No clue about car loans and financing

[Anonymous]

Anonymous wrote:

Anonymous wrote:I have a related question about the value of refinancing if you could pay cash? I get the theory that with 0% interest you might as well take the financing. But I feel like there must be a catch. Isn't the total cost purchase price of the car higher?

Yeah, like PP said, it's all an incentive to get you to do something else. If you come in with 3% from your bank and your dealer offers you their "special connection" to their preferred bank for 2.8%, it's because there's some kind of incentive involved from the bank to the dealer for steering loans to them. You pocket the .2% and the dealer gets whatever they get from the bank.

The "specials," like 0% for 60 months or whatever, are exactly what PP said, an attempt to get you to upgrade. This is why car salesmen love to get you to negotiate on your payment rather than the actual price of the car. "With the 3% from your bank that you were planning on using, you'd be paying X per month. But now that we're giving you 0%, you're saving $80 a month, so the Premium model is now in your budget!" But if you don't fall for it, there's no catch.

So what they said ^ is important:
1. Negotiate the actual price, not monthly payments.
2. Get a preapproval from a credit union. I don’t know about the current 0 rates, but when I bought a few years ago the dealer admitted that there was no way to beat the rate I had. (1%) back then. I then put the car money in ladder CDs so that I paid no interest at all.
3. Check to see if your job or professional associations etc have any affinity group deals first.
4. My workplace belonged to a car buying plan that allowed me to get a firm reduced price from the dealer with no haggling online before I ever walked in. So I already knew my price for the east car I wanted on the lot. I negotiated extras for no additional charge because I was truly willing to walk away and they saw I had the money and the price Prenegotiated.

#3 and #4 above are different, so hopefully you can take advantage of both.

Good luck, I found the process for a new car purchase to be unbelievably stressful.

[Anonymous]

Anonymous wrote:

Anonymous wrote:You can come in preapproved, but if you have good credit the dealer will be able to beat your preapproved rate

This. You want to go in with a preapproval from your credit union or bank, but generally your dealer will be able to beat the APR with their own financing. Still, you want the pre-approval to make sure they don't shave $$ off of you that way.

NP—about to purchase new or used car. Got preapproved and have a blank check from bank. Can you tell me how preapproval will help me and how a dealer would try to shave $$ off me? TIA