The days of unnoticed dealer profits for arranging retail vehicle financing are racing to a close. Get used to it.
The finance reserve added to the wholesale financing rate has long been a staple of dealer profits. But business ethics are changing. And the invisible markup is ending.
Some captive finance companies face trouble because the markup can result in higher average retail rates to minorities. A harsh light is shining on that markup.
The problem is not the dealer's profit. A gross profit on a retailer's service is clearly fair. But many customers believe that the rate quoted in the finance and insurance office is the bank's rate. Then later they are shocked to learn that the dealer made some money on the deal.
In the future, the dealer will be explicit that he's being paid for the service. That's not a bad thing.