I looked at Alfa Romeo's UK webpage:

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So if I purchase outright, the dealer gets 23,830 cash now But if I use their finance, they get a total of 21,541 less finance costs in 4 years

This sounds crazy to me. Surely the dealer would be better off if I offered them the 21,541 in cash right now?

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    No, Alfa is "dropping" its out the door sale price by 3000 so that you "could" get the car for 20,830 cash, but they won't sell it to you for cash for 20,830 because they will give you that 3000 discount only if you take the financing deal, pay a deposit of 3009, 47 payments of 259 and a final payment of 6359 for a total of 21541. So, the dealer would be better off if you offered them 21541 cash right now; you might even be able to offer less and get them to accept the offer. – Dilip Sarwate Jan 21 '16 at 16:47

Yes, maybe. Sometimes the mother company (that makes the car) covers a bit of the loss that comes from the super-offer loan, so the dealer loses a bit less.

But generally, you are right. you should be able to talk them into some rebate that gets you around the given number, depending on how good you are a negotiator (and how urgently they need to sell a car)

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  • The company is not "covering a loss" to the dealer here, they're providing an incentive (to the purchaser) to get payments lower on the loan so more people will purchase cars. Any loss is only to the company. The dealer gets the same amount either way. – davmp Jan 23 '16 at 19:38

The question is about the dealer, right? The dealer isn't providing this financing to you, Alfa is, and they're paying the dealer that same "On the Road" price when you finance the purchase. So the dealer gets the same amount either way.

The financing, through Alfa, means your payments go to Alfa. And they're willing to give you 3,000 towards purchase of the car at the dealer in order to motivate those who can afford payments but not full cash for the car. They end up selling more cars this way, keeping the factories busy and employees and stockholders happy along the way. At least, that's how it's supposed to work out.

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