Need some quick loan advice.

[Albertaktm]

Make sure you ask the dealer for their buy rate. If they won't tell you... go somewhere else. Thell them you'll agree to pay their buy rate which is the rate they purchase the loan for. Their sale rate to you is usually more than their buy rate.

That seems very odd the dealers get into the loans at all. Around here, all dealers have a finance department but it’s just someone who shops your credit app to one of the big national banks they contract to. The bank that gives you the loan will kick back a finders fee to the dealer but ultimately you, the customer, are dealing directly with the big bank. Dealer is out

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[DOOKEY]

That seems very odd the dealers get into the loans at all. Around here, all dealers have a finance department but it’s just someone who shops your credit app to one of the big national banks they contract to. The bank that gives you the loan will kick back a finders fee to the dealer but ultimately you, the customer, are dealing directly with the big bank. Dealer is out

Agreed. Some dealers are sneaky though and will mark up their buy rate. It's just free money to them. If they won't discuss their buy rate(which should be obvious to you since you should deal with the bank directly) you should walk. They're shady.

Dealers can effectively buy the loan from the bank. That's the buy rate. The sell rate to you can be different. So I'll always advocate for getting pre-approved at a CU like others have stated. If you go through the dealership finance department you can pit your rate against them. Some of them can even be pretty valuable if they try to win your business by asking local lenders to beat your current rate through your CU.

AND! Most credit unions say their rates are fixed but some will match up to a certain percentage point. So if you get pre-approved at a CU and have a dealer do their magic to beat your rate you can effectively use that against your CU to get your rate cut down.

....unless your credit is in the crapper!

If you finance through the dealership always make sure you are paying their buy rate.

 

[Albertaktm]

Agreed. Some dealers are sneaky though and will mark up their buy rate. It's just free money to them. If they won't discuss their buy rate(which should be obvious to you since you should deal with the bank directly) you should walk. They're shady.

Dealers can effectively buy the loan from the bank. That's the buy rate. The sell rate to you can be different. So I'll always advocate for getting pre-approved at a CU like others have stated. If you go through the dealership finance department you can pit your rate against them. Some of them can even be pretty valuable if they try to win your business by asking local lenders to beat your current rate through your CU.

AND! Most credit unions say their rates are fixed but some will match up to a certain percentage point. So if you get pre-approved at a CU and have a dealer do their magic to beat your rate you can effectively use that against your CU to get your rate cut down.

....unless your credit is in the crapper!

If you finance through the dealership always make sure you are paying their buy rate.

Very interesting way of doing a loan. Here, no dealer ever gets into the loaning of money. Back when I had to borrow money to buy new your choices were your bank or the manufacturer loan program. Ford Motor Credit, GMAC. I am not sure what Chrysler had. Those all collapsed when the manufactures had to get the US Government to bail them out to the tune of billions some 15 years ago. Now it is all done through the banks. No dealer themselves actually uses dealer money for any financing. Dealers here just sell vehicles.

 

[gsbrockman]

Unless a dealership can substantially beat your credit union, stick with the credit union rate.

As ruthless as some dealerships are (note : I said some) there’s a good chance they’ll deliver you at one rate....and call you back in three to five days requesting you to re-sign at a different rate.

 

[Sazabi19]

Just tell the dealer you can get a loan at your credit union at 5%. If they can beat it go with the dealer. If not go with the credit union. (You will want to get pre-approved)

The credit union will not give you a check. If you go with them they will pay the dealer directly.

That's not true at all. The CU may give them a check like mine did. It was for more than the JLR was worth and Gupton took out the amount needed and that's all that was used in my account. It's fine if the amount is over what you need, the dealer will use only the portion they need.

Your rate is usually good for like 14-30 days once you get it, so better shop around when you know you're about to sign. Nothing wrong with going with your CU and then having the dealership check. These places all know savvy customers shop around, don't be shy/nervous about it.

 

[SH556JL]

For me, I had a pre approval and just needed a purchase order to get the check. Before getting the purchase order the vehicle to send to my credit union. I allowed the dealer the opportunity to beat it. They did, by .27% at a longer term. Not much, but enough so it wasn’t worth being the middle man trying to get them paid. I just treat the loan like it’s a 48 month term, but have the option of a lower payment if needed.

 

[Shibadog]

Yup. You can always call the CU just to be safe.

I’d definitely call and cancel the load. I’ve they’ve already got a contract and cut you a check, you are likely going to have to pay some interest $

 

[Spartan99]

They need to profit from the buy rate of the loan or the price of the vehicle. They have to make a profit some how to stay in business. If you get a fantastic rate but before negotiating a price, they might need to increase their price. Depends on how much wiggle room they have. The best cars are the ones that have been sitting on the lot. It’s expensive for a car to sit. Eventually they’ll let it go at a loss, essentially paying you to take it off their hands.

 

[Some Random Guy]

Check was made out to the dealer

Mine was blank, the dealer had to fill in their info and then I had to sign it in extra places.

I’d definitely call and cancel the load. I’ve they’ve already got a contract and cut you a check, you are likely going to have to pay some interest $

My "pre-approved" check wasn't valid until I signed and provided some additional info at the dealership. So while it's a contract, it's a $0 contract with an option up to a pre-approved amount. It doesn't become an obligation against you until the dealership cashes it.
Granted, this was only with Navy Federal. Normally the dealership would beat any other offer I had.

 

[Opus]

Remember also, OP that you can go with the dealer initially and then refinance with your CU at any time. My dealer had a decent rate, but once interest rates drop I'll be looking to do a refi.

 

[Spartan99]

Remember also, OP that you can go with the dealer initially and then refinance with your CU at any time. My dealer had a decent rate, but once interest rates drop I'll be looking to do a refi.

Good reminder.

OP you can also make a massive dent in your interest payments by paying extra on your payments.

 

[SmallCrawler]

The best way to beat the interest rate is to make some higher monthly payments when you can.

As a simple interest loan, the interest rate is calculated monthly based on what you still owe, meaning if you pay off your loan earlier, you won't have to pay the interest that would have accrued over the remainder of your loan.

 

[Deleted member 59498]

I always get a pre-approved check that is made out to no one and payable up to the approved amount.

Dealers never have beat my credit union so I tell them not to run my credit. They will run it with 4 or 5 different lenders and I don't want the inquiries on my credit. Regardless if loan officer considers them all one pull they still show up as individual pulls.

 

[Albertaktm]

The best way to beat the interest rate is to make some higher monthly payments when you can.

As a simple interest loan, the interest rate is calculated monthly based on what you still owe, meaning if you pay off your loan earlier, you won't have to pay the interest that would have accrued over the remainder of your loan.

The interest rate is calculated monthly??? It usually is fixed for the term of the loan. Sure if you pay it off months, years early there is less interest paid, but the rate stays the same. I have heard of variable rate mortgages. But not car loans. .

 

[Nitehawk92]

Just tell the dealer you can get a loan at your credit union at 5%. If they can beat it go with the dealer. If not go with the credit union. (You will want to get pre-approved)

The credit union will not give you a check. If you go with them they will pay the dealer directly.

My Credit Union has "pre-approved" loans. You apply with a max amount and if approved, they send you the pre-approved loan paperwork. It has everything the dealership needs to do all the paperwork and pay for the Jeep. If the dealer beats the rate, you just do not give them the paperwork and the pre-approval expires in a certain number of days (usually 90 days)...

Even better was the fact that my pre-approval was good for 90 days at 2.5% for 66 months. My Jeep was not delivered with in the 90 days. My credit union gave me a 45 day extension on the original 90 days. I picked up my Jeep on the last day of the extension and got the 2.5% rate. By the time the extension was over, rates went from 2.5% up to 6% or more. I picked up my Jeep on December 15, 2022. When the dealer saw my 2.5% rate, they did not even try to sell me any kind of financing...

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