New car financing

[bulldogcountry1]

I’ve been trying to buy a car for a while now, and the financing situation has me all confused. I went in thinking it would be less complicated if I just planned on getting the financing from my bank.

I guess things have changed. Prices are fluid, based on dealership financing, 0% financing, and “cash”. Trying to buy a car with cash is like trying to enter Whole Foods without a mask. They don’t want that.

Some states are offering 0% for 72 months. That option gets you the second worst price, but you save on interest in the end. I just have a problem financing for 72 months, though. I hate having a payment over my head that long.

The next level of pricing is financing through the dealership. The rates aren’t great, but it seems like the best strategy is to refinance with who you want after 3 months.

The only way to get the internet advertised price is to be retired military, have a credit score of 812, own property in 7 states, and be a member of the Aquatic Equestrian Association.

Any advice appreciated.

 

[Breazeweaze]

I don’t have much advice recently but I had no problem financing through a Credit Union the last time I financed.

However, I’m going cash only from here on out (barring financial disaster). Car Max was pretty good for us when we bought my wife’s CR-V.

I wouldn’t tell them you are buying with cash until you’ve set the price.

I would just say, “I’m not worrying about financing until we’ve decide on a price. I don’t want to talk about how much a month or anything like that. I want to talk about how much is the car.”

Then after you got a price. Tell them how you will pay the price. Whether via bank/credit union or using their financing.


Don’t get it confused. They don’t offer 0% for free they get their money somehow. Otherwise, they would not be in business for long.

 

[dorndawg]

Car companies are banks who manufacture autos as their side hustle. Generally though not always, you will get the best price utilizing their financing, then (like you mention) refinance on your own when you can.

 

[Drebin]

I’ve been trying to buy a car for a while now, and the financing situation has me all confused. I went in thinking it would be less complicated if I just planned on getting the financing from my bank.

I guess things have changed. Prices are fluid, based on dealership financing, 0% financing, and “cash”. Trying to buy a car with cash is like trying to enter Whole Foods without a mask. They don’t want that.

Some states are offering 0% for 72 months. That option gets you the second worst price, but you save on interest in the end. I just have a problem financing for 72 months, though. I hate having a payment over my head that long.

The next level of pricing is financing through the dealership. The rates aren’t great, but it seems like the best strategy is to refinance with who you want after 3 months.

The only way to get the internet advertised price is to be retired military, have a credit score of 812, own property in 7 states, and be a member of the Aquatic Equestrian Association.

Any advice appreciated.

Nice humblebrag on the credit score.**

Anytime you can get zero percent financing over a long term, take it. It's free money. If you can afford to, pay extra against the principal every month and it's pretty easy to shrink your loan term that way. ETA: This applies if you can negotiate an acceptable price. You clearly shouldn't pay 3 grand more or whatever the number is to get a zero percent interest rate. You should reasonably expect to pay a little more going this route, though.

Dealers definitely want you to finance right now, although they lose that incentive on the zero percent deals unless there's a dealer kickback on those deals from their finance company. I still say you get your best out-the-door deals on cash offers. They are less likely to negotiate the price when you're signing up with their finance offerings.

The type of vehicle and the dealer history matters, too. I bought a new truck in late February and the dealer told me it was the first truck he had sold all month. Thus, he was more motivated to make a deal to move it. If you're trying to buy a popular vehicle that dealers can't really keep on their lots, you're not going to have much leverage as a buyer.

There's a supply problem right now too. A lot of car plants shut down for covid and many dealers are having trouble with inventory. That is going to drive the prices up.

Happy shopping...

 

[bulldogcountry1]

Nobody will give me a price without knowing knowing how I will pay for it. Most give me two different prices. The 0% price is generally $5k higher.

I’m dealing with Ford, btw.

 

[Breazeweaze]

I would walk away. You know they will get you to commit your time and then yank you around. We went to a couple places like that.

Just ask for the price. And tell them if they don’t come back with a price to start the negotiation then I’m walking.

And just walk. Sometimes they will pull you back in and you can give them a few minutes but I wouldn’t let them jerk me around.

I wouldn’t take your spouse (if you are married) for that part because it’s harder to walk when it’s 2 of you there.

That’s why I’m likely to just buy from CarMax going forward. They don’t negotiate. And they don’t sell you bc the price is just the price.

 

[Bulldog Bruce]

Most of those loans have no penalty for early payment. Just make sure that is true and pay it off with your cash right away.

 

[SyonaraStanz]

Finance with them to max on rebates. Then turn around and refi with a credit union at a better rate.

 

[JML105]

Never, ever, go into a dealership in person to buy a vehicle. The last half a dozen vehicles I have purchased have all been over the phone and out of state. Some cash, some dealer finance, some financed through my credit union. I do not tell them how I'm going to pay for it until I get their bottom line price that I'm satisfied with. When you arrive to pick up the vehicle, their finance manager should have all the paperwork ready for you to sign so you can be in and out within an hour. It is that simple.

Another pro tip: Try to make the deal on the last day of the month. The end of a quarter, fiscal year, or model year will give you even more leverage.

 

[GloryDawg]

I have qualified for 0%. 0% is not 0%. You lose rebates and it is really .008% or so.

 

[johnson86-1]

Most of those loans have no penalty for early payment. Just make sure that is true and pay it off with your cash right away.

Or if you like whoever owns the dealership and/or the salesman, after you have the deal, ask if there is a minimum number of payments you need to pay for them to keep their incentives. If it's only like three payments, I would make the three payments and then refinance or pay it off.

 

[msudawg12]

I would walk away.

Yep, walk out.

there are a thousand ford dealers and they're all struggling right now. go to another. or the original will call you back after

 

[patdog]

Good point. When I bought my current car, I told them I was only taking their financing to get the lower price. The salesman asked me to make at least 2 payments because if I paid it off before then, the manufacturer would claw back the incentive they were paying the dealer. I was glad to accommodate them .

 

[horshack.sixpack]

I’ve been trying to buy a car for a while now, and the financing situation has me all confused. I went in thinking it would be less complicated if I just planned on getting the financing from my bank.

I guess things have changed. Prices are fluid, based on dealership financing, 0% financing, and “cash”. Trying to buy a car with cash is like trying to enter Whole Foods without a mask. They don’t want that.

Some states are offering 0% for 72 months. That option gets you the second worst price, but you save on interest in the end. I just have a problem financing for 72 months, though. I hate having a payment over my head that long.

The next level of pricing is financing through the dealership. The rates aren’t great, but it seems like the best strategy is to refinance with who you want after 3 months.

The only way to get the internet advertised price is to be retired military, have a credit score of 812, own property in 7 states, and be a member of the Aquatic Equestrian Association.

Any advice appreciated.

Take free money. 0% at 72 months means you get to use someone else's money for free. It's a simple interest loan with no penalty for paying it off early so pay as much as you like per month if you want to shorten the term.

 

[kired]

We shopped around for about 6 months --- from last July till January. I considered paying cash & financing. Never got the impression from any of the dealers we were talking with that it would make a difference on my price.

Almost all dealers had different rates depending on the vehicle. We were looking for a 3-row SUV - those typically had the worst rates (1.9 - 2.9%). Most of the cars & smaller SUVs had either 0% - 0.9%. Did not even look at trucks so couldn't say how they compared.

I don't remember seeing anything higher than 2.9% unless you wanted to finance for 72-84 months (you should probably find a less expensive car if you need to finance that long to afford it)

 

[horshack.sixpack]

I've never heard of this practice. Walk away.

 

[BoomBoom.sixpack]

I’ve been trying to buy a car for a while now, and the financing situation has me all confused. I went in thinking it would be less complicated if I just planned on getting the financing from my bank.

I guess things have changed. Prices are fluid, based on dealership financing, 0% financing, and “cash”. Trying to buy a car with cash is like trying to enter Whole Foods without a mask. They don’t want that.

Some states are offering 0% for 72 months. That option gets you the second worst price, but you save on interest in the end. I just have a problem financing for 72 months, though. I hate having a payment over my head that long.

The next level of pricing is financing through the dealership. The rates aren’t great, but it seems like the best strategy is to refinance with who you want after 3 months.

The only way to get the internet advertised price is to be retired military, have a credit score of 812, own property in 7 states, and be a member of the Aquatic Equestrian Association.

Any advice appreciated.

Some states allow/require that all of the potential interest/profit on a car loan be paid off even if paying off the loan early. I don't think MS allows that, but I've never been able to verify.

The dealer financing will partly depend on what private financing you walk in the door with. They get the highest kickback by talking you into the highest rate loan. Come in with a low rate, and they'll counter with a slightly lower one. Come in with nothing, and they'll try to talk you into one that's much higher than you qualify for.

If you consider dealer financing, use a burner phonenumber. Will save you about 15000 phone calls for extended warranties and other crap....

Only trust that you can finagle the system if you know multiple people that have done it with that salesman. I wouldn't want to fight over the fine print. You'll lose. Bird in the hand....

 

[RiverCityDawg]

I would walk away. You know they will get you to commit your time and then yank you around. We went to a couple places like that.

Just ask for the price. And tell them if they don’t come back with a price to start the negotiation then I’m walking.

And just walk. Sometimes they will pull you back in and you can give them a few minutes but I wouldn’t let them jerk me around.

I wouldn’t take your spouse (if you are married) for that part because it’s harder to walk when it’s 2 of you there.

That’s why I’m likely to just buy from CarMax going forward. They don’t negotiate. And they don’t sell you bc the price is just the price.

All this. I've bought new vehicles for my wife to drive and I know we haven't gotten the best result because she's been with me and doesn't have the stomach for negotiation. I fared much better when I bought a truck by myself.

With all that said, the last vehicle I bought was through CarMax and it was a great experience. That doesn't help the OP if he wants a brand new vehicle or can't find what he wants in the CarMax inventory, but I'm probably not ever going to do it differently again. I got a nearly brand new vehicle (9300 mi) and didn't have the deal with the usual dealer BS.

 

[pmack3641]

Don’t ever tell them your paying cash until you make the deal. They want you to finance that’s where they really make their money. When they it , yes I’m financing but as soon as you agree on a price and it’s written down then it them with “changed my mind I’ll pay cash” and watch their face turn red.

 

[Dawgpile]

Nobody will give me a price without knowing knowing how I will pay for it. Most give me two different prices. The 0% price is generally $5k higher.

I’m dealing with Ford, btw.

Ford (and I assume most captive lenders) offer special financing rates OR a specific dollar rebate. This is why you're getting two different prices and why they are keen to know how you want to finance. What I would recommend is looking at your interest expense over the life of the loan added to the cheaper price of the vehicle. If that total amount is less or greater than the 0% price then you have your answer.

 

[garddog]

You don't need them to give you a price.

1. Go to Edmund's or any of the buying sites and get the invoice price. It is not hard.

2. Go to the manufacturer website and look up current rebates.

3. If you have a trade use Edmund's or other site to get accurate assessment, don't bullsjit, be accurate.

4. Take the invoice price, less the rebates, less the trade, this gives you the difference.

5. Take the difference x 5% for tax. Call the court house and find out what the tag and registration cost is for that vehicle.

6. Once you have the numbers log on your computer and use Ally or your preferred bank and apply for that total.

Then go get your vehicle, dealer won't turn you away.

Math looks like this.
Hypothetical numbers
51999 msrp
48999 invoice
6000 rebate
25000 trade in
17999 difference
18899. Price with tax
1500.00. Tag, title, registration.
20399 total financed.

If you owe money on the trade you have to add that back in on the new loan.

I sold cars in the past and have bought plenty. If you prepare you will not have an issue.

 

[jdbulldog]

Are you trying to do this on line or in person? Walking into a reputable dealership will always get you the best deal. There are a lot of Ford dealers who will gladly take your cash.

Nobody will give me a price without knowing knowing how I will pay for it. Most give me two different prices. The 0% price is generally $5k higher.

I’m dealing with Ford, btw.

 

[SirBarksalot]

Maybe not applicable to this but...

desperate for a new vehicle, a year ago. Really desperate, as in mine died and I’d sold it. Found what I wanted..a used 2018. Negotiated the price. While all the dealer ******** was going on, got on my phone, looked at finance rates. Got a good grasp on what was available.
Sat down with the dealer finance guy...nice good ol boy, family member had just passed away, gave my condolences..then he proceeded to try and bend me over his desk. Took out my phone and started throwing out what I had found...”oh, you know what, hang on, let me try something different...oh yeah MR. barks...you’re in luck, we can beat that”..

so yeah... come to the table armed.

ed: sorry, but I can’t help but say...if you need to finance a car for 72months, you don’t need to “buy” that car.