View Full Version : Financing a car?

Wade Lippman
01-15-2014, 6:25 PM
I have never financed a car, so I don't know much about it.
A dealer says there is a huge incentive only available if I finance; which I don't want to do.
But he tells me I can simply pay it off after 60 days with no cost or penalties other than the little bit of interest on the 60 days.
Is likely to be true?

I don't really trust him. He was willing to take much more off than two other dealers, and then gave me a silly price on my trade in; which explains why he could take so much off in the first place. But on the whole he is still a bit cheaper than the other dealers unless this financing thing will bit me.
(I have offered to just buy the car with no trade in, but he hasn't replied.)

Unfortunately he has the only car in the area that my wife wants, so I would like to work with him; but don't want to end up a fool. Hey, she can wait a month until something else comes around!

David Weaver
01-15-2014, 6:40 PM
Read the finance terms, ask him if he'll give you any disclosure documents for it. If he doesn't, ask him if he'll give you the number for the dealer finance so you can ask them.

In some cases, finance companies will take on folks who say they'll pay off loans just because they know that those same folks often don't.

As far as incentives, I don't know that there are always counter-incentives to go along with finance terms (i.e, i don't know if there's always an alternative discount). Last year, my dad bought a new car and financed it at 0%. He doesn't need to finance anything and hasn't otherwise financed a car in the last 30 years. When I asked him why he did it, he said the dealer said that there were no other incentives, the price was the same for finance or not and convinced him there was no reason to pay cash. When I looked it up later, it was a 0% finance or $1750 discount on the car. Why the dealer wasn't honest, I don't know, but my dad would much rather have had 1750 back.

Point being, you're entitled to read the terms and call and ask and get something in writing. It's not a risk that you have to take the dealer's word on. If he refuses to get you something proving what he says in print, I'd tell him to go suck an egg.

There's no free lunch, of course. If his deal is contingent on making a margin on your trade, he might back off or just not respond about the no trade. Just the same, if you negotiated a deal with him and then sprung a trade at the last second, he might not like that, either. He's working with a number in mind when all is said and done, and how he gets there doesn't really matter. You should be doing the same thing.

Rich Riddle
01-15-2014, 6:48 PM
1. Did he tell you that to simply run your credit he charges you hundreds of dollars for the credit check/financing even if you don't use that financing? It's a scam. Don't fall for it. What type of vehicle are you considering purchasing?

2. If he has a car on his lot your wife likes and you don't want to deal with him, have the car sent to another lot. The other dealers can do that.

3. Best advice is go to a bank/credit union if you need a loan or pay cash. That way you are only negotiating the car you want to purchase. Sell your trade-in. A pain but yields thousands more. Buy the car right.

4. Were you in the military? It's important believe it or not.

Wade Lippman
01-15-2014, 7:10 PM
At this point I haven't signed anything. If he tries to charge me anything for the credit check I will walk.

I will ask for a copy of the financing agreement in advance. (picking up the car on Monday).

In principle I can save $1,000 by selling the trade in myself. I have done that 3 times; twice worked out nicely, but the 3rd was a nightmare. Wound up selling it 3 months latter for much less than I expected; I haven't any idea what went wrong, but no one wanted it at anywhere near the supposed value. I really don't want to go through that 3rd one again.

glenn bradley
01-15-2014, 7:17 PM
Ask about fees for credit check, document prep or filing. They have to make that money somewhere.

Jeff Craven
01-15-2014, 7:27 PM
I've been through that a couple times, where they get kickbacks for a finance deal, and they don't care if you pay it off early. Just check the loan documents, that there is no early payment penalty.

Rich Engelhardt
01-15-2014, 7:42 PM
But he tells me I can simply pay it off after 60 days with no cost or penalties other than the little bit of interest on the 60 days.
Is likely to be true?
I do that all the time.
Just make sure it's written in the loan papers that there is no prepayment penalty.

Art Mann
01-15-2014, 9:16 PM
Dealers often get kickbacks from finance companies when they write a loan agreement. If the written agreement states there is no penalty for early payoff, then there is no risk or problem in doing the deal. I have personally done such a deal myself and paid off the loan company in less than 30 days.

If the dealer starts talking to you about finance check fees or documentation fees, he is trying to rip you off. Those itmes are just a cost of doing business and it makes no more sense to pay a fee for that than it does to pay a fee for someone to clean the dealership's bathrooms. At that point you can either accept the deal anyway if it is favorable enough or you can just walk out the door. I usually just walk out the door. I don't like doing business with people who are trying to trick me.

Wade Lippman
01-15-2014, 11:37 PM
They want me to sign the purchase agreement and fax it to them (they are 80 miles away...) and I guess that is reasonable since I am picking it up on Monday. (my wife will be driving by there, so she will just swap cars)

I haven't seen the finance agreement yet, but the purchase offer says that if it is not satisfactory I can get my deposit back, so I guess it is harmless so far. He says he will send it to me Friday when he gets back to work.

He is $500 less from a dealer 40 miles away and $1,500 less than one 10 miles away; they were both going to get the car from him.

I can't wait to see the finance agreement.

Bryan Lisowski
01-16-2014, 12:31 AM
Why don't you go to the dealer that is 10 miles away and ask them to meet or beat the deal? I have done this and it usually is very successful.

Jim Rimmer
01-16-2014, 1:24 PM
When I bought my Ford P/U I got an additonal $1500 discount if I financed through Ford Credit but I coyuldn't pay it off for 90 days. It was really low rate and even with 3 months interest, I saved a lot. I did it and on day 91, paid it off.

Wade Lippman
01-16-2014, 5:14 PM
Why don't you go to the dealer that is 10 miles away and ask them to meet or beat the deal? I have done this and it usually is very successful.
He was $1,500 too high and I didn't get any sense he was going to move that much. More importantly, he had to get the car from the first dealer, and that wasn't likely to happen.

Wade Lippman
01-18-2014, 8:38 AM
Read the agreement and it says I can pay it off early for the amount owed.
Only catch is that I have to pay $75 for insurance, but I save $540, so I guess it is a good deal.

Of course the interest rate is 1.9%. My credit union charges 3.0%.
I mean geez.... I could put the money in municipal bonds that pay 3.7%.