Need some quick loan advice.

[Whaler27]

Thank you. I appreciate both your advice. I actually contacted my dealer, they’ve been great throughout the ordering process and although it’s his job to sell, the man has been great to deal with. He said he would try to match or beat my CU rate.

Dealerships can usually match or beat the credit union, because the credit union typically has a single advertised price for a particular loan type at a particular term and beacon score. The dealer probably has a “buy-rate” well below the credit union’s “retail rate”.

The bank providing the financing through the dealer will pay the dealer based on the amount financed, and the difference between the dealer’s buy-rate and the rate they quote/sell the customer. If the dealer can maintain a larger spread between those two rates they make more money, but they will still make some money on the deal all the way down to their buy rate. They will typically give up the minimum amount of that spread required to get the deal. (This is why F&I guys at the dealerships get less chatty and friendly when you tell them you’ve reconsidered and won’t be financing.)(It’s also why it’s a TERRIBLE idea to tell a dealer you’re going to ”pay cash” as you’re negotiating the purchase price — because that tells them that they‘ll have to make all their money on the difference between their cost and the sales price on the vehicle.)

As interest rates climb the difference between the buy/retail rates tends to grow, as does the opportunity for dealer profit on financing. For perspective, between 2000 and 2001 the dealer finance kickback on boat and RV loans was routinely 15% to 16% of the amount financed. That’s a BIG profit center, and well worth the effort even if they cut the number in half.

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[The Last Cowboy]

Do not buy the GAP if you intend to make a big first payment that will put you into equity.

As stated above, look at the loan terms for paying ahead. Most banks will still require the monthly payment on time. Most credit unions will show the minimum payment due at a later date. For example, my next minimum payment is due in May of 2024. It will be paid off well before then though.

Also, never allow yourself to get caught up in the payment vs purchase price smoke and mirrors game. This is where they really get you, and you could wind up owing thousands more than you initially thought. Always negotiate the bottom line sale price then figure the payment based on that number.

 

[JSFoster75]

Dealerships can usually match or beat the credit union, because the credit union typically has a single advertised price for a particular loan type at a particular term and beacon score. The dealer probably has a “buy-rate” well below the credit union’s “retail rate”.

The bank providing the financing through the dealer will pay the dealer based on the amount financed, and the difference between the dealer’s buy-rate and the rate they quote/sell the customer. If the dealer can maintain a larger spread between those two rates they make more money, but they will still make some money on the deal all the way down to their buy rate. They will typically give up the minimum amount of that spread required to get the deal. (This is why F&I guys at the dealerships get less chatty and friendly when you tell them you’ve reconsidered and won’t be financing.)(It’s also why it’s a TERRIBLE idea to tell a dealer you’re going to ”pay cash” as you’re negotiating the purchase price — because that tells them that they‘ll have to make all their money on the difference between their cost and the sales price on the vehicle.)

As interest rates climb the difference between the buy/retail rates tends to grow, as does the opportunity for dealer profit on financing. For perspective, between 2000 and 2001 the dealer finance kickback on boat and RV loans was routinely 15% to 16% of the amount financed. That’s a BIG profit center, and well worth the effort even if they cut the number in half.

My local credit union advertised a 5.49% interest rate for 72 months, the local dealer that dealt directly with the same credit union got my loan at 4.09% through the same credit union... It's possible to get the dealer to negotiate a lower rate with the local credit union if they have a relationship with that credit union.

I'm wondering if I can figure out had to say "credit union" one more time in the above paragraph

 

[Gladius Nova]

My local credit union advertised a 5.49% interest rate for 72 months, the local dealer that dealt directly with the same credit union got my loan at 4.09% through the same credit union... It's possible to get the dealer to negotiate a lower rate with the local credit union if they have a relationship with that credit union.

I'm wondering if I can figure out had to say "credit union" one more time in the above paragraph

Same happened with me, but with another local credit union. Gave me a 1.5 rate decrease. I'm not married to my credit union when it comes to "loyalty".

 

[dshark1]

Also, never allow yourself to get caught up in the payment vs purchase price smoke and mirrors game. This is where they really get you, and you could wind up owing thousands more than you initially thought. Always negotiate the bottom line sale price then figure the payment based on that number.
[/QUOTE] @The Last Cowboy

would u say this applies for leasing also?

 

[The Last Cowboy]

Also, never allow yourself to get caught up in the payment vs purchase price smoke and mirrors game. This is where they really get you, and you could wind up owing thousands more than you initially thought. Always negotiate the bottom line sale price then figure the payment based on that number.

@The Last Cowboy

would u say this applies for leasing also?
[/QUOTE]

Absolutely, but there’s the residual value and cap cost reduction shell game to negotiate as well. A lease is as negotiable as a purchase.

As for me, I never lease. And I won’t finance negative equity. I always like to have an exit plan for life’s unexpected turns.

 

[dcmdon]

I’ve seen shenanigans tho

Mathematically yes. My point is make sure it adds up to be what they say. Nothing was added in. Early payment penalty ? Different total price if you use their financing? I actually had a GM guy try to squeeze the difference of my trade-in that he didn’t want to give me. Shenanigans

That would all show up on the paperwork as a change in the amount financed.

 

[Gladius Nova]

Also, never allow yourself to get caught up in the payment vs purchase price smoke and mirrors game. This is where they really get you, and you could wind up owing thousands more than you initially thought. Always negotiate the bottom line sale price then figure the payment based on that number.

@The Last Cowboy
[/QUOTE]
Learned that the hard way with my first couple of cars in my early 20s.

 

[BrentMG]

My local credit union advertised a 5.49% interest rate for 72 months, the local dealer that dealt directly with the same credit union got my loan at 4.09% through the same credit union... It's possible to get the dealer to negotiate a lower rate with the local credit union if they have a relationship with that credit union.

I'm wondering if I can figure out had to say "credit union" one more time in the above paragraph

 

[stephanadams]

The dealership asked the question about beating their interest rate and ultimately did.

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[Semivies]

Real estate investment loans often have more flexible terms compared to regular auto loans, especially when shifting funds between assets. Depending on your credit and debt-to-income ratio, you might get better leverage by going that route instead of burning cash or taking a high-interest personal loan. Definitely helped me free up cash for upgrades later.

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