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some questions about financing..
I've done searches but couldn't find any good solution to fit my questions. I was at a dealer and talking about the financing option, the rep told me to fill out a form to get credit approval and see what rate I'll get. He also told me there is no early payoff pental in the state of NJ.
So in general the dealer prefer you to finance through them but does that mean I'll get a better chance on the pricing negotiation? As for the early payoff, will the dealer have me to sign anything saying I can't payoff early for at least 60 days. (depends on the charge back period) If not, I can just sign the fiance for one month and then pay everything off right away right?
As far as I understand, wether cash or finance, it doesn't make much difference to the sales rep right?
thanks,
| | Reply » some questions about financing.. |
Quote: I've done searches but couldn't find any good solution to fit my questions. I was at a dealer and talking about the financing option, the rep told me to fill out a form to get credit approval and see what rate I'll get. He also told me there is no early payoff pental in the state of NJ.
So in general the dealer prefer you to finance through them but does that mean I'll get a better chance on the pricing negotiation? As for the early payoff, will the dealer have me to sign anything saying I can't payoff early for at least 60 days. (depends on the charge back period) If not, I can just sign the fiance for one month and then pay everything off right away right?
As far as I understand, wether cash or finance, it doesn't make much difference to the sales rep right?
thanks, | A dealership makes money on selling you financing. If you are not prepared in advance you will not get a great rate. So, in terms of strategy I don't think you should walk into a dealership without prior preparation. And, you should NEVER talk financing until you have settled on a price for the car. NEVER.
To be prepared, this is what I think you should do. Go to Capital One's website and apply on line for credit with it to buy a car. It is one of a few internet companies which has very competitive rates for cars. It is a legitimate company and highly rated by consumer groups. (This is not a paid or unpaid advertisement!) If you are approved then Capital One will send you a blank check for "up to" the amount you specified to buy the car. (You can write in a lower amount.) Capital One will probably give you a very good rate, but sometimes dealerships have relationships with banks and finance companies and can get you better rates. But a dealership won't tell you that at first, because its job is to extract as much money out of you as it can. The higher the rate it sells you, the more the finance company pays it.
With check in hand (but don't say anything about it yet), go to the delaer and negotiate your best deal. Then will come the meeting with the finance person to pay for the car. When you sit down with him/her, ask what the best financing is that you can get from the dealer. Make sure it's for the same length of time, same downpayment and similar terms as the Capital One loan you have obtained. This way you will be comparing apples to apples rather than apples to oranges. If the deal isn't as good as what Capital One has offered, take out the blank check and tell the finance person. Invariably the finance person will "remember" that there is a bank or other lender it deals with who can beat the deal.
Good luck.
| | Reply » some questions about financing.. |
wow, that's a pretty good tip. I'll keep that in mind.
Well initially money isn't a big problem. I am ready to pay cash for the car. Obviously dealer wants to convince me into financing. Since you said not to mention about the financing untill setting down a good rate on the car then I guess it won't matter if I pay cash or financing. I was just wondering if I told the dealer that I am willing to financ through them (then payoff right away) and the'd give me a better deal on the car.
I guess it doesn't matter after all?
| | Reply » some questions about financing.. |
Look at it this way. First, it's good that you can (and may want to pay cash). That gives you more maneuvering room to get a good deal. But, second, 95% of the people who go to dealerships are going to finance or lease. 95%. (I don't know the real number, but I do know it's real high.)
So, the dealer assumes you are going to finance and that he's going to make money off you at that end of the transaction. He just doesn't know yet how much.
When you negotiate price first, the dealer may be more willing to come down a bit because the dealer assumes he's going to make it up on the financing.
So, you NEVER mention financing when negotiating price because that locks you in to do it, or allows the dealer to back out of the price if you "change" from financing through the dealer to some other payment option.
Then, after the price is agreed to, you can ask about financing. If you have done your homework in advance, you will have an idea of what the going rate is for financing. Capital One, for example, will give Tier 1 creditworthy borrowers (the best) a loan for up to $100,000 for 6 years at 5.69%. There are a couple of conditions, such as automatic checking account deduction, and the pledge of your first child to the dealership as collateral (this is to see if anyone is still reading), but that's a great rate for 6 years. You can go for a shorter period of time and get an even lower rate.
After you know what Capital One would make a loan for, you innocently ask the dealer about financing. This is a give and take negotiation. You should never show your cards until the time is right. The dealer will then offer you a rate, maybe squirm around and finally offer you his "best rate." Ninety-five percent of the time his "best rate" is bullschit. Remember, he's looking to make money on every aspect of the transaction, including the extras he's going to try to sell you after you've bought the car.
It is at this point that you mentally compare what he's offered with what you know you can get from someone like Capital One. (If you belong to a credit union, go there and see what kind of rates you can get from it. If you have a good banking relationship with a small bank. go there and do some comparison shopping.) The whole point is you need to be prepared before you go into the dealership.
So, now you have the dealer telling you what his best rate is and you know it's way, way too high. You can say "no, I'll just pay you cash," in which case the dealer may find a new rate that is really his best, or you can spring the Capital One check on the dealer. Most dealers should be able to match if not beat Capital One if you are a Tier 1 borrower. Some credit unions and small banks may also be competitive.
Leasing is a whole different world but in the end, even if you lease the key is to negotiate the best price you can before you tell the dealer that you want to lease. Don't try to get a car for a specified monthly lease payment going in. You will be fleeced.
| | Reply » some questions about financing.. |
I really appreciate for the indepth explaination. Wow, through out all the bimmer forums I go to (including m3froum, e46fanatics, bmwforums) I think this is the most informative one. Members here are great!
I am mainly concered about purchasing with case since I would want the most hassle free transaction possible. I'll just not mention a word untill we agreed on the price.
| | Reply » some questions about financing.. |
Quote: I really appreciate for the indepth explaination. Wow, through out all the bimmer forums I go to (including m3froum, e46fanatics, bmwforums) I think this is the most informative one. Members here are great!
I am mainly concered about purchasing with case since I would want the most hassle free transaction possible. I'll just not mention a word untill we agreed on the price. | OKAY, HERE'S WHAT YOU DO IF YOU ARE REALLY GOING TO PURCHASE FOR CASH. AFTER YOU STRIKE THE DEAL AND THE DEALER STARTS TO TALK ABOUT FINANCING, TELL HIM YOU WILL PAY CASH AND WOULD LIKE ANOTHER $500 OFF! (Sorry about the all caps - I didn't look and my button was on.)
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some questions about financing..