"300hp30mpgrwdfor30k" (300hp30mpgrwdfor30k)
04/28/2015 at 03:05 • Filed to: None
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"300hp30mpgrwdfor30k" (300hp30mpgrwdfor30k)
04/28/2015 at 03:05 • Filed to: None | 0
| 8 |
I have 2 friends looking to get new cars soon, both in their late 20’s. Live in LA, pay rent, have jobs, one’s got a more reliable and higher paying one than the other but neither are going to be buying new cars. One likes cars but wouldn’t read a website about them regularly, the other is more of a novice with a history of cheap, unreliable automobiles that die after like 6 months.
So I went with my friend to the Kia lot and all the salesman wants to talk about before models or color or anything else is financing. Oh my god, the financing! It’s like literally “You should set this up so you lease it through us first and then get on a payment plan with us after.” He literally said that without any prompting. He didn’t even want to talk about the car. Any questions about anything found a way around to financing or us talking to the finance guy.
So is there a website or Jalopnik post or something I can find that gives a layman information on the different types of automotive financing and what the traps are? What the present subprime auto loans crisis entails? My friends are smart guys, but we all need better info on this so no one gets a terrible deal. A basic primer on dealing with dealership folk would also be helpful.
Stephen the Canuck
> 300hp30mpgrwdfor30k
04/28/2015 at 03:14 |
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There should be something by Tom over on auto buying.
Dunnik
> 300hp30mpgrwdfor30k
04/28/2015 at 04:44 |
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Financing a new car is much, much easier than financing a used car. The days of 0% financing are over, but you’ll always, always get the best % when buying new. Around here most dealers are offering anywhere between 1.5% and 4%.
If they insist on financing used they could pay 6-10% or even higher, depending on credit rating.
Always consider the total borrowing costs. Make sure this number is revealed.
Dealer financing is often hard to beat, but they should still shop around various banks etc. for financing. It may be cheaper.
And find another dealership, or another salesman: it’s not a good sign they want to nail you down to financing before you even look at a car. Avoid the “how much can you afford” conversation. They should know the range of what they can afford. Never reveal this range directly, for if you say “I can afford $300-400 a month” don’t be surprised if he pushes you into a $399/mo. payment :P
Kevin Barrett
> 300hp30mpgrwdfor30k
04/28/2015 at 05:19 |
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I’ll make a little outline for you and your friends.
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The guys at the dealer aren’t there to sell cars, or benefit you in any way. They’re there to sell a loan, and the car is just a vehicle for that loan. Anything else they can bundle into that loan (like warranties, GAP coverage, and protective coats) makes it even sweeter for them. It is very important to them to cloud all this and make the terminology very confusing and intimidating, so they’ll try to make you focus on the payments, which are the very least important part of any loan, which brings me to my next point:
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One party at the negotiation table does this all day, every day, and the other side will do it once every 5-10 years—it’s like bringing a child’s drawing of a knife to a gun fight. Bring a gun to the gun fight, and begin your car shopping at your local credit union to find out what kind of lending options you can get. They’ll tell you how much of a loan they’re willing to give you ($), at what interest rate (%), and for what term (# of months). Your monthly payment (the least important part of a loan, remember?) is derived from these other numbers. Only get a fixed interest rate, by the way. Anyway, figure it all out in the credit union where you aren’t getting emotional about a new car that you just test drove (that brand new car with brand new bushings and tires felt so good, right?). Get some options from another lender, and get these guys competing for your business, too.
With these numbers in hand, you’ll be ready to go up against the salesman. The salesman has his own financing options he’d love to tell you about, and you should listen to them. Some of them may turn out to be better than what you found with your own footwork, but that doesn’t mean you wasted your time. If you hadn’t brought your own numbers in, you’d be at their mercy, and they’d have no outside competition. And their lenders
want
to give you those tasty interest rates and the dealer
wants
to sell you the car at $2k below sticker, but only if the loan includes useless insurance programs, but that’s why you should always:
!!! UNKNOWN CONTENT TYPE !!!
You’ve got your financing figured out, and the dealer may not know that yet. You aren’t obliged to tell him, either, so when you’re at the dealer, just focus on the price of the car. Don’t pay sticker price, and don’t let the dealer try to talk to you about monthly payments, just go for the best price for the car . Insert any haggling you feel confident to do—haggling isn’t my forte, and I won’t try to advise you how to do it. If they won’t sell you the car at the price you feel is fair, then you can leave—you weren’t going to be happy with any outcome there, and you’ll be better off driving your beater until the end of the month when Salesman Tryhard is more desperate to put up some numbers.
But maybe they’ll give you a very
good
number, a number which lets them keep the lights on, but which they hope to make better for themselves when they draft up some financing options for you. Let them make as sweet a deal as they can, but always return the conversation to the variables that matter now; the
interest rate
, and the
term
. When they try to talk to you about monthly payments, it’s a distraction to get you thinking about drawing out your loan longer or accepting a higher interest rate in order to get a more comfortable monthly payment. You know better. You came armed with your own financing options, remember?
If they get squirrely and start going to talk to their financing manager or sales manager or whoever, its an intimidation move, and they’re trying to make you feel like they have the power that only you have. You can leave . You can end the negotiations at any time, and Mazda is going to keep on making CX-5s, or whatever you were shopping for, in every configuration and in every color. That one you picked out, the one they offered to bring up from Tacoma because it has AWD and the Moonroof Package and not the Touring Tech Package (because honestly, who needs GPS in the car when they have it on their phone?), there are hundreds, maybe thousands more just like it, and it’s in their best interest to let you believe they found you the rarest and most unicorn of all CX-5s, and that car was yours until you got so damn picky.
It may be that they don’t want to sell the car at the price they named except through their own lenders. That’s fine. If it’s the same loan for the same term and interest rate, then there’s no reason to split hairs, is there? Except that their lenders may “require” that you buy GAP coverage, or an extended warranty, or any of a hundred other worthless services. Don’t listen to these, and be ready to walk away if they won’t drop it. They may even assert that they’ll sell you the coverage and include it in the loan, and that you can then immediately cancel the coverage and be refunded the amount the coverage cost. But that refund won’t come until months later, and the price of that coverage will have accumulated interest the whole time. Don’t stand for these games, and if they won’t let it go, leave.
Kailand09
> 300hp30mpgrwdfor30k
04/28/2015 at 06:26 |
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I am surprised I’m writing this, but depending on their price range still consider new.
I got thousands in incentives for buying new and financing through Ford Credit, then 90 days later getting a loan privately at a much lower rate and paying off the Ford side. This meant low rate + incentives, making the car cheaper than I could have bought it used at the time.
Even when a bit more expensive it may be cheaper in the long run.
On the other hand, used is almost always cheaper and I had a bit of a fluke. Still, check out credit unions and the like for good financing options.
LongbowMkII
> 300hp30mpgrwdfor30k
04/28/2015 at 06:58 |
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Lots of stuff about this by Tom on the auto buying sub-blog.
themanwithsauce - has as many vehicles as job titles
> Dunnik
04/28/2015 at 08:04 |
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Actually 0% financing is very much a thing if you have good credit. Not even perfect, just good credit and a solid down payment. If you can do the ~10% down payment and your credit score starts with a 7 (or even just a high 600s) then you can pretty much qualify for most finance offers. I got 0% on my Ford, a coworker is looking into a renegade and jeep has a 0% thing going on right now and another coworker might snap up a cheap journey since the 0% offer applies and he’s had perfect credit for a while.
yamahog
> 300hp30mpgrwdfor30k
04/28/2015 at 08:12 |
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If they have to finance either way, they may be better off going new.
Also, get an insurance quote and preapproval from local credit union before going to the dealer! Then you know what you’re eligible for, and you can challenge the dealer’s F&I to match it.
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yamahog
> themanwithsauce - has as many vehicles as job titles
04/28/2015 at 08:17 |
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Depends on your history. I’m a young person with an 801 (I didn’t even know they went that high since my parents were... Not so great) and a nearly 35% down payment, yet not a long enough credit history to qualify for any better than 1.9% :(