Don't forget the financing side of negotiations

[The Crusader]

I decided to go with the local dealership and ended up paying about $1400 more than I would have at Gupton. It saved me a $500 fee, 2 days of time away from work, and 700 miles of $5/gallon diesel fuel. I guess I came out OK there. When I showed up to pick up my Jeep, they were ready to bend me over on the interest rate.

I told the sales guy that I arranged for outside financing and he asked me what the rate was. I told him to "just give me your best rate". They came out with a monthly payment of $861 for 60 months after I told them how much I was putting down as a down payment. They wouldn't tell me the interest rate and just wanted to deal with down payment and monthly payments. I pulled out my phone, googled an amortization calculator and punched in the loan amount and my 2.99% interest rate and came out with $790/month. They asked what it would take for me to finance through them. I told them that if they would get down to $780/month I would finance through them. They magically got it down to 2.45% and $779. I saved $82/month ($4920) by being prepared with alternative financing. I'm sure there are things I could have done better and I am open to suggestions for next time, but I wanted to remind everybody that negotiating the sales price is only half the equation.

They also tried to tell me that they would have to wait for business hours to get a cashiers check from the credit union before I could take the Jeep. They were trying to get me to take their rate in haste. I told them that I waited this long to order the Jeep that I would gladly wait a few days to get the financing right. They knew I was on to them. I took my 20 year old son with me to show him the kind of stuff they would try to pull and they didn't disappoint me.

What could I have done better?

What kind of shenanigans have dealers tried to pull on you?

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[JET_83]

I decided to go with the local dealership and ended up paying about $1400 more than I would have at Gupton. It saved me a $500 fee, 2 days of time away from work, and 700 miles of $5/gallon diesel fuel. I guess I came out OK there. When I showed up to pick up my Jeep, they were ready to bend me over on the interest rate.

I told the sales guy that I arranged for outside financing and he asked me what the rate was. I told him to "just give me your best rate". They came out with a monthly payment of $861 for 60 months after I told them how much I was putting down as a down payment. They wouldn't tell me the interest rate and just wanted to deal with down payment and monthly payments. I pulled out my phone, googled an amortization calculator and punched in the loan amount and my 2.99% interest rate and came out with $790/month. They asked what it would take for me to finance through them. I told them that if they would get down to $780/month I would finance through them. They magically got it down to 2.45% and $779. I saved $82/month ($4920) by being prepared with alternative financing. I'm sure there are things I could have done better and I am open to suggestions for next time, but I wanted to remind everybody that negotiating the sales price is only half the equation.

They also tried to tell me that they would have to wait for business hours to get a cashiers check from the credit union before I could take the Jeep. They were trying to get me to take their rate in haste. I told them that I waited this long to order the Jeep that I would gladly wait a few days to get the financing right. They knew I was on to them. I took my 20 year old son with me to show him the kind of stuff they would try to pull and they didn't disappoint me.

What could I have done better?

What kind of shenanigans have dealers tried to pull on you?

must have a 750 to 800+ credit score like myself then to get that rate, congrats

 

[The Crusader]

Actually, no. My ex ruined my credit and had me living paycheck to paycheck until she moved out. Since the divorce in November, my credit score went from 650 to 700. My brand new debt/income ratio is less than 30% after buying the Jeep and I put down a 13k down payment. It should be 750 by next year. Texas "at fault " divorce law is a wonderful thing. I haven't touched my divorce settlement, since that will build most of my new home.

My point was that the dealership would have bent me over if I hadn't prepared by arranging alternative financing.

 

[DawnViola]

Dealers will buy points on loans to make extra money. Always go in with a pre approval.

 

[fun2drum]

I bought an Infiniti Q50 several years ago and the dealer lied about my credit score in order to scam me for a ridiculously high rate. The guy said "unfortunately your credit score came back a little lower than we were hoping for, so 6.5% is the very best rate we can get for you." I told him that was incorrect because I knew my rating was higher, but he said "Oh you can't rely on those online credit checkers. We use the one the banks use." I took the Infiniti because it was a good deal, I had invested all that time, and I wanted it - but I went to my bank the next day where I got it refinanced for under 3%. It pays to know your score.

 

[Panthers65]

Check your local CU, I got 1.74% last november from my local CU

 

[Pedal Metal]

Well said. Look, it’s a business from the front to the back office and things are just getting heated up at the financing stage. Still, I really do think it’s short sighted to blame the dealership or sales representative for being good at their craft. The majority of the blame falls to the feet of the many who seek to sign a single purchase deal which exceeds the average U.S. works annual income (approximately $50k) with the stroke of a pen and little homework.

Consider that it’s not personal just business. So, go in prepared to be your own advocate from cradle to grave. That doesn’t mean that you can’t be personably, why wouldn’t you want to be and nobody wants to do business with a jerk. Just don’t be close eyed to looking at what you’re doing and who’s responsible for your side of your deal.

I posted the following comment in a thread titled ”Loans”:

”Noting your line of “Loans”, I couldn’t help but to get realed in. Yes, rates will go up, but when that happens, we may also see some inducements such as rebates to finance through Chrysler. So, my advice, is that which i was once given and meet your banker before you need them. Just realize that you’ll be in a better bargaining position with the dealer‘s finance dept if you already know your options in the market and who will match or beat what. I’d recommend talking with 3 banks or credit unions in your area in person.

Also, I realize you didn’t ask about financing term, but you may want to consider that most auto loans *used* to be 36 months. So, just some food for thought here, but absent our bizarre used car appreciate market (signs of a fracturing market) if our economy falls off a cliff, you’d be better to limit yourself to that type of car that you can finance in the shortest term possible.”

 

[jeepers29]

I always go pre approved from our CU. Ladt Ocy, when we picked up the Glad, I endeed up with 0% through the dealer. I love 0% loans.

 

[ShadowsPapa]

Actually, no. My ex ruined my credit and had me living paycheck to paycheck until she moved out. Since the divorce in November, my credit score went from 650 to 700. My brand new debt/income ratio is less than 30% after buying the Jeep and I put down a 13k down payment. It should be 750 by next year. Texas "at fault " divorce law is a wonderful thing. I haven't touched my divorce settlement, since that will build most of my new home.

My point was that the dealership would have bent me over if I hadn't prepared by arranging alternative financing.

Go in armed with information. Do your homework - yeah, that's the bottom line.
Of course you can also refinance, too............ read the fine print. Some miss that part - some contracts of the past put in penalties for paying off early, etc. - watch for that BS as well.
According to our bank, my wife has the highest credit rating of any of their customers, I'm 1 point behind her (likely due to farm life? or the fact I've co-signed for others and she hasn't?)
We have banks, credit unions and others begging us to be customers and get swamped with credit card apps in the mail so when I go into talk to people about money - they don't ever have us over a barrel.

When we did finance vehicles, it was so easy because our credit union was on the dealership list of lenders. They'd show us the screen, ask which we wanted to go with, and we chose our own credit union.
I recall when I was shopping for trucks years ago, I went to our CU and told them I was going to go buy a truck. They asked how much I wanted and I told them. As they were getting the check ready for me, they actually tried to talk me into buying a bigger, better, more expensive truck. I had to laugh - the banker was almost like a used car salesmen.

if our economy falls off a cliff, you’d be better to limit yourself to that type of car that you can finance in the shortest term possible.”

We used to take loans out for as long and far as possible. If we could get 60 or 72, that's what we'd get. But we'd pay them off ASAP. It's really handy if you lose a job and have to fall back on the lower payments associated with longer terms. If you get a really short term loan the monthly payments will be higher and if you lose your job, you are stuck. Get the longer term but make the shorter term monthly payments (pay more each month) that way if there's an emergency - your roof leaks, you lose a job, the refrigerator breaks, you can go back to the lower payment for a month or two then when back on your feet, go back to paying more each month.
It's saved us a couple of times. Go for 72, pay it off in 24. You have wiggle room. Since these are simple interest, it's easy.

 

[Pedal Metal]

We used to take loans out for as long and far as possible. If we could get 60 or 72, that's what we'd get. But we'd pay them off ASAP. It's really handy if you lose a job and have to fall back on the lower payments associated with longer terms. If you get a really short term loan the monthly payments will be higher and if you lose your job, you are stuck. Get the longer term but make the shorter term monthly payments (pay more each month) that way if there's an emergency - your roof leaks, you lose a job, the refrigerator breaks, you can go back to the lower payment for a month or two then when back on your feet, go back to paying more each month.
It's saved us a couple of times. Go for 72, pay it off in 24. You have wiggle room. Since these are simple interest, it's easy.

I’d actually largely agree with your concept of taking a longer term with a smaller principle for those times of future hardship as long as you have the discipline of paying down your principal. That’s just sound cash flow and risk management. However, soooooo many don’t follow sound cash flow / risk management and go into debt up to their eyeballs and then their back is against the wall when the sky falls for them. Far to many let the focus of their deal be their monthly payment based on their estimate of what their current monthly excess is instead of truly negotiating for the true “OUT THE DOOR” purchase price. Not to mention even looking at the amortization schedule as mentioned by the original poster and trying to understand how they can map out future interest expense savings by paying their principal down.

 

[MikeyK]

I went long term (84) at 3.8, and yes I could have done better at my CU at 3.49, but I wanted the smaller payment (less than $300 per month).

I got well below MSRP, and a fantastic trade.

I just didn’t like the strong arm extended warranty tactics, especially since I already had GEICO mechanical breakdown warranty.

 

[ShadowsPapa]

I’d actually largely agree with your concept of taking a longer term with a smaller principle for those times of future hardship as long as you have the discipline of paying down your principal. That’s just sound cash flow and risk management. However, soooooo many don’t follow sound cash flow / risk management and go into debt up to their eyeballs and then their back is against the wall when the sky falls for them. Far to many let the focus of their deal be their monthly payment based on their estimate of what their current monthly excess is instead of truly negotiating for the true “OUT THE DOOR” purchase price. Not to mention even looking at the amortization schedule as mentioned by the original poster and trying to understand how they can map out future interest expense savings by paying their principal down.

And if they take the longest term, and don't pay ahead, they may end up "up-side-down" owing more than the thing is worth. Not as big a problem in the past 12-24 months, but generally speaking, it got a lot of people into deep doo-doo. We've never been up-side-down with a vehicle and the dealer guys (and gals) would sometimes seem confused that we owned less than our trade was worth! Like - don't you people ever see that any more? And today, we own them outright. Love it when they ask "how much do you still owe" and I say "not a penny".

 

[Schnee]

My CU has new car 36 month loans @ 2.49%. The dealer offered to match that rate, but I told them they needed to /BEAT/ it our it wouldn't be worth my hassle, since my CU is super easy to work with and payments are automatically xfered.

I pointed to the 0% Jeep is currently offering on their SUV Wrangler, and said "something like that," or at least 50 basis points (0.50%) better would be acceptable. The dealer quickly and politely bowed out.

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