More common now with lower inventory across Toyota dealers. Ask them if there’s an associated discount for having to finance with them just for shits and giggles. When I was a sales director for a Ford store Ford threw out $1,000 rebates tied to Ford Credit. I know for a fact Toyota doesn’t do that, but it lets the dealer know that you aren’t some dummy who isn’t aware of the play.
If they’re jack wagons just pay it off with the first statement and they will receive a chargeback for the flat they receive from TFS. If they’re decent so far I’d still pay it off, but give them a perfect survey score to go with it.

 

OP said the dealer said it's only possible to reserve if you finance through them. That's not true. It may only be worth their while to accept deposits and reserve vehicles if they finance through Toyota and therefore became a policy for that specific dealer. But it's not a blanket Toyota policy.

 

Again, how are they liars? They told the complete and honest truth, their business won’t sell a reserved a truck unless you finance with them. This has nothing to do with Toyota since they don’t own the dealership and it was never said this is a Toyota policy.

 

I dunno? She may be helping you.

Anyone who comes in and says I will pay cash is going to get bent over.

You will not get the best price.

If you finance thru Toyota or the dealer, you will get a better price...but they will want to encourage you to pay for the full term of the note. They make the most money when you take as long as possible to pay off an item.

As long as there is no penalty for paying off early ( as in 2 days later), you can secure your own financing and still get the best price. Pay off the loan to the dealer quick and save a bunch of money.

I'm guessing the sales person knew ( by your CR) that you could pay for the truck easily. She/ he was only saving a bit of time.

It bothers me to no end that I can't buy a truck outright cheaper than I can finance it. The only thing I can think is that dealers and banks are more happy making $15 in interest vs nothing in interest...even if the cost of the rig is $5k less when you finance.

It's all math, I guess.

 

Ask if they just want to pre-process for a loan of it they will only accept the loan for payment. If they will only accept the loan, they can sell to another in my opinion. If the first, they are not pushing the deal up to Toyota Financial ... still too damn pushy but if the "final process" makes the difference to to you (they could be ensuring they will get money for it in the end) then you can still walk before they pre-process.

Still ... there should be another dealer who does pull this crap.

 

Go to another dealer. We just bought (for cash) a new RAV4 with no such hassle.

 

I would say dont get the loan only to pay it off before your first payment that may impact your credit if your teetering between break points.

Based on my states current deals, you can get a 48 month loan at 3.99, which is damn good by todays standards, pay it off in 6 months, youd probably pay somewhere in the ball park of 500-600 in interest, put half down, pay 300ish in interest. You get 750 off for being vet? rad, literally already saved some money lol. Get them to cut you a better deal for having to finance and who gives a shit about the rest.

Edit: dealers are approaching end of year, looking to get kickbacks from Toyota. They could be close to a goal for X amount vehicles financed through toyota or something along those lines

 

Thanks all. I reckon I have a glimmer of understanding about this practice, though the absolute exclusion of a cash buyer (or, I suppose a buyer with another lending resource) makes little sense. Perhaps they just want to be able to check my credit status. I'm going to check with some other dealers.

 

This practice isn't anything new.

I wanted to buy a '94 M-Edition Miata. Dealer required financing through the captive as a condition for purchase. Each store was only getting one or two units.
IIRC, there was a $300 college grad incentive, so I played along. Refinanced a couple months later at a lower rate and longer term.

They're trying to make as much money per unit as possible.

 

Huh I didnt know they did that. Mine was just a deposit to reserve it

 

it doesn't need to be a corporate toyota policy to be the way they do business. remember, all dealerships are independently owned and operated, which means they can create any sort of rules and requirements to anyone interested in purchasing a vehicle from them.

it wouldn't shock me if any brands dealer started requiring any new buyers to "stand on 1 leg for 5 minutes" before they'd agree to do a deal with them...

a very different market, but in 2014 when i was looking at buying a different brand new car, there were a few kia and hyundai dealers that absolutely refused test drives unless i let them run my credit and finalized the deal. one subaru dealer wouldn't even alot me a car that they admitted was on it's way unless i put non-refundable money down, and completed the financing aspect for a vehicle that didn't currently exist.

covid tended to alter the game from a buyers market to a sellers market. many dealers struggled before that with the concept of a buyers market, and now many more are going to struggle to flip back. i think this is simply a case of exactly that.

here's the problem. they have the court, the ball, and the audience to complete the game, they require nothing from you. but if you desire to compete for this specific game, you MUST play by their rules. take it or leave it.

it's actually nice from my point of view that they made you aware of the rules of their game this early on. i've seen plenty of deals where the dealer changes the rules to something similar but only as they're unloading the vehicle into the lot and someone waited weeks/months after signing papers to get to that point.

 

Finance department doesn't make commission unless buyer finances vehicle through dealer (dealer works with many lenders and banks). My understanding is that if financing is obtained and signed for, then buyer pays off loan early, said dealer loses out on commission.

There must be some other financial spiff involved for this particular dealer to require this. Maybe they get a bonus if they meet a financing quota.

If OP is financing anyway I don't see what the problem is. Have them match whatever apr and length term you can find elsewhere based upon your credit. Also, be sure to negotiate the OTD sales price before agreeing to sign finance docs with them.

 

There's your answer. The dealer isn't profiting one way, so they need to profit another way.

 

not really. the dealer makes money on the financing end as well. the majority of new vehicle purchasers finance. but the sales staff also tend to rotate out every few weeks/months. there's absolutely no incentive to 'build a relationship' to sell the same person multiple vehicles over the course of years. every deal is situated to make/break someone's career as a salesperson, and that's only if they can most efficiently wring every profitable dollar out of every new sale.

it's really not you, it's just how this specific dealer has chosen to best turn a profit. agree/disagree, it doesn't matter.


back to my story/fiasco from 2014. i had decided on a subaru brz. at the time there was a dealer in colorado that supported the brz forums. being the forum junkie i am, i like to support businesses that support my habit. so i reached out to them around november of '13 with a plan that had many moving parts. i wanted to plan a trip where i'd fly out to colorado in May, and drive the new car back home to indiana, over a 2-week time span. but as with anything like that, it meant i had to get approval for time off work, and make hotel and flight reservations.

in reaching out to the salesperson, i made it clear that i was looking to setup a deal for a few months later, in May, to get the car, to make an event out of the experience. i made my plans known. i was looking for one of the most common colors/trims for the vehicle, and asked if there was some way we could set up the deal now, and i could wire an unspecified amount(i had the finances to cover the complete cost of the car) to reserve 'a' brz, not a specific brz, where i'd have the VIN, but any brz of that color/trim package (at the time, they had 55 brz's on their lot, 15 were of the color/trim i wanted).

he responded with shipping quotes to send the vehicle to indiana, and offered to complete the deal by tomorrow with an 'out the door' price.

i reiterated my plans, and how i'd like to make a vacation trip out of the experience, later on in the year.

his response was basically, he can't hold a vehicle for me. not now, not ever, if i wanted a car, he could ship it to me, but he was looking to close out this month with strong numbers.

i reiterated that i wasn't haggling his price, and this was a guaranteed sale in a few months, i just had to know he'd have a vehicle of that color/trim there 'at the finish line' for me put all the other parts of the plan into motion.

he closed the contact out by basically saying that there's no way this can be done. either buy the car and pick it up now, buy it and ship it back 'home', or don't waste my time.f

so i didn't waste any more of his time. i found a local dealer that came in $4,000 under his price, that was happy to sell me a car, and drove a car home in january instead...

 

It's not unusual, and may be a good deal. When I bought my last vehicle interest rates were somewhere between 0% to 2%. I let my trade-in be my down payment and financed the rest for 5 years. But paid itoff in about 2 years. By keeping the loan small, paying it off soon at low interest the total interest for the life of the loan was around $1200.

I could have pulled money from other sources and paid cash, but I'd have lost money. My money was earning more interest than I was paying on the loan.

Interest rates a couple of years ago were up there, but they have moderated some. Not 2% good, but at a rate I'd be willing to pay.