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Honestly in the current environment I don't see much reason to go with outside financing. Almost all of the OEM's are offering 0% financing on many of their vehicles. Even where they are not the rates are very low.
The advantage is that if you take the financing off the table all you have to negotiate is price. So you work out the best cash deal possible, then see if they can offer financing that's more competitive than what you've arranged ahead of time.
Wife is looking to get into a new car. Unsure yet which car but she appears to have her heart set on a Jeep Renegade. I recently bought a car the traditional way, meaning I went to the dealership and spent hours there while financing was sought and approved. She wants to do something different and have financing pre arranged before she even steps foot at a dealership. The thing is that neither one of us has ever done pre arranged financing before so we wanted to now how it works.
I know when you do it the old school way like I did the dealership tells the bank exactly how much of a loan I need for the vehicle which includes taxes and registration. If you go get a car loan yourself, how do they know how much to loan you to cover all the fees?
Thanks in advance
Never spend hours there. If you know ahead of time what you can get from a credit union, leverage the dealer to beat it. Currently (depending on your credit and location of course) Renegade has 0% available for up to 72 months.
My personal method of buying new cars is to know what I want before I get there, verify the one on the lot that I want with a test drive, and then sit down to make my offer. My offer is always the same.
1. I pay invoice less any applicable rebates.
2. I get the best preferred rate (0% for as long as you need to finance)
3. I will take it home today.
4. Give me the credit app to fill out while you go get approval from manager.
5. Bring back a copy of invoice with agreed upon price signed by manager.
If they comply I give perfect 10's on their customer satisfaction survey and have a car within an hour. If they balk, I walk. Usually takes 15 minutes to have a deal and then another 30 to pick it up later today.
Last edited by Rynldsbr; 09-23-2016 at 01:37 PM..
Reason: readability
I recently bought a car the traditional way, meaning I went to the dealership and spent hours there while financing was sought and approved.
Why would you have to spend hours there? That's ridiculous. Either you are being jerked around and should leave, or your credit sucks, and/or you are trying to carry too much negative equity and you've got no business trying to buy what you are buying. IF they can't come back with a reasonable offer within ~10 minutes after you've sat down to the table, it is time to leave.
I went to a Honda dealership with a loan set up with lightstream (2.39% 5 yrs). I went back and forth with the sales manager on price and he finally said he'll give me my price if i finance through honda (same rate). I agreed and it turned out that they were able to get me a better rate (2.04%) at the price I wanted.
What's the lesson here? Go in with your own financing but let them offer to match or beat the rate you are locked in at (after you agree to a price).
Definitely go in with your financing taken care of ahead of time but also give the dealer a chance to beat that rate. It might surprise you what they can do.
A lot of the manufacturers are getting aggressive with their rates. I guess they keep the money "in house" that way.
It's a great idea and you may save lots of money going with your own financing. You will know in advance what your interest rate and terms will be and you can compare that with what the dealer is offering.
My Dad was a dealer and take my word for it financing is just another way for the dealer to make money with discounts and such.
The "Finance Manager" in most cases is also supposed to sell you ups such as extended warranties, alarms and many other things. All additional profits.
Oh, and dealer doc fees?? Tell them you won't pay them! It's just additional profit of some $350-$700 and it's not required by law as they will tell you in some cases.
And another way to save money.
Drive the car you want, submit your credit info and such and then walk, even if you want the car. Believe me they will call you many times trying to save the deal. When they stop calling you know what you could have bought the car for and you can go get it. It's hard to walk away from a new car but try it!
The bigger dealerships will already have established relationships with most banks/credit unions. Just get pre-approved first and normally you don't even need a check from your bank. The finance dept at the car dealer will be able to view your preapproved ammount and rate on their computer. They will try to match or beat the rate.
Never spend hours there. It's just no longer necessary.
Each of the last three cars I bought I did the negotiating, arrangement of financing, trade evaluations and offers, and agreeing to a deal all without being at the dealer in person. I visit the sales department for 1) test drives, 2) final signatures and taking delivery.
Of course, you have to know what you want, what it is worth, and what the deal should be. Then, stick to it.
If they want to hold you hostage in a cubicle, buy from another dealer.
I've had price and financing all settled before heading to a dealer and still had the process take hours. Frustrating to say the least especially when buying out of town/state. One case where their printer was on the fritz and other paperwork nonsense, and another where they hadn't prepped the car yet and it needed a brake job bad so they were rushing to get that and some other stuff done last minute even though they had a good week's notice.
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