No clue about car loans and financing
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Anonymous
| If you know the type of car you want to buy do you apply online before negotiating with the dealer? Is there a pre-approval process? Or do you wait until you have a final price with the dealer and then apply through them? Please help. |
Anonymous
| You can apply for the dealership financing when you negotiate, or work with a lender beforehand to get pre-approval. Usually the dealerships offer zero or very low APR for incentives so that’s normally what I’ve done |
Anonymous
| You can come in preapproved, but if you have good credit the dealer will be able to beat your preapproved rate |
Anonymous
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. |
Anonymous
And I should add that the banks and credit unions that finance cars are used to this. You generally don't have to tell them anything about the make and model in advance, you just tell them the dollar amount you want approved, they run your credit, and send you a letter. Then if you end up using them, you call them from the dealer to have them send over the necessary docs. |
Anonymous
| Do people usually finance the whole car or just part of it when rates are low? |
Anonymous
I would finance as much as you can. Rates are dirt cheap. |
Anonymous
| At 0%- as much as I can |
Anonymous
I've had a few 0% and 1% car loans but never put any money down as it didn't save any money. If you have a down payment then just put it in some intetest bearing account and use it to make regular payments instead. Low rates are essentially a payment plan but you can always pay it off early. |
Anonymous
| 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? |
Anonymous
No, the dealership gives you 0% financing then tries to convince you to buy a more expensive car or premium model with a 6-7 year loan because the monthly payments are lower. The dealerships get incentives for getting people to use the manufacturer's financing, that is why they offer these loans. |
Anonymous
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. |
Anonymous
| Sometimes also they offer the 0% rate *or* $500 or $1000 off the price, but not both. So do the math and see where you come out ahead. |
Anonymous
| Dealers get paid for referring buyers for financing. Our car is through capital one, the rate was higher than the manufacturer rate, but they knocked the price down by 1k. We paid off the loan once it was set up, but other than angry calls from the dealer, we came out ahead |
Anonymous
| Is the go with a pre-approved letter the same if I want to lease a car? |