Any tips or opinions for auto loan financing, specifically should I walk in with my financing from my bank or let the dealer finance it?
Is there any advantage to using either method and negotiating a lower price or better trade in value, etc. ??
This is for a used car loan if that make any difference to the situation.
Thanks!
http://www.carbuyingtips.com/ - There’s a section for financing.
I believe getting a loan from outside the dealership would be the best price. Getting it through the dealer is how they make money.
I wouldn’t tell the sales guy how you would pay for the car, but hint that you’re doing the dealer financing. This should lower the price a bit. When you’re in the finance room about to close the deal, tell them you’ve changed your mind, and will pay out of your own pocket. They may try to raise the price of the car back up a bit, but threaten to walk away if that happens. Depending how slow their business is during this time, they may just give you the lower price they quoted you for.
There are various online banks that will give you a car loan and mail you a check for up to a certain amount (whatever amount you qualify/ask for). You can fill it out to whatever dealer you want and buy the car that way. Last time around I took one of these with me, told the dealer what the interest rate on it was, and asked them to do better. They did.
I recently bought a car and I did the following things: decided exactly how much I would be willing to pay each month and resolved myself to walk away if I couldn’t get it. In the end, they dropped the price of the car under invoice, gave me well over the blue book value of my trade (close to what I could sell it for privately but a lot less hassle), and they got me a better interest rate. A big part of this is doing your homework and being prepared for the negotiations.
What I did was print out the blue book value of my trade—use whatever site they link to on their own website. Then look up what you car is actually selling for on ebay, craiglist, etc… If you sold the car yourself, you would probably get somewhere between the Blue book value and what people are advertising their used cars for. I used this for leverage in the negotiations, specifically, I aimed for the midpoint between the blue book and what they would realistically be able to sell it for.
Then I did a national and local search for the best auto loan rates then I got approved for a loan—credit unions are usually the lowest. You don’t have to use the loan, but it does become a useful bargaining tool. For example, when I walked in they told me their financing would be around 6% but that maybe they could get it to just above 5.5% if I had good credit. I was already approved for a 4% loan from a local CU so after haggling they came back with a 3% financing from another bank.
The negotiation is strategic and you have to lay your cards down in the right order. Going with the dealers financing is usually a great way to go, but if you can walk in with a loan already, then you have more bargaining power. Also, beware of the fine print on auto dealer financing. Not a lot of dealers do this anymore but sometimes they will put a clause into the loan that basically says that you pay the entire amount plus interest regardless if you pay off extra on the principle every month. I may be stating the obvious but the pay off price is usually the value of the loan without interest; however, some loans will get you on the way out by making the payoff amount the value of the loan with interest, thereby penalizing you for paying a loan off early. This is how some dealers make up that money they supposedly took off the sticker price. Granted, if you have no plans on paying your car off early, then it doesn’t matter, but if you are like me and like to make additional payments, then I don’t want to be penalized for it.
Other good things to do are go in the last day of the month less than an hour before closing. They are trying to make their inventory numbers and if you get them close to closing, they won’t dick you around by disappearing to talk to their manager for hours. One last thing, try making a deal with their internet sales group first—the deals are usually better than what you get when you actually go in, but if you know what they will accept for internet pricing, you can figure they will still go a bit lower than that price. Towards the end of the sale when we still weren’t at the magic number I said them point blank “I have already gotten your internet price and I know that if you don’t do better than that I will just go buy it from you via the internet.” The salesperson wants to make their commission so they will usually try to better it. Internet sales are an area that seems to pit the salespeople against the dealer’s internet sales. To a salesperson getting their numbers on the board is often more important to them because they can get bonuses for selling X amount of cars or having the best sales, internet sales kills them because it is easier to send out 100 emails with a “no haggle” price than it is for a salesperson to sit down with a 100 people and go through the negotiations process. Knowing this can expedite the process and help both of you out. The salesperson usually gets paid a set amount (maybe $200 a car) so they really don’t care either, they just want you to buy it.
They tend to move the shells around so much it can be confusing, but if you can arm yourself with as much information before you get in, it helps a lot. I also was nonemotional about it: the dealers job is to get as much out of you as they can, yours is to keep it in your pocket. I have found being nice but stern helps. I also try not to dick them around either:if I don’t plan on buying a car that day, I tell them so they don’t need to waste their time. In some ways being straightforward helps the situation, you can’t lay your cards down all at once but I do let them know the things that can do to wreck the chances of me ever buying a car there like running off with my keys, trying to get me to sit there for hours, lowballing me, or just generally being too pushy.
Any tips or opinions for auto loan financing, specifically should I walk in with my financing from my bank or let the dealer finance it?
Is there any advantage to using either method and negotiating a lower price or better trade in value, etc. ??
This is for a used car loan if that make any difference to the situation.
Thanks!
It all depends on the make of the car. Had 0.9% from Audi and Porsche I believe is offering 1.9% right now. In my experience, the financing arm of the car company usually has better interest rates.
Thanks, good advice on two counts.
I already noticed the car is listed cheaper online than what they told me in person ($1000). Seems kind of silly for them to do this when they are closed on Sunday, and I have time to go home and look it up.
Good call onthe early payoff, I am actually planning on making about two payments per month most months so I do plan to early pay off.
I have done the research on my trade in so kind of feel ahead of the game there.
I have already noticed lots of online loans companies that I was not planning on looking at beforej so think I will go ahead and look at those then see what they offer me when I go back this week.
I am not in a rush so I feel like that helps me abit with negotiating.
Thanks again