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Location: Stuck on the East Coast, hoping to head West
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I'm shopping for a new car. I can pay cash for it. I've been playing the dealers against each other. I got a great offer from one dealer that is contingent on dealer financing. I'm considered getting the financing so I get that great price and then paying off the note within a week or so.
Yes, as long as your state allows an early payoff with no penalty. I did that once on a car, as they offered me a sweet deal on the car if I took the finance, which sounds identical to your situation. I had the money in the bank. The car was paid off 12 days after I purchased it. No repercussions at all. I suspect it is somewhat rare. Either way, I would not mention it to the dealer at the time of the deal, just smile, sign and pay it off ASAP. I got the title 2 weeks later.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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I did it several times, just make sure there is no prepaym not penalty on the written agreement small print. They will not be happy about it, in fact I would take it to a different dealer for warranty repairs or service.
Yes, as long as your state allows an early payoff with no penalty. I did that once on a car, as they offered me a sweet deal on the car if I took the finance, which sounds identical to your situation. I had the money in the bank. The car was paid off 12 days after I purchased it. No repercussions at all. I suspect it is somewhat rare. Either way, I would not mention it to the dealer at the time of the deal, just smile, sign and pay it off ASAP. I got the title 2 weeks later.
As noted, make sure there isn't some sort of prepayment penalty.
Typically, the dealer earns a commission from the whoever is financing the loan. If you pay early, the dealer may lose that commission. I've been told that typically if the loan is paid off within 60 days, the dealer loses the commission.
Agree with checking that there are no or minimal prepayment penalties. I'm not in that same position but I can pay the car off in less than the loan term and I have a $25 "document fee" which I'm okay with.
Taking dealer financing and an extended warranty can be a negotiating tactic. Presuming no pre-payment penalty on the financing and full refund on the warranty within 60 days or whatever. They get their commission/kick-back, you get some more $$$ off or free stuff. Win-win.
Read the contract fine print first as some finance contracts have a penalty for pre-payment under 90 days. The dealers usually sell the finance contract to a 3rd party credit/financing facility. Ask to see the details before signing.
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