Credit Card Payment Limit

[nobbyv]

I plan to use the Ford Pass Rewards card to pay part of the purchase price of my truck that will be arriving soon so I can get the rewards. I pinged my dealer to ask what the max is I could put on the card, as I know some dealers charge a fee over XXXX dollars. Their reply has me a bit curious: they say if I am financing at all, whether my own financing, Ford Credit, or a bank my dealer works with and arranges, the max is $500. If I am paying cash, the max is $5000. That seems odd to me; I would almost think it should go the other way: if I finance using a bank they arranged, they get a kickback, so I'd think would be more willing to eat the credit card fees of a larger credit card payment. Am I missing something? Not planning on causing a stink as they have been GREAT to deal with (MSRP, no add-ons, $27 doc fee). Just curious what the angle is I'm missing.

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[AutobahnSHO]

They probably don't get a bank kickback, and it's going to vary dealer to dealer.

 

[nobbyv]

They probably don't get a bank kickback, and it's going to vary dealer to dealer.

But why the difference between cash and financing then?

 

[Hot Runr Guy]

On the Edge I just bought, there was a $2K limit on a credit card, PLUS a 3% fee. Used Ford Motor Credit, 0% for 66 months.

HRG

 

[nobbyv]

On the Edge I just bought, there was a $2K limit on a credit card, PLUS a 3% fee. Used Ford Motor Credit, 0% for 66 months.

HRG

Wow, you got a rate of 0% recently? I'll have to try them. I could pay cash, but would prefer to finance if I can get a low rate (which has seemingly been pretty tough for the last 1-2 years).

 

[Hot Runr Guy]

Wow, you got a rate of 0% recently? I'll have to try them. I could pay cash, but would prefer to finance if I can get a low rate (which has seemingly been pretty tough for the last 1-2 years).

Keep in mind, this was on an Edge, plus a $1500 rebate. There are no such deals in my area on Maverick.

HRG

 

[Ozarkbeard]

My dealer wouldn't let me use any credit card for any of the truck cost. But I wasn't about to complain because I got it for more than $1500 off original Price Protected MSRP including $129 doc fee.

 

[mav_kev]

You're cutting into their finance reserve by putting more money down and not financing as much - typically the bigger the loan, the more the dealer gets paid for writing it. Reducing the loan amount by using your card for a down payment is a negative for them. Even if they charge you a "convenience fee", that's just to recoup the merchant processing fee for swiping your card and not actual profit. Finance reserve is pure profit.

It is weird that they wouldn't allow more if you're arranging your own financing - that part of the policy sounds a bit punitive.

 

[nobbyv]

You're cutting into their finance reserve by putting more money down and not financing as much - typically the bigger the loan, the more the dealer gets paid for writing it. Reducing the loan amount by using your card for a down payment is a negative for them. Even if they charge you a "convenience fee", that's just to recoup the merchant processing fee for swiping your card and not actual profit. Finance reserve is pure profit.

It is weird that they wouldn't allow more if you're arranging your own financing - that part of the policy sounds a bit punitive.

You're misreading my post. They allow more if you DON'T finance at all.

 

[mav_kev]

You're misreading my post. They allow more if you DON'T finance at all.

I understand your post - I'll try to be more clear. There's a financial incentive for them to get you to finance more. If you're not financing, they're not making any money on financing. In that case, allowing credit card use doesn't directly affect their profit.

For example, if you're spending $30,000, but they allow you to put $5,000 on your card so you only finance $25,000, they're missing out on finance reserve on that $5,000. If they cap it at $500, that means they're minimizing the financing profit lost through a down payment.

They're trying to disincentivize card use for people who finance by capping card use at $500. For "cash" buyers, it wouldn't matter if it's card, check, or cash - they're not making extra money on the payment method, so go ahead and load it up. The $5,000 limit is probably more of a security thing at that point.

 

[nobbyv]

I understand your post - I'll try to be more clear. There's a financial incentive for them to get you to finance more. If you're not financing, they're not making any money on financing. In that case, allowing credit card use doesn't directly affect their profit.

For example, if you're spending $30,000, but they allow you to put $5,000 on your card so you only finance $25,000, they're missing out on finance reserve on that $5,000. If they cap it at $500, that means they're minimizing the financing profit lost through a down payment.

They're trying to disincentivize card use for people who finance by capping card use at $500. For "cash" buyers, it wouldn't matter if it's card, check, or cash - they're not making extra money on the payment method, so go ahead and load it up. The $5,000 limit is probably more of a security thing at that point.

Right, but as you noted, they are paying a 2.9% fee on whatever you put on a card. So if you're paying cash, not only do they have no hope of making any money from financing, they're also losing 2.9% of whatever you put on the card from the profit they WERE making from the sale of the vehicle. I'd think limiting that loss would be the bigger concern. Prioritizing maximizing profits on the chance that you finance through them (because keep in mind the rule applies even if you bring your own financing) instead of minimizing losses for cash buyers seems like a bad tradeoff. See what I'm saying?

 

[mav_kev]

Right, but as you noted, they are paying a 2.9% fee on whatever you put on a card. So if you're paying cash, not only do they have no hope of making any money from financing, they're also losing 2.9% of whatever you put on the card from the profit they WERE making from the sale of the vehicle. I'd think limiting that loss would be the bigger concern. Prioritizing maximizing profits on the chance that you finance through them (because keep in mind the rule applies even if you bring your own financing) instead of minimizing losses for cash buyers seems like a bad tradeoff. See what I'm saying?

Fair play. You didn't mention if your dealer charges a convenience fee for card use, only that they have a max amount based on payment method. They would be silly if they don't charge a fee, for the reasons you just laid out.

 

[jamie722]

My dealer had a max 5000 for cc. You could use multiple credit cards like if you wanted 2500 on 2 cards- but max 5000 total.

 

[Ren E Gade]

If you use the Ford credit card you can charge up to $3000 towards the down payment, if your dealer has a problem with it go to Ford credit card site, scroll down and show it to them. Don't buy the warranty, when you pay off the cc you will receive bonus points in your app... then go to Granger and get your warranty and apply the points.

 

[nobbyv]

If you use the Ford credit card you can charge up to $3000 towards the down payment, if your dealer has a problem with it go to Ford credit card site, scroll down and show it to them. Don't buy the warranty, when you pay off the cc you will receive bonus points in your app... then go to Granger and get your warranty and apply the points.

Not sure what you mean here. The link says nothing about dealers being required to accept the Ford Pass card for down payments.

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