Can we talk financing now

[jeepdriva]

Sorry if this has already been started but can we talk financing now. With all of the chatter around best deal, we know the dealer also makes it when we use them for financing. We also may get to deal better after the fact if we choose them for financing. What would be the best way to negotiate this? Should we be going and getting our own rate from our banks to walk in with so we have a starting point?

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[Tortooga Custom Works]

In short - yes you should be doing research long before you go to the dealer.
For example, what is your credit score - do you know? What rates would you qualify for? This will involve some of your own research. Remember that when you actually apply for credit, that process will "run your credit score" - which could deduct some points from your current score. So use a free tool, like freecreditreport, creditkarma, or the ones that some credit card companies provide. Experian's product, I think it is now called CreditWorks, is very good, not free, but worth the money in my opinion.

Once you know your credit score, you'll know where you fall, and then start looking at the various banks in your area. Look first at who you bank with and what they offer in terms of interest rates. Check some of your local Credit Unions. Again, this is all research, don't actually apply for credit yet. Make sure you look through the fine print - some rates are only good for a certain term. Other rates require a specific deposit amount, or auto pay to be setup.

In my experience, dealers use two or three different types of financing institutions (maybe someone else can elaborate more on this part):
1) the primary one, usually the one backed by the manufacturer, in this case, Chrysler Capital. You can find their interest rates online. Typically, if your credit is below what they call "Good" - you probably won't qualify for their rates.
2) secondary institutions meant to assist those whose credit is below good or lower
3) tertiary institutions meant to assist those whose credit is poor

If you are working with a good dealer, you might be able to get what banks they use, and then you can research what their current interest rates are.

I've seen cases where people with excellent credit have been able to negotiate rates down. I've seen cases where people with poor credit have been able to add more money down and negotiate rates down. I've also seen cases where the dealer can get one of their banks to match a lower, published, interest rate from another bank that they may not deal with.

So, yes, take time. Research, research, research. Don't apply for credit until the last possible moment. Also, if you are still negotiating the price of the vehicle, finish that negotiation before you get to financing. Don't negotiate your monthly cost at all. Don't even have that conversation. I

f you do all research ahead of time, you'll know what you want to pay for the vehicle (be reasonable, remember to include tax), what term you are comfortable with on the loan, how much you actually have as a down payment, and what interest rate is your absolute max.

If you do all this before, you might determine that it is better to walk into the dealership with a voucher/check from a bank you chose yourself - OR you might determine that the dealer's banks are better and you'll finance with one of them.

 

[TennesseePA]

I wouldn’t expect a special rate from Chrysler on the Gladiator. The post above is very accurate and well stated and I cannot improve in it but I believe that Jeep is going to cash in as much as possible on this truck while it is hot. Plus if a dealership sets up your financing they get a kickback or “backend” money. If you are approved for a 5.99 % rate but they sell you a 7.99% they earn more money from the lender. If you arrange your own financing you can usually get a better rate than the dealership can provide.

 

[Rex3rd]

With taxes do you add however much the tax is is your area? Sorry for the stupid question, I've never been smart with buying a vehicle... always bought used and let the dealership Handle financing witch probably isn't good... trying to be smart this go around being it's a new vehicle. I also get my fico score free each month through my discover credit card

 

[TennesseePA]

At least in TN most county clerks have a vehicle tax calculator. Not sure where you are but it couldn’t hurt to try. Plus your dealer should be able to give your out the door price a few days before delivery.

 

[SleepyJeep]

I agree with @ralphjjr - do your research and get an approval from your local Credit Union - that is what I did, altho I plan to put 30% down. Then once you have a loan approved you can negotiate the rates on the loan or the loan itself with other finance companies.... Gives you a lot more leverage... Goodluck!

 

[Tortooga Custom Works]

With taxes do you add however much the tax is is your area? Sorry for the stupid question, I've never been smart with buying a vehicle... always bought used and let the dealership Handle financing witch probably isn't good... trying to be smart this go around being it's a new vehicle. I also get my fico score free each month through my discover credit card

Sales tax on vehicles can be different than sales tax on other items, and of course it varies state to state.
I also just recently learned that sales tax on a vehicle can get applied differently state to state. For example, in New Jersey if you have a trade in, the value of the trade in is NOT factored into the tax. However, a down payment is subtracted after the tax is added.
This does not mean that trading in is necessarily better than a private sale, again, you gotta do the math ahead of time.

I suggest googling “sales tax on motor vehicles in [state name]”
Then find the .gov page - your states’ department of taxation. That should at least get you the right rate.

 

[Moonridge]

A huge thing my customers never really think about before coming to a dealership is term. Most financial terms are averaging around 72 months right now. We break it down into 60, 72, 75, and 84 months. With the Gladiator being a truck, (and being pretty costly) I bet that a lot of people will opt in for a higher term. My recommendation is if you can get by doing 75 months instead of going up to 84, do it. Your 75 month interest rate usually matches your 72 month interest rate and that three months can truly make a difference in payment. If you have a good relationship with your local dealership, they usually can find the best rates for you without you going to every bank around town. As a dealer we have access to interest rates that consumers can't get unless they apply through us, because we do so much business with these banks. Banks to consider, Credit Unions (most have fantastic rates, but some have raised rates considerably), Capitol One (buying really strong right now for good credit), and USAA if you are military. Don't expect a huge amount of money off if you bring your own financing to the table from a dealership, a lot of the profit comes from financing through a dealer. That profit can be used to buy down rates, and discount the vehicle, which with Gladiator being so new, it's probably going to be your only bargaining chip with a dealer. I also saw someone say that Chrysler Capitol was for good credit scores. That isn't true, Chrysler Capitol is a sister company to Santander and it is a bank that specializes in getting bad credit situations bought. If you have excellent credit, you will end up paying a higher rate with Chrysler Capitol, and you probably won't get an extra rebate like Chrysler Capitol does with most vehicles.(Wranglers don't get one, so it's unlikely the Gladiator will get one.) I can also break down leasing if anyone wants me too, it's how I plan to purchase my Gladiator.

 

[Dietruck]

A huge thing my customers never really think about before coming to a dealership is term. Most financial terms are averaging around 72 months right now. We break it down into 60, 72, 75, and 84 months. With the Gladiator being a truck, (and being pretty costly) I bet that a lot of people will opt in for a higher term. My recommendation is if you can get by doing 75 months instead of going up to 84, do it. Your 75 month interest rate usually matches your 72 month interest rate and that three months can truly make a difference in payment. If you have a good relationship with your local dealership, they usually can find the best rates for you without you going to every bank around town. As a dealer we have access to interest rates that consumers can't get unless they apply through us, because we do so much business with these banks. Banks to consider, Credit Unions (most have fantastic rates, but some have raised rates considerably), Capitol One (buying really strong right now for good credit), and USAA if you are military. Don't expect a huge amount of money off if you bring your own financing to the table from a dealership, a lot of the profit comes from financing through a dealer. That profit can be used to buy down rates, and discount the vehicle, which with Gladiator being so new, it's probably going to be your only bargaining chip with a dealer. I also saw someone say that Chrysler Capitol was for good credit scores. That isn't true, Chrysler Capitol is a sister company to Santander and it is a bank that specializes in getting bad credit situations bought. If you have excellent credit, you will end up paying a higher rate with Chrysler Capitol, and you probably won't get an extra rebate like Chrysler Capitol does with most vehicles.(Wranglers don't get one, so it's unlikely the Gladiator will get one.) I can also break down leasing if anyone wants me too, it's how I plan to purchase my Gladiator.

Please do breakdown leasing as well. That is the way I am also going.

 

[MPETE]

Also VERY interested in leasing basics. I seem to be looking at new or new-to-me trucks on average, every 3-4 years. With that said I feel like leasing could be a very beneficial option for, IF the payment is a saving over a loan.

 

[furrymurray]

I can also break down leasing if anyone wants me too, it's how I plan to purchase my Gladiator

Please do...

 

[GoneTopless]

If your credit is good (and it should be or your shouldn’t buy this truck and fix your credit first) then it’s simple

Go to a State or National Credit Union

They will match dealer rates - if your credit is good (750-850)

 

[Moonridge]

How leasing works with Jeep dealerships is there are three leasing companies that we can use. Chrysler Capitol, US Bank, and Ally. Right now the main lease bank is most likely going to be Chrysler Capitol, because they have crazy high residuals. Leases are based off 3 factors: term, residual, and money factor.

Terms are 24, 36, 39, and 48 months. Your term depends on if going a longer term lowers payments, or if your vehicle you are purchasing has a "sweet spot." JL Wranglers have a great 39 month lease and a good 48 month lease.

• Next factor is residual, which is based on the value the bank thinks the vehicle will be worth at the end of the term. Now I don't have the Chrysler Capitol rate sheets yet, but I assume at least above .70. Sports having your highest residual, Overland 2nd highest, and Rubicon the lowest. (I heard rumors of .80 which is crazy.) Take your MSRP (residuals aren't based on discounted prices or rebates) multiply by your residual and you get your residual value. Your residual value is the buyout price at the end of the lease, and that value stays the same from the beginning. Higher residual, better resale value, better payment. Lower residual, standard resale, worse payment, less you owe at the end of the lease. How do these cars have $200 leases you may ask? Well that is our final factor...
• Money Factor, which is really a fancy term for interest rate. Just take your money factor .00175 for example. Multiply by 2400 and you get your interest rate 4.2%. Money factor is based on vehicle and credit. To make things simple, like JL Wranglers, Gladiators are not going to have an incentive based rate. So expect around that example I gave earlier.

The reason why I am choosing to lease, and why I recommend them is basically a lower start cost of ownership. GAP protection is included in a lease. You also get a very low monthly payment compared to a purchase payment. Potentially up to $300-$400 in savings per month. The things to watch out for is your driving miles 10k, 12k, or 15k and making sure you don't have any major damage on the vehicle in case you turn it in. (Chrysler is pretty accepting when it comes to damage repair, anything smaller than a softball is ignored.) Even if you are going to mileage out your lease, you can still get a great starting lease payment then buyout your lease at the end with no penalty from the bank. You can also sell and trade your lease if you want to make some money, if your in a good equity position.

Couple protips:

Don't try to roll negative equity in a lease, your negative will not go into the residual. It is one of the quickest ways to pay off negative equity if you can make the payments. Same thing with aftermarket parts it doesn't go into the residual, so you end up getting a much higher payment for something like a lifted Jeep from a dealership.

Always get a pre term inspection scheduled by Chrysler at your house or work. For some reason the reps will tell you that you don't need it, just take it to a dealership. You can get blindsided by the cost a of small repair that you could of taken care of for half the price Chrysler Capitol charges.

Sorry about the blog post, talking about leasing makes me a little long winded.

 

[Blown7]

How leasing works with Jeep dealerships is there are three leasing companies that we can use. Chrysler Capitol, US Bank, and Ally. Right now the main lease bank is most likely going to be Chrysler Capitol, because they have crazy high residuals. Leases are based off 3 factors: term, residual, and money factor.

Terms are 24, 36, 39, and 48 months. Your term depends on if going a longer term lowers payments, or if your vehicle you are purchasing has a "sweet spot." JL Wranglers have a great 39 month lease and a good 48 month lease.

• Next factor is residual, which is based on the value the bank thinks the vehicle will be worth at the end of the term. Now I don't have the Chrysler Capitol rate sheets yet, but I assume at least above .70. Sports having your highest residual, Overland 2nd highest, and Rubicon the lowest. (I heard rumors of .80 which is crazy.) Take your MSRP (residuals aren't based on discounted prices or rebates) multiply by your residual and you get your residual value. Your residual value is the buyout price at the end of the lease, and that value stays the same from the beginning. Higher residual, better resale value, better payment. Lower residual, standard resale, worse payment, less you owe at the end of the lease. How do these cars have $200 leases you may ask? Well that is our final factor...
• Money Factor, which is really a fancy term for interest rate. Just take your money factor .00175 for example. Multiply by 2400 and you get your interest rate 4.2%. Money factor is based on vehicle and credit. To make things simple, like JL Wranglers, Gladiators are not going to have an incentive based rate. So expect around that example I gave earlier.

The reason why I am choosing to lease, and why I recommend them is basically a lower start cost of ownership. GAP protection is included in a lease. You also get a very low monthly payment compared to a purchase payment. Potentially up to $300-$400 in savings per month. The things to watch out for is your driving miles 10k, 12k, or 15k and making sure you don't have any major damage on the vehicle in case you turn it in. (Chrysler is pretty accepting when it comes to damage repair, anything smaller than a softball is ignored.) Even if you are going to mileage out your lease, you can still get a great starting lease payment then buyout your lease at the end with no penalty from the bank. You can also sell and trade your lease if you want to make some money, if your in a good equity position.

Couple protips:

Don't try to roll negative equity in a lease, your negative will not go into the residual. It is one of the quickest ways to pay off negative equity if you can make the payments. Same thing with aftermarket parts it doesn't go into the residual, so you end up getting a much higher payment for something like a lifted Jeep from a dealership.

Always get a pre term inspection scheduled by Chrysler at your house or work. For some reason the reps will tell you that you don't need it, just take it to a dealership. You can get blindsided by the cost a of small repair that you could of taken care of for half the price Chrysler Capitol charges.

Sorry about the blog post, talking about leasing makes me a little long winded.

But at the end of the day you own nothing no equity ...the argument can be made its easy to get rid of the vehicle after..but you have to have faith something big doesn't happen in all those months.

Me I always buy,,, I own it better or for worse.

Its great if you have a business to take the expense of leasing but leasing is a money pit that just gets deeper...

 

[Tortooga Custom Works]

thanks @Moonridge - awesome explanation.

might be good to cross post here: https://www.jeepgladiatorforum.com/forum/threads/leasing-a-jeep.15530/

@Blown7 leasing and financing both have their risks, their pros and their cons. Just because it works for me, doesn't mean it will work for you.
I've seen a lot of purchase deals that, because of the interest rate and term, were actually much more expensive than a comparable lease and end-term buyout.

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