What stage does financing come in?

My dealer casually asked me about financing when I placed my deposit, but it really comes down to financing when you purchase the vehicle. Most likely, your sales person will not participate in the financing portion. Your sales person is there for one purpose and one purpose only: sell the vehicle - rope you in and make the sale. The paperwork and financing is usually handled by their manager or a designated dealer finance person. It's a dirty game.

Don't always feel that you need to be financed through your dealer for the car loan. There are a lot of organizations out there that will give you car loans. Most often, your dealer finance options are higher than other locations. A lot of people finance through the dealership either because they don't realize this or because it is most convenient. Check with your bank, credit card company, credit union, invenstment company, mortgage company, etc. All of these places have very competitive car loan rates.

I usually tell our dealer that I'll be paying by check. This tells them one fo two things - either you actually have the cash for the vehicle (5% of the time) or that you're going to get a loan from some other organization (95% of the time).

 

I always brush off their financing questions and say, "I haven't decided yet, let's worry about that later." As far as I'm concerned, the financing doesn't have ANYTHING to do with buying a car except actually paying for it at the very end. It shouldn't have anything to do with price negotiation, with trade-in value, or anything at all.

Go through the entire process before asking about or discussing financing. Get the price of the car decided on first. The dealer will try and use the trade-in value and so on to increase or decrease the price of the car. Next, get a price for your trade in. Once again, this should have no bearing on the price you pay for the car. If the dealer gives you a good price on a car, they will usualy lower the amount they give you for the trade-in. Go to CarMax first and get their offer before you go to the dealer. Also check the book value. After you get the prices of the car and trade-in settled, and any other detail worked out (extended waranty, etc), then you can duiscuss whether you are going to pay yourself or what.

When we bought our Volvo, this is what I did. I got the price settled first. I made it clear that I wanted to get the price decided first. Then I brought the trade-in to them the day before we actually bought the car. They gave us a trade inprice that was half of CarMax, so I said no thanks and sold it to Car Max. Then the next day, we were all set to pay for the car, but I had that morning noticed in the paper that Volvo had just introduced a 1.9% financing offer. So we went in inteding to pay ourselves, but ended upgetting the 1.9% financing. Each step was independent. Best way to not get ripped off.

 

At what stage does financing come in? At the stage where you decide you want to buy something you cannot afford. Sorry, but that's the truth. Sell your soul to the bank. Once you borrow, they own you.

What's the alternative? Buy a used car that you can afford, and then put "car payments" into a bank account until you can afford to buy the car you want. You have to wait maybe 3 years before you can have the car you want, but you pay a LOT less for it because there's no interest.

 

I agree whole-heartedly.

 

First, I don't think your post is going to help. They are going to finance, either through the bank or dealer, she just neede to know when to do it.

Second, sorry, you're wrong.

In my above post, I said we were ready to pay for the Volvo ourselves. The 1.9% rate was lower than what our money was earning in the bank, so it was beneficial to finance. We made money off the financing. Obviously that situation won't always be applicable. If the rates ever dropped so low our money was earning less than 1.9%, we can simply pay it off and be done with it.

Just curious, what's your take on home financing. Should people wait until they can buy a house outright? I mean if you can't buy it outright, then you can't afford it. Take those house payments and put them inthe bank, right? In 30 years you'd have enough cash to simpy buy it. Or is that an acceptable time to sell your soul to the bank. If not, I certainly hope you didn't do that, and bought your house with cash, are still renting, or better living in your car (no rent there). Otherwise that'd make you a hypocrite...

 

I put my $500 Deposit down a week ago.. Our Prius comes in on the 22nd. The Finance guy who will actually write up your car, gave me the purchase agreement that had EVERY detail in writing, MSRP, DOC FEES, OPTIONs,Total, and balance after the $500. Make sure you get this! You will need it to get a loan from any other source.

He offered me 6.35 From Toyota.
My Bank is at 6.50
Capitol one is 5.65 for 60 months.

Once you have your Purchase Agreement in writing, you have until your car arrives to secure your funds. Then go to the dealership with check in hand and get your car. You pick the lender!

Note: Most lending institutions allows up to 45 days before your first payment would be due. So make sure you know when your car is going to arrive. Also if you are going to put down, say 10k, of your own money,some banks will give you a better APR.

Hope that helps.

 

I get the financing done before I buy the car and close the deal. I shop around give the CU, bank etc the invoice price with tax etc and set up a max loan amount and get approval on that. I then go to the dealer and make the deal and get actual figures and call the lender for the check. Sometimes the OEM has great finance deals then I will go for the best deal I can get. I have driven the last 4 cars into the ground so it was a matter of negotiating with someone on a major fixer upper (new tranny, new engine etc). My mechanic always seems to know a kid who will fix up the car and resell it. I get a few bucks on the car (usually more than I expected) and am happy. Before that I sold my cars myself. There are also consignment lots that will sell a car for you. Your dealer may give you a fair trade in but I have never seen it.

 

I hate to encourage anyone to go into debt, but money doesn't cost much more than inflation right now, and it doesn't looks like there will be a tax credit in 3 years. There is definately a gray area here.

 

Congrats - I'm in the same boat that you are in, although we've decided to cash in some investments to bypass financing.

I've never had a new car, and I've always vowed to never purchase a new vehicle. I've felt that the value of a new vehicle just wasn't worth the extra expense; however, the Prius has changed my mind just enough.

Good luck in the Boston area!

 

I feel that if you need to finance more than 30% - 45% of the car's cost, you can't afford the vehicle and should consider something different.

 

Get prequalified for a loan where you bank beforehand (bank, credit union). Then go to the dealer. The last thing you discuss is dealer financing (generally more costly). Prequalified financing gives you more leverage and puts you in a better position.

Even if the dealer offers you better financing, you can always finance or refinance where you bank. I did this, had a much healthier discussion with the dealer finance rep. I ultimately paid off the vehicle loan within one year.

 

I was looking for this information months ago.

now to further add to it, I think i made a mistake, i gave my dealer a deposit, he just gave me a receit and a sales form that said 06 prius pkg 7. No other details, because at the time of ordering he had no idea, the actual car i would get or the price.

on the 18 he sould know what his december distributions should be. can you fill out a Purchase Agreement in december, and still be eligible for the tax credit, or am i gonna have to do everything on jan 2. and hope my bank is open?

 

If you have a palm pilot or laptop, get a loan calulation program that tells you the total actual cost over time for different settings. A 48mo loan ALWAYS comes out than a 60mo loan in the long run.

We ended up with following logic, which is wrong!
"Well if we set it up at 60mo, we can still pay it off in 36, but if there is an emergency cash crunch, we can get by with a smaller car payment."

This hinged on the question we asked the dealer... If we get the lower payment (but more $$$ in the end) financing plan, can we pay it off early"

He said "Sure!"

We later found out that TFS lets you pay early, but it only gets applied to your next payment, which means they still get ALL the interest, with no benefit to me for paying early. Now it says on my statement that my next payment is due in late 2006, because that's how far ahead we are in payments. They still keep accruing interest on the unpaid part, which includes all the money i've already given them! so they are making double on that money! (my interest and whatever interest they get in thier bank)

So, condensed version:
Get the shortest term loan that you can afford the monthly payments for. This should automatically be the shortest one available if you are anal about money. Then, once you have the loan, only pay early if moves your loan completion date towards today, but only pay the exact amount if paying early applies to future payments, moving your next statement away from you.

Sorry for the rant... long day...