<p>I am getting ready to purchase a new car, my first in 11 years!! The manufacturer is offering 0.9% APR for 24-36 months or 1.9% APR for 37-60 months. While this sounds like a good deal to me, I remember hearing a piece on the radio recently about not getting your car loan from the dealer. I did not hear the reasons for not going with the dealer’s loan, but the consumer advocate suggested going to your credit union. When my son got his car last year, the credit union was offering 9+%, so his manufacturer offer of 0% seemed like a no brainer to him. Now I am wondering if that was the right thing to do.</p>
<p>As I really don’t deal with loans often, I leave that to those smarter than myself, I am really confused as to why the lowest percentage loan would not be the best. Please explain for this slow learner! :)</p>
<p>Make sure you know all of the terms of the financing offered at the dealer.</p>
<p>If it is the manufacturer’s finance company, there may be special tie-ins with rebates. In some cases, you can choose a rebate or a special below market interest rate from the manufacturer’s finance company. In other cases, getting a rebate may be contingent on getting financing (which may be regular or special below market interest rate, depending on the offer) from the manufacturer’s finance company.</p>
<p>1) In lieu of other discounts or rebates (As in $4k rebate or 0.9% financing.)
2) and some may require dealer “contributions” which mean the dealer won’t discount as much as they normally would…</p>
<p>Like everything, price it both ways and then do the math *based on the length of financing that suits your needs best<a href=“which%20is%20not%20always%20what%20they%20are%20offering”>/i</a>.</p>
<p>Try to get the rock bottom price BEFORE you worry about financing. The way cars are sold (in the articles & books I have read) is that they may offer higher prices with attractive financing but buyers like the “great rate” so are willing to pay a higher sticker & total price on the car vs. if they got financing elsewhere.</p>
<p>Depending on how much & how long you will need to borrow, you may have other options. For us, We got a new charge card that allowed you NO interest for 12 months, as long as you made minimum monthly payments. We paid 1/2 cash up front and charged the rest, making minimum monthly payments. Just before the 12 months expired, we paid off the entire balance (we saved up during those 12 months so we could pay it all off rather than getting any car loans). Some folks use home equity loans or other methods of financing as well.</p>
<p>There are a TON of different ways that car dealers try to convince you that you’re getting a great deal from them–“discounting,” special extras, special financing, rebates, etc. It helps if you can compare prices for the same car at several places.</p>
<p>On a related note, you can also save a bundle if you buy a gently used car from a car rental place like Hertz, which is generally sold WITH a warranty. That is how many of my loved ones have bought their vehicles recently. This can significantly reduce the amount that you may need to finance!</p>
<p>One thing I do know is to lock in a price before dealing with the financing. We tell each dealer we will be paying cash and no trade in if they ask; I don’t want them to know in advance how I will be paying for the car.</p>
<p>I do know from research that there is no rebate available for this car. The percentage rate depends on the length of the loan and if we qualify, which we will; I just checked my credit report and credit score last week in preparation of buying the new car. </p>
<p>It looks like we have become “friends” with the owner of the dealership and he promises he will give me the BIL/SIL pricing; I asked if that was the in laws he liked or didn’t like! I have also received the Costco pricing at another dealership as well as received online pricing. My research has provided me with all the information I need to make a great deal. I think I have a handle of the car price; all that is left is the financing.</p>
<p>Great!! That’s more than 90% of the folks know! You still need to know if the financing deal requires dealer “participation” before you can run the numbers.</p>
<p>I also got a quote for buying the vehicle from OR (no sales tax) & shipping it to HI. That helped shorten any haggling and the dealer reluctantly matched that price so I wouldn’t buy from OR. It was in 1986, when I didn’t have access to Costco & all those other pricing options you have so handily provided for yourself.</p>
<p>As others have said, the common logic for getting the loan from the CU rather than the lower rate from the manufacturer is because of the tendency for them to offer EITHER the low rate loan OR the discount off of the price of the car, but not both. In order to know which is the better deal you’d have to crunch the numbers since if the interest rate/term is too high from the CU it might be worse than the factory deal despite not getting the price discount. You should be readily able to see if this rate is in lieu of a discount or not and then do the math.</p>
<p>It sounds like you’ve done your HW on figuring out if there are any factory discounts, dealer incentives (i.e. factory to dealer incentives), etc. and have figured out about what you could get through fleet/internet sales/Costco/etc.</p>
<p>snowball, it’s always good to shop around and compare rates. usually they will say you can have 0 percent financing or 4k discount on your car or something like that. those rates w/ them sound pretty good especially if its not in lieu of any promotional discounts. i’d clarify that with them when the time comes. I got a loan through my credit union when I bought my car and it had a very nice interest rate, much better then what the dealership had… though it was a used car. I’ve also seen people get creative like by putting it on a home equity loan, credit card, etc.</p>
<p>it sounds like you have done all the homework. one thing my mom did in negotiating the price of her vehicle was that she found the same car cheaper elsewhere but in a different color or something like that. she used that listing to get the price of her car down. </p>
<p>also, i don’t know where you work but I know i have corporate pricing (basically access to their employee purchase program) from places like GM and Ford. Not quite sure about the others but you could check and see if you have anything like that.</p>
<p>Just went through negotiations to buy TWO cars, a personal car for myself and a company car for our business.</p>
<p>I was looking at several different cars; and it was very complicated to figure out loans, trade-ins, rebates, and so on. One dealer wanted to give me 1500 dollars less for the trade-in but a higher interest rate; another gave no rebate and a higher trade-in, but would give me a low interest loan; a third gave me lots of money for my car and a low interest loan but no rebate. As far as I can tell, every single car model (even models within a different line) has a different rebate/loan structure when you go to the dealer. In the end, I negotiated the whole package on my car, looking for the best value on the trade-in and the lowest interest rate. </p>
<p>For the company car that DH was buying, low monthly payment was the biggest issue, and he ended up with a low-interest loan–far lower than our bankers were offering–over a long payment term.</p>
<p>I have not seen comparable rates at credit unions or banks when compared to what the dealers are offering.</p>
<p>My credit union is 3.99 percent up to 24 months or 4.29 for up to 66 months. If I were to buy a new car I would probably go with whatever rebates they gave me on the purchase price and finance it with them. If they gave me no rebates however I’d probably take their lesser rate.</p>
<p>If you have a choice between 0% interest OR a factory rebate and a higher interest rate, it nearly always saves money over the term of the loan to take the rebate and finance at a little higher rate because you’re financing less money. I don’t have access to my loan calculator, but my office does bank loans and all of our training says that it is best to take the rebate. (If you have State Farm Insurance, they finance vehicles and can run different scenarios for you.) The dealer doesn’t always offer the best interest rate on the first go around. Last time I bought a car, I flat out lied and told the saleman I could get 4.5% at my credit union (I don’t even have a credit union) and voila–he came up with 4.24%. This was 8 years ago and that was an excellent rate at that time. I am not usually a dishonest person, but heck, all’s fair when you’re buying a car! Also, they will more than likely try to sell you extended warranties, credit life/disability insurance and gap insurance. Most just stick that on unless you tell them no. (State Farm Bank loans contain a debt cancellation feature free of charge–it works like gap insurance.) Not meaning to keep plugging State Farm, but it is what I am familiar with. I am amazed at the people who buy new cars and have no idea what “else” they’ve bought.</p>
<p>I usually write a check out of my home equity line, which gives me an effective rate of around 2.8%, gives me payment flexibility, and is one less check to write every month.</p>
<p>0.9% would be tough to turn down if you can swing the 36 month payment. 1.9% vs. 2.8% out of my HE line? That’s a close call… I would probably use my HE line.</p>
<p>Have never been offered a cash discount, but I know I’d always go for that over any lower interest (especially since I have a LOC option available @ .99% interest for 1st 12 months and no pre-payment penalty, no fees, no annual fee. I feel no scruples about lying about great loans I could get because you probably COULD line up a private lender who would offer you whatever you want because you’d give them better interest rates than they’re getting on their bank account. (Haven’t bought a car with any financing since 1986 & when they eliminated the deduction for interest, I paid it all off.)</p>
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I have also received the Costco pricing at another dealership as well as received online pricing. My research has provided me with all the information I need to make a great deal. I think I have a handle of the car price; all that is left is the financing.</p>