I know that quite a few people here work for car dealers. A friend that used to be a sales guy basically told me that with the internet, he doesn't have much room to negotiate, but where the dealer makes up for that is when the buyer sits with the finance manager. That's where the fees are added to the total price, not to mention the extended warranties and any additional item they can add up to it. Of course I want to avoid this painful process by simply declining everything and paying on my own terms. I've been wondering if the best way to accomplish this is to go through a credit union. With check in hand, I can simply state "I have this much money right now and I'm not paying $0.01 more". The trick is to have the balls to walk out. Is financing outside of the dealer a better option?
Quote from: duccarlos on October 21, 2010, 10:26:12 AM
Is financing outside of the dealer a better option?
it depends...
who has the lower rate?
if the dealer is making points on the financing, they may be "more negotiable" on the sales price.
avoiding the after-the-fact fees is really as simple as saying "no".
fwiw, i pretty much know what my sales price is going to be when i walk in the door. i research the "invoice price" and current incentives so i have a good idea what i
should pay.
I know I have good credit, so I would need to check first with the dealer to see if they offer a better rate. Like anything in life it depends. The older way of thinking about it, it was better to show up cash in hand.
I don't know if they like cash anymore. I think that a lot of dealerships seem to just be banks with lots of cars on the lot. I am looking for a car too, and have visited several dealerships recently and one of the first questions they ask you is what you want your monthly payment to be. It seems like nobody ever pays for a car in full anymore. :-\
Quote from: duccarlos on October 21, 2010, 11:12:14 AM
I know I have good credit, so I would need to check first with the dealer to see if they offer a better rate. Like anything in life it depends. The older way of thinking about it, it was better to show up cash in hand.
+1
The best way to finance is not to finance!!!
Unfortunately that's easier said than done. :P
I read recently (thanks in no small part to Cash For Clunkers) that during a comparison of prices for new cars and used cars, that they discovered that the prices for used cars actually increased to the point where it's smarter in most cases to just buy a new one.
...so if you're set on financing, at least finance a new car to get the most for your money.
Quote from: duccarlos on October 21, 2010, 11:12:14 AM
I know I have good credit, so I would need to check first with the dealer to see if they offer a better rate. Like anything in life it depends. The older way of thinking about it, it was better to show up cash in hand.
Go through a credit union. I got 3.75% 5yr for my 696 through Merck Federal Credit Union. FCU's are much more pleasant to deal with and will be able to offer a better deal. If you are a member of a private credit union there is no way dealer financing will offer better rates.
That's good to hear. Not only is it the better rate, but also having a check when you walk in makes it easier to be able to deal with the finance guy.
Lot's of times the factory will offer x% or xxx cash back.
It's usually a better deal to take the cash incentives than the lowball rate. If you use a cu you can get a good rate and the cash incentives.
Quote from: humorless dp on October 21, 2010, 12:10:41 PM
Lot's of times the factory will offer x% or xxx cash back.
Or sometimes both.
When I bought the new VW this past weekend, I got rebates and 1.9% on the balance owed.
Quote from: Veloce-Fino on October 21, 2010, 11:19:15 AM
Go through a credit union. I got 3.75% 5yr for my 696 through Merck Federal Credit Union. FCU's are much more pleasant to deal with and will be able to offer a better deal. If you are a member of a private credit union there is no way dealer financing will offer better rates.
Again, it depends on who has the best rate.
Credit unions will typically have lower interest rates than banks. There's less profit margin built into your loan through a FCU versus through a bank. Also, as mentioned, having a pre-authorized finance check in hand is a good thing.
HOWEVER...
If your credit is good enough to get you a lower interest rate through the dealer's finance company (and you should be able to tell based on the fine print on their fliers) then that can possibly be the better option. If you go this route, you'll need to watch carefully that they don't try to slide in one of those after-purchase extras that are almost all profit for the dealer.
When negotiating price, you want final purchase price in writing before you sign anything. ANYTHING. Don't start talking about financing until you know HOW MUCH you're financing. If you've got a bank check, once you've settled on a final purchase price for the vehicle, get the details on what it's going to take to get it out the door/on the road. Taxes, tags, etc, etc. Get the list, and the price for each, and a final itemized figure with a bottom line. Have them explain any line item you have questions about/want an answer for. If they try to use smoke and mirrors, feel free to walk away. Go back the next day. Start again. Go to another dealer. Get price quotes on similar cars. Get them to compete.
If you get to a sticking point on something (dealer fee, price, etc.) walk away. Seeing you start to walk away will usually unstick things. If it doesn't, you can always come back tomorrow and try again. You'd be surprised how much the price drops when the sales guy gets tired of seeing you coming because he knows you're going to fight with him for an hour.
Once you have a final, on the road, keys in your hand bottom line (IN WRITING) that you're happy with, feel free to whip out the bank check and write it for the full amount. OR, at that point, you can begin negotiations with the finance department.
Just like you priced out the car/truck you price out the credit union/bank and the dealer. And trust me ask your wife for your balls back to walk away from the deal. And the only power you have over the dealer is to get up and walk away. When my friend bought his truck his mom paid for it with her credit card (yes she had the limit and had already bought and paid off 3 cars with it). They said they couldn't but when we got back to the car and started to sit down they ran back and told us yes we could pay with the card.
There is no set rule. Sometimes they offer low interest or a cash incentive. Sometimes only low or even 0% interest but no cash incentive. If you own a home a home equity loan or line of credit may be the way to go since the interest is tax deductible. You also want to know if there is an acquisition fee, early buy out penalty or required gap insurance. You should call your insurance company and determine what deductible on comprehensive and collision will be required if you finance. You also need to know what it will cost you to insure the vehicle.
Most dealers have software that will compare the true cost of financing, leasing and paying cash. Paying cash does have a cost since you loosing interest unless you normally save your money under the mattress. In 2004 we bought two cars. We could have paid cash. 0% financing was available. There was no cash incentive. Guess what we did.
If 0% is available, chances are we will go that route. I just dislike the whole dealing with the finance guy thing. I'll do my homework and I won't go in there like an asshole, but I will stick to my out the door price. From what I understand the sales guys no longer have to haggle prices, that's what they pay the finance guy for. I will try to find a place with no commissions so that I don't feel bad if I have to walk out.
Quote from: duccarlos on October 21, 2010, 11:58:24 AM
That's good to hear. Not only is it the better rate, but also having a check when you walk in makes it easier to be able to deal with the finance guy.
It does make certain negotiations a lot easier. I did this last year when the dealers were desperate for sales and the process went so much easier.
I am not a credit union member, and have found typically that dealers bank of choice (Harris in Chicago for some reason) always have a 1% lower rate than my bank so I use them. If you are going to use the dealer, ask how many banks they check with (can ding your credit score if they check your rate with several banks due to the credit check).
mitt
Any of the guys that actually work at dealers have any advise about dealing with the finance guy?
Quote from: Grappa on October 21, 2010, 11:16:49 AM
I don't know if they like cash anymore. I think that a lot of dealerships seem to just be banks with lots of cars on the lot. I am looking for a car too, and have visited several dealerships recently and one of the first questions they ask you is what you want your monthly payment to be. It seems like nobody ever pays for a car in full anymore. :-\
when you get this quote run like hell. the next thing you'll be doing is meeting the "pit" boss and playing tic-tac-toe to determine your payment. You'd be surprised what can be added into your desired payment. most of these practices are long gone but there are dealers still pulling these stunts.
Also, the trick to any purchase is to own more than the bank does, if you finance. If you don't set a schedule in which you plan on paying it down early then look at the amortization table to determine your break even line when you're no longer upside down. If you need to buy gap insurance for a couple of years until you own more than the bank do it. I read that over 80% of cars on the road are never paid off. The land of credit is tightening so I'm sure those numbers will change.
Quote from: duccarlos on October 21, 2010, 05:05:31 PM
Any of the guys that actually work at dealers have any advise about dealing with the finance guy?
the finance department is often separate from the sales department so they can't deal with them at all. At least this is my experience with my purchases. They have some worthwhile items but most are not IMO. My wife purchased the wheel and paint protection on her Benz when I told her NO NO NO, well she ran over curbs and scratched the shit out of them to the tune of three wheel replacements and banging out some dents. It paid for itself twice over ;D
I'm not going to be much help. Yes we still have people that pay green cash money although its rare. Had one customer write a personal check yesterday. See people use credit cards too. I'm not involved with our finance department at all and don't really follow how they do things. I would like to believe that our finance department does business in the best interest of the customer. I would just compare rates and see what suits you better. Sorry I can't be more help but its not my area of expertise.
Best way to finance? Wait until the maker is offering 0, .9, 1.9 or so financing. If you've got good credit you'll qualify for the low rate. My wife's car is financed for the low, low rate of 0%. Timing along with not having to buy RIGHT THEN is the key.
JM
Are you trading in a car on this new car ?
If so , that is an area where a dealer can really have the upper hand .
Chances are the Dealer will give you the black book wholesale trade in price for your trade.
Way less than NADA used retail. Even less than NADA wholesale.
Obviously the Dealer must make a profit on your used car ( running it through the service Dept. and fixing anything glaring that stands out ) but they want to give themselves a few thousand $ cushion in case after 90 days( if it's their practice ) , and it hasn't sold, they will take it to their local Dealer auction and hopefully sell it for about what they have invested in it.
Dolph
Quote from: duccarlos on October 21, 2010, 05:05:31 PM
Any of the guys that actually work at dealers have any advise about dealing with the finance guy?
do not deal with the F& I guy at the dealership.
shop outside loan rates at banks or credit unions prior to going to a dealership.
pick one that works for you and get the money from them..... then go beat the dealer down with cash.
Never fall in love with a car..... set your price.. two grand back from the MSRP is a good start. walk if they say no or even mention financing through them, unless you get a 0% loan.... even then...hammer the dealer on the price. most dealerships are sitting on old inventory and want to get it gone.
One of the guys I work with wanted one of the new, high end 'vettes.
He refinanced his house, took the money in certified bundles, all cash, and put it in two briefcases. Then he took his son to the dealer (both decked out in leather coats and sunglasses) and bought the vette like that, because, why not?
Lease instead of finance.
I'm not going to trade in my current car. I'm going to sell it independently. The day the check clears my bank, I'll go buy, so I have to be very diligent when keeping up on all the incentives the dealers are offering. I will need to finance the difference between the price and what I get for the old car, but I'm hoping it will not be that bad.
Quote from: Randimus Maximus on October 21, 2010, 10:24:15 PM
Lease instead of finance.
I usually keep my cars for at least 10 years, not a big lease kind of guy.
My problem is that I can't just say "I'm buying a new car on X day". I'm pretty sure that I know what I'll end up buying and I can do my homework as to where I'll be buying it. So I have the what and the where, but not the when. And that's the most important when talking about financing.