What exactly happens at the financing dept?

Typically, you meet the salesperson, their supervisor who will decide on the price and take it to the financing guy. I would suggest finding out what the best rates you can get through your credit union/bank before you go to the dealer. Because, not only does that eliminate some of the stress because you know what you are approved for, but it adds more leverage. Typically, the dealer has incentives from Toyota credit or banks to finance cars through them. So, they will try to make sure that happens. If you know what you are looking to pay, what you are approved for, the visit to the financing guy will be a piece of cake. Bring someone you trust with you, that is responsible with finances and has gone through the process before. Bringing my Dad or my other half has been good. My Dad is a huge car guy, so he doesn't put up with any BS.

I would suggest negotiating prices between dealers before you step foot on site. Start a bidding war. E-mail all the dealers you are willing to travel to regarding the car you want. Get them to put an offer the table and circulate it through all the dealers. Get it in writing and that part of the process will be done. The more you educate yourself, the better you will handle the process of buying a car. It is easily the most stressful process I have ever had to deal with. You may get lucky, but expect to spend the day at the dealership. I don't know why it is such a long process. It is easily 3-4 hours at a minimum.

 

it depends on the dealer. some push extended warranty hard by trying to scare you. after salesperson tells you how reliable their cars are, finance tells you how much one little non covered repair could cost. you'll probably have to mortgage your home! i went to finance yesterday, he didn't even bring it up. fill out personal and finacial application, if your credit is good, zero percent financing. it's best to go in armed with as much info as possible. and don't agree to anything until you've gone home, thought about it and gotten advice. if you do sign something there, check and make sure your state has a cooling off period, you can call back and cancel. and take someone with you if you can, as rupert says above. all the best!

 

I'll tell you what happens in the finance department - nothing good.

I've only been there once - back in 1999 at a Toyota dealership buying a 1997 CPO and they screwed me over good on the interest rate. They told me one rate when I took the car home on a Saturday night - the next week when the paperwork was complete it was a different number. Yes, I was younger and stupider then. I never should have taken the car home without having all the paperwork completed. Actually I never should have borrowed money to buy a depreciating asset - I should have bought a cheaper car for cash. But I learned my lesson - the finance department is where the crooks and thieves work.

For the Prius C I went to the only dealer in the valley who participates in the Costco Auto Program (waste of money joining Costco for this - all they do is send you to the Internet Department). We went back and forth a bit to come to a price. He got approval from the desk for the price - I never dealt with the manager - just the salesman. I put down a deposit on an Amex card (more protection if the dealer tried to screw me over somehow). Then the dealer ordered in the car from another dealership (didn't have Summer Rain in stock). I asked the salesman to bring the car to my house. And they will if you ask - you don't have to go back to the dealership to sign paperwork. When he brought the car over I signed the paperwork and gave him a check for the residual balance. Then I gave him a ride back to the dealership and dropped him off.

I never saw the finance department. The only negotiation was the price of the car - no pushing of warranties, etc. Much better experience in my opinion.

 

I addition to extended warranties, the finance department is where they try to sell you magic protective coatings. Anything, including extended warranties, that the finance department tries to sell you will typically be at least double the price you would pay if you shopped around. Or worse yet, worthless.

Some (many?) dealerships make more money off their finance department selling overpriced crap than they do selling new cars.

 

What exactly happens at the financing dept?

Usually?
You get robbed.


If you buy a new car...that's usually fleece #1. Don't feel bad. I buy new myself despite the fact that financially speaking......it's moronic. However (comma!) I usually start negotiating at the actual MSRP (minus fake options like floor mats, fabric and paint treatment, nitrogenated tires, and other fees...)

Then...if you traded in your usta-car (or usta-truck)...that's robbery number 2. I used to do that too before I wised up and either kept the old car as a third vehicle, or sold it off before getting the new car.

OK....so the dealer whammed you for both the new car and the old one so skillfully that you're not even aware that your butt ought to be sore.....
Then?

You meet the "Finance Manager" whose job it is to convince you that you ought to use HIS (or her) lender so that the loan commission can go to the dealer.....and the same goes for anything else that they try to sell you.

If you have to buy new...or....like myself, you're just not all that bright financially...then you can mitigate some of the damage by doing three simple things:
1. Get per-approved for a loan through a credit union.
2. Never trade in. If your present car isn't paid for consider waiting....or at least sell it first.
3. NEVER EVER buy anything at the Financial Manager's office. You can get the OEM warranty later (and cheaper!) and even if you think you need daffy services like GAP or Credit Life insurance.....why wouldn't you shop around for these products?
You buy cars at a car lot.
You buy insurance from (wait for it.....) an insurance agent.
and....you buy an OEM warranty from the COMPANY.....not the dealer! An OEM will usually offer it to you as a "last chance" which usually comes in the mail a year or two after you buy your car.

Those are just the basics.
Don't even get me started on "non-optional" options, "admin" fees, and other rip-offs.

 

A lot of good information here. Just bought my first new car (Prius C, Trim 2) two days ago so I am by no means an expert.

That said, a trade-in can be a good deal on rare occasions. In my case I had an 11 year old vehicle with 115k miles, which bluebooked at $1500-$3000 but had paint dammage, light fixture dammage, was due for a timing belt, and needed new tires.

They offered me $1500 for the trade-in (which was actually $1600 when you figure in the tax I saved on the new purchase) so I was pretty happy. I may have got $2k selling it on my own, but I would have felt bad for whichever sucker bought it.

Also, have your financing in hand (don't just say you "could" get a certain rate). You are not obligated to use the loan you qualify for from your bank / credit union and in most cases you don't even need to notify them that you don't intend to use it. Apply online and have it done in a business day.

It turned out the finance manager couldn't beat my rate (no zero percent on hybrids right now), but he tried damn hard.

As for the options, just say no. It may make them turn red, get pissy, etc. Doesn't matter; they aren't going to not sell you the car for your agreed upon price just because you won't buy their undercoating. Don't feel pressured, you are the one in control here and you don't owe them any anything.

 

The sales person shows the car off, talks you up, and helps you decide on the exact product you want.

The financing office closes the financial and other legal obligations of the deal.


It's just like going to any other retail store that has separate sales associates who don't run the cash registers. Even if you go in with your own loan or cash you still go to the finance office to cover all the paperwork including any additional add-ons (extended warranties, paint protection, et cetera) as well as the legal paperwork to transfer the title of the car.

It isn't really any more difficult than that, though many places try to obfuscate a lot of what is going on. What matters to you, and this is information they should give you if you ask, is how much are you paying? From the bottom line on the car to your trade-in, plus any extras and discounts. The dealer should be able to add it all up and down for you, show you how much you are actually borrowing on the loan and at what interest rate.

As far as loans go, dealers aren't always 100% accurate on what interest rate they can get you. They make an educated guess based on your credit score and the financial information you give them vs the financial institutions they use for the loans. If the financial institution doesn't agree with their estimate and changes the rate they approve, then your payment will go up or down depending on whether they raised or lowed the rate (yes, I have seen the final approval from a bank actually be lower than the dealers guess). Getting pre-approved by your bank or credit union allows you to walk in already knowing the maximum interest rate you would have on the loan. After getting pre-approved you only have to worry about the dealer getting you financing if they think they can better interest rate for you.


The appropriate method to buy a car is:

1. Know how much you need to borrow well ahead of time, including tax (see 1a), title, and all. If you don't know your trade in value or exactly what additional charges there will be, then it's ok to visit the dealer to work out these details, just make sure you don't agree to buy the car quite yet. Leave and never go back if you get a high pressure salesman who insists on you buying the car then and there.

1a. Expect to put some money down, the preferred minimum is often the total sales tax of the transaction.

2. Go to your preferred financial institution, maybe a couple of them. Get loan pre-approval for the amount you are going to need (slightly higher actually, just in case you missed something).

3. Go to dealer and buy the car. Use your pre-approved loan, unless the dealer can beat their interest rate with a financial institution that you are willing to work with (hey, some people hate certain banks). If you visited the dealer already and dealt with a sales person, then you probably have their card and should be considerate enough to deal with them when you go back (call them or email them and find out when they will be in and available to help again)...unless you absolutely hated that salesperson, then go find another or go to a different dealer and make them match the price you are willing to pay.

 

they try to sell you extra stuff

I just stayed firm to my belief in that Toyota makes pretty reliable cars and I didn't need anything extra

and the finance department part actually went by faster than the salesperson/manager price authorization run back and forth part.

 

I have to concur with the people who say to walk in with some sort of financing in place. When I bought my latest Toyota I walked in with a pre-approved loan from a big bank and was treated very differently. And, psychologically, I felt like a stronger negotiator. I ended up getting a slightly better rate from Southeast Toyota Finance, so it worked out well for me.

Also, just learn to say "NO." Extended Warranty? "NO." Gap Insurance? "NO." Alarm system? "NO." If saying "no" gets tedious, substitute such phrases as "absolutely not" or "no way."

The only other advice I can add is to take a calculator (or get an app for your phone). When the sales manager slaps figures down in front of you, whip that thing out and add up the numbers yourself. Not only is it a good idea, but this lets them know that you aren't a chump and they can't sneak some bogus charge into the deal.

Most of all, remember that you can walk away from the deal at any time before you sign the papers. If you don't feel comfortable...WALK. There are other cars at other dealerships. You don't have to do anything.

 

+1 on calculator and notes (which can both be in your phone). Just a subtle reminder to the folks that you're not there for a haircut. Whatever extras they are offering, you don't need it or can get it better and/or cheaper elsewhere.

To be honest, the calculator and notes are mainly for the sales guy. Once you get to the finance person - or in Australia it's usually the finance person just for finance and insurance, then another person who sells all the snake oil products you don't need - then you can just tell them you're not interested in anything other than doing what you need to do and go ahead and play games on your phone while you "wait" for them to do all the stuff they pretend they need to do to get you sat in front of them in the first place.

That's what I did anyway.

 

To be fair, there are a lot of forms that need a lot of data entered into them, then they need to be printed and sorted. An slow/inexperienced finance guy can take quite some time just trying to prep your paperwork, a good finance guy can be ready in under 15 minutes. This is assuming they don't have other buyers they're trying to sort out ahead of you.

 

Financing is not completely based on your credit. If you agree to pay full MSRP, then sure you will get 0% financing. If you haggled to below dealer invoice, they certainly won't offer you 0% financing. At that point, you both know you're getting a deal already so they want to make money back on financing.

Important to think about ahead of time: If anyone asks how much you want to pay per month... just lowball the number (such as $150 or $200 per month) which would equate to a low finance rate. If you say you could afford $300 per month, then they will be happy to offer you that ~4% rate.

 

I always get a kick out of this one. I tell em it all depends on what I can get the car for and what the interest rate is.
They always give me the look like, whaaat? lol!

 

I just tell them we can talk about how I pay for it if I decide to buy it.

 

I don't mind the finance department - maybe it's because they never try to sell me anything. I know weird huh? In fact when I got my v the finance guy said "I know you're going to say no, but I am required to make this presentation and have you initial this form say you declined the leather/vinyl protection package." I just say "okay" and listen for their 30 sec. presentation and initial the form for them. That was it, and that's the way I've been treated for the past 4 cars I've bought at two different dealerships. But I remember waiting in the lounge for a service appointment last year, seated just outside one of the finance manager's office, and I overheard the presentation being made to a young woman. They were pushing her hard to add on warranties, etc and I could tell she felt a bit unsure on what to say. I can't believe they left the office door open enough for anyone to overhear. Unfortunately I didn't hang around long to hear what finally happened.

 

read through Car Buying Guide for New and Used Vehicles | CarBuyingTips.com before going to the lot.

 

One trick I found, quite by accident....
Meet with the finance guy late in the day- like a half hour before closing... and even better if you can make it a Fri or Sat night! If you time it right- he's been there all day- he made his money... and just wants to get out of there to start his weekend- and you'll reap the rewards!

 

Yep! I bought my C3 on Wednesday at about 8PM It was the FI guys weekend
and he kept telling me all about it.