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Post by surfinboy on May 22, 2020 10:19:44 GMT -5
Always curious about this – whenever I’ve financed a car through a dealership they usually just throw my credit score at a bunch of banks and whicheveer one comes up with the best rate is who I send my payments to. Given this, do dealerships make money on financing or is this a convenience they offer to customers simply to close deals and hope that they’ll sign up for extended warranties, etc?
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Post by damuniz on May 22, 2020 10:38:19 GMT -5
In my experience, you are better off shopping for your own loan before you ever set foot in a dealership. My local credit union has better rates than any dealer.
That said, I would try very hard not to borrow for a car and pay cash.
I have floated loans when the manufacturer had a deal for like $2000 off if you financed and then paid it off at whatever the earliest termination date was that I didn't get dinged with a fee (usually 3 months).
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Post by BobbyMac on May 22, 2020 10:52:12 GMT -5
I haven't bought a "new" car in several years, choosing instead to buy used. My highly regarded used car dealer has a lot of sources for financing that I would not normally know about. My credit union usually has the best loan rates out there. However, when I bought my 2018 Ford F250 last year, my dealer was able to secure an even lower rate through another local credit union. Of course, having a credit score of over 840 helps.
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Post by Mfitz804 on May 22, 2020 11:04:57 GMT -5
I’m sure the my also make money on the back end of loans, yes. Otherwise, they’d not be so anxious to pass out 0% financing loans.
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Post by Peegoo 🏁 on May 22, 2020 11:12:15 GMT -5
Yes, there is a loan origination fee that's rolled into the total cost, usually between 1% and 2% of the total sale cost. The bank does the work and writes the loan, but the dealer makes a percentage of the fee for bringing the business to the bank.
Most often it's the same bank(s) that own the new vehicles on the dealer's lot (dealers don't own the cars they sell...a bank does).
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Post by Seldom Seen on May 22, 2020 11:13:38 GMT -5
It seems easier to finance through the dealer but you are better off working with your lending institution. I've helped my daughter with a couple of car purchases this way and both times her credit union bested the dealers terms.
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Post by rangercaster on May 22, 2020 11:15:06 GMT -5
In my experience, you are better off shopping for your own loan before you ever set foot in a dealership. My local credit union has better rates than any dealer. That said, I would try very hard not to borrow for a car and pay cash. I have floated loans when the manufacturer had a deal for like $2000 off if you financed and then paid it off at whatever the earliest termination date was that I didn't get dinged with a fee (usually 3 months). So true ...you bet they make seriois money on financing... the dealer wants to move product, while making maximum profit by removing every possible dollar he can from your wallet... Nothing personal... Just business ... Caveat emptor... |
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hilltop87
Wholenote
My Strat is my friend
Posts: 885
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Post by hilltop87 on May 22, 2020 11:23:19 GMT -5
Credit Union always for me. I hate dealing with car dealer finance people. I also refuse their warranty push every time.
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Post by De ville on May 22, 2020 11:39:47 GMT -5
In my experience, you are better off shopping for your own loan before you ever set foot in a dealership. My local credit union has better rates than any dealer. That said, I would try very hard not to borrow for a car and pay cash. I have floated loans when the manufacturer had a deal for like $2000 off if you financed and then paid it off at whatever the earliest termination date was that I didn't get dinged with a fee (usually 3 months). So true^^^^
The dealer for my Silverado couldn't come close to the rate I received from my credit union. They did sound disappointed they couldn't get the financing gig. Maybe because they had the best price on my truck with it's mileage in the state.
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Post by Peegoo 🏁 on May 22, 2020 12:26:31 GMT -5
You can sometimes use your own financing as a negotiating point for final sale price, because dealers pay a 'fine' to the bank for every new vehicle they still have on the lot at the end of the month. Some dealers are more motivated than others to move their cars--depending on how healthy they are as a business. For instance, even if the dealer cannot match the interest rate your bank or CU charges, you can offer to take dealer financing if they agree to drop the price of the vehicle a bit more. Do a little quick math to see how the dealer's interest increase affects total cost over the life of the loan. If they can adjust the vehicle price and come in lower than the current deal on the table (their car, your financing), you take that deal. Most dealers will nickel and dime you if you let them. When I was buying a new Toyota truck in 2004, I thanked the sales guy for his time and picked up my stuff and headed for the door after an hour of discussion because they would not budge on $250 on a $22K vehicle (a little over 1%). I was paying cash. I knew what their cost was for the truck and they would still make 4% on the sale, which was fair. The sales guy said, "I can't believe you're walking away from this deal over $250." I replied, "I cannot believe you're letting me walk out the door over $250." I got the deal I wanted...not the deal they wanted. It's simple Tarzan business tactics: "You have truck. Me want truck. Me have munny. Make happen."  |
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Post by stratcowboy on May 22, 2020 12:55:20 GMT -5
Many scenarios are detailed here...and that makes sense. Basically, if you go in without full information of what the dealers are paying for vehicles and what financing is available, you're cannon fodder. That said, knowing what's out there available from various dealers and financial institutions prepares you to meet their stonewall scene with firmness of your own.
Last time I purchased a vehicle (a new Honda CR-V, late August 2014), I had planned to pay cash. As I live in a remote area, no matter where I purchase a vehicle, I'm going to have to travel to go pick it up. So I did lots of on-line research about what this car should cost, what its average/median selling price was in the general southern Rockies region was, etc. So I basically put it "out to bid" for about 10 different dealers. I also told them they were competing against one another. Some played, some did not. But I sure got enough offers to make all the research worthwhile. When I arrived at the chosen dealer, they offered to finance the vehicle directly from Honda--not a bank in the traditional sense (Honda Financial Services). Though I wanted to pay cash, they insisted on running the numbers for me as my credit score was/is excellent (something I don't actually pay attention to, but my financial habits have gotten me there regardless). They basically offered me an interest rate that was only slightly above zero. As the finance agent at the dealer said to me, "Do something better with your money instead of paying for the car." Which I wound up doing. For 4 years of financing, I paid something like $96/year in interest. It was a no-brainer. So, yeah...I probably did better keeping my money in the stock market.
But it all depends on the situation, what the credit markets are doing, what the incentives are for dealers to get rid of their vehicles, etc. Bottom line is...you gotta do the research for the situation that exists at the time you're thinking of buying. That's the only way to be sure you're doing the best you possibly can at any moment in time.
YMMV...
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Post by Peegoo 🏁 on May 22, 2020 13:00:39 GMT -5
^^^THAT is good advice right there.
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Post by Lesterstrat on May 22, 2020 14:13:40 GMT -5
Here’s a tip for anyone looking to finance. Caveat, you MUST have great credit.
1. Shop for your own credit. You will almost always get a better rate. (Of course, you can get free money right now for up to 84 months).
2. When the deal is done, they’ll want you to finance through one of their partners.
3. Tell them you will if they pay you the difference in interest from their rate and yours, and you also want a cut of kickback they’re getting.
That’s worked twice for me in the past year (hit a dear not once, but twice in a month’s span and totaled both cars).
The first I got a $320 check. The second time I got a check for $125. Both from the same dealer and same GM of the dealership.
p.s. They’ll most likely want you to sign a paper saying you agree to stay financed through their partner for 90 days. Sign it. It’s not enforceable. You can do what you want the second you walk out the door. That said, I’ve honored it both times. However I may feel about car dealers, I don’t break *my* word.
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Post by Laker on May 22, 2020 14:29:21 GMT -5
Ordinarily, I would go to the credit union I joined back in 1965 where I’d just tell them what I need and they’d cut the check for me. When I purchased my Escalade it was a used, 5000 mile, Cadillac certified car where GM offered .8% financing and 100,000 mile bumper to bumper warrantee. Our money guy told me it was better to pay that little bit interest rather than pulling out my money that was making quite a bit more. I anticipate looking for another low mile certified car when I purchase my next to take advantage of the low finance rate.
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Post by rickyguitar on May 23, 2020 14:09:42 GMT -5
My policy is to have financing in place, but dont reveal that up front. Negotiate price, with no add ons like prep or handling. Then say I have my own financing and prepare for the year jerker. That said I do not anticipate buying another new car.
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ECS-3
Wholenote
Posts: 170
Formerly Known As: ECS-3
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Post by ECS-3 on May 23, 2020 14:46:19 GMT -5
I usually check terms with my bank, then go into the dealer. If the dealer can meet or beat my bank I’ll go with the dealer.
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