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My credit score is around 675. Not great, but not bad either.
The other day I was looking at a new car which advertised .9 percent financing (WAC) for 24 month and 1.6 percent financing for 36 - 60 months.
The car I am looking at is a small compact and retails for around $15,000 (plus all the other fees that they charge).
I told them I was able to put down $10,000 (hello, that is 75% of the purchase price). And they told me the interest rate would be 8%.
Can *anybody* who is familiar with the car industry tell me what the deal is? I did not think that my credit score was all that bad....why the high interest rate?
You pretty much have to have about a 740+ to get the promotional financing.
In reality, taking the rebates that they usually offer in lieu of the special financing usually gives you a better deal anyway.
I sold cars back when everyone was offering 0% financing. We had a guy come in wanting to trade his car in, he didn't care about the selling price or what we were giving him on his car, he just wanted 0% financing and a payment under $250. His credit was stellar and he qualified for the 0% rate, but the payment was going to be $280 so he didn't want to buy.
The funny thing is, I ran it again with the standard rate (2.9% at the time) and with him getting the rebate he qualified for without taking the 0% and his payment came down to $240. I called him back with that info but he didn't care. If the deal didn't include 0% financing he wasn't interested.
My credit score is around 675. Not great, but not bad either.
The other day I was looking at a new car which advertised .9 percent financing (WAC) for 24 month and 1.6 percent financing for 36 - 60 months.
The car I am looking at is a small compact and retails for around $15,000 (plus all the other fees that they charge).
I told them I was able to put down $10,000 (hello, that is 75% of the purchase price). And they told me the interest rate would be 8%.
Can *anybody* who is familiar with the car industry tell me what the deal is? I did not think that my credit score was all that bad....why the high interest rate?
20yrsinBranson
Credit has tightened dramatically in the last few years. You only financing a small part of the price may be a factor. You can always negotiate that, or go to another dealer.
If it were me, I'd hang on to as much of that $10K as possible. You never know when you'll need cash on hand quickly, and having it tied up in an immediately-depreciating asset may not be the best financial move. You could put some of that money in an investment and earn at least what the interest rate was supposed to be. Dip into the principal if necessary to make the car payments.
When interest rates are as low as you say you should have gotten, there's hardly any incentive to give up your cash.
You pretty much have to have about a 740+ to get the promotional financing.
In reality, taking the rebates that they usually offer in lieu of the special financing usually gives you a better deal anyway.
I sold cars back when everyone was offering 0% financing. We had a guy come in wanting to trade his car in, he didn't care about the selling price or what we were giving him on his car, he just wanted 0% financing and a payment under $250. His credit was stellar and he qualified for the 0% rate, but the payment was going to be $280 so he didn't want to buy.
The funny thing is, I ran it again with the standard rate (2.9% at the time) and with him getting the rebate he qualified for without taking the 0% and his payment came down to $240. I called him back with that info but he didn't care. If the deal didn't include 0% financing he wasn't interested.
It never ceases to amaze me when people can't see the simple logic in a situation like that but will instead demand that you meet their (less advantageous) conditions.
I don't really care where the money goes (unless a write off is involved), I just want the best price/payments where applicable. The net money coming out of my pocket is my main concern.
You only financing a small part of the price may be a factor. You can always negotiate that, or go to another dealer.
This is a good point. Dealerships generally get a commission on the financing; it's all up front, so all they really care about is the amount you finance. They might work a little harder for you to get the lower rate if they stand to make a little more off the financing.
Well-qualified is usually 720+. To some extent, it's the finance managers call (they look at income, residence, etc.) but with 645 you just are not going to get the promotional rates. Try a local credit union or CapitilOne or one of the other online car loan companies. You should be able to beat 8%.
8% is in used car market rate with bad credit. I recently got a 4.4% rate. My credit score is in the range of 720 thru 769 between the big three. I have two other cars finance in my name for my wife and mother in law. So my debt ratio is on the high end if you include my primary and rental resident.
To some extent, it's the finance managers call.....
It's not the finance managers call. The dealership only brokers the deal between the customer and the lending institution. The finance manager can try to persuade the bank to bend the rules and give the customer a better rate, but he or she has no say in the actual decision making process.
You'd need over 700 at least, but you also need to be in the right credit tier, if you've never financed something expensive before they can be dickish about it even if your credit is good.
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