Financing a new Gladiator

[Panthers65]

This will be my first time financing a new vehicle, want to make sure I'm doing it right.

I've got excellent credit, want to make sure I'm getting the best rate I can.

Will I get a better or worse rate putting down more money? IE if I put down $20K in cash and finance the rest, will I get a better rate than if I only put down $5K?

I was offered an extra 1% if I finance through Jeep, but I also have my local credit union that will offer as low as 1.99% on anything under 60 months. If Jeep's rates are 5-6%, it would still be better for me to loose the 1% and just finance through my CU. Should I get preapproved through my CU first and then see what rate Jeep can offer, or should I try Jeep first, and then go to my CU if it's too high. I have heard dealerships running your credit 2-3 times to get the hard inquiries and drop your score to raise your credit. I don't think my dealership would do that, but I know every check has the opportunity to drop your score some.

Those of you that have tried both, I would expect Jeep to be a bit higher than a credit union, but do you have any experience in how much higher they will be? If 5% is the lowest I would get from Jeep, it's really not even worth messing with their financing, and the CU will tie the loan straight to my checking account and I can see everything in 1 window.

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[bleda2002]

Get pre-approved but let the dealer shop around for rates and tell them what rate you want. They got me under 1.9 for 72 months with only my 8k trade as down. I normally only do 60 months but at that rate it makes no sense not to stretch it. Dealers don't have to use Chrysler Capital, mine is through bank of America.

As for the amount down, depends on what bank they have you going through. From a financial perspective, if you are getting a rate of around 3 or less you are better off putting the least amount down, paying off any higher interest debt with that money, or if no debt drop it in some kind of investment that will typically return atleast the 3-6 annually.

 

[dbmcubs21]

This will be my first time financing a new vehicle, want to make sure I'm doing it right.

I've got excellent credit, want to make sure I'm getting the best rate I can.

Will I get a better or worse rate putting down more money? IE if I put down $20K in cash and finance the rest, will I get a better rate than if I only put down $5K?

I was offered an extra 1% if I finance through Jeep, but I also have my local credit union that will offer as low as 1.99% on anything under 60 months. If Jeep's rates are 5-6%, it would still be better for me to loose the 1% and just finance through my CU. Should I get preapproved through my CU first and then see what rate Jeep can offer, or should I try Jeep first, and then go to my CU if it's too high. I have heard dealerships running your credit 2-3 times to get the hard inquiries and drop your score to raise your credit. I don't think my dealership would do that, but I know every check has the opportunity to drop your score some.

Those of you that have tried both, I would expect Jeep to be a bit higher than a credit union, but do you have any experience in how much higher they will be? If 5% is the lowest I would get from Jeep, it's really not even worth messing with their financing, and the CU will tie the loan straight to my checking account and I can see everything in 1 window.

Where are you seeing 5%? If you have good credit your APR should be 2-3% at most in current market.

 

[Sazabi19]

Once the credit score people see you're looking for a new line of credit you get dinged BUT then you have several days to look around and get more inquiries without being penalized again. It's not every query, just those made within that timeframe are all lumped together to not hit you with each. I don't know the exact timeframe.

I don't know if money down will hurt you getting a better interest rate, that's usually done through your credit score. People usually put more down to have a lower payment overall. People with worse credit are usually required to put down more money than someone with good credit and get higher interest rates.

 

[Panthers65]

Get pre-approved but let the dealer shop around for rates and tell them what rate you want. They got me under 1.9 for 72 months with only my 8k trade as down. I normally only do 60 months but at that rate it makes no sense not to stretch it. Dealers don't have to use Chrysler Capital, mine is through bank of America.

As for the amount down, depends on what bank they have you going through. From a financial perspective, if you are getting a rate of around 3 or less you are better off putting the least amount down, paying off any higher interest debt with that money, or if no debt drop it in some kind of investment that will typically return atleast the 3-6 annually.

Appreciate it, didn't realize the dealership would go that low, but I think to qualify for that last 1% it has to be financed through their in-house capital.

I know financially with that low rate it makes sense to finance a majority of it, but honestly I don't mind losing a bit of money for the piece of mind to not have debt. I hate the idea of debt and would pay a bit more to be out from under it. At the end of the day even at $1000 difference, I'll pay an extra $1000 to not have a car payment for the next 3 years.

 

[Panthers65]

Once the credit score people see you're looking for a new line of credit you get dinged BUT then you have several days to look around and get more inquiries without being penalized again. It's not every query, just those made within that timeframe are all lumped together to not hit you with each. I don't know the exact timeframe.

I don't know if money down will hurt you getting a better interest rate, that's usually done through your credit score. People usually put more down to have a lower payment overall. People with worse credit are usually required to put down more money than someone with good credit and get higher interest rates.

Thanks! so the whole idea that a dealership could run a check 2-3 times in order to get a higher interest rate isn't accurate?

My jeep is scheduled to be delivered anytime between the 16th and 28th. So I don't get multiple dings against my score, I should probably wait until my Jeep is actually on the lot before having my credit run anywhere, right?

 

[Klutch]

- Credit unions aren't always the most competitive when it comes to interest rates. It varies a lot between different credit unions. (I've never seen the best rates on Mortgages at credit unions.)

- Dealers make a kickback when they sell a loan. So, they have an incentive to find you a good interest rate. Let them do so. Dealers will also often have a "certificate" for a very low interest loan. They get a fixed amount of those from banks. They usually reserve them for special cases. You can be a special case by refusing to buy an extended warranty. Likely, the dealer will offer you one of those very low interest loans if you buy an extended warranty. Typically, the lower rate pays for the warranty. Also, when the dealer initially quotes the cost of the warranty, come back with an offer of half that price. They will typically agree. There's a huge markup on those warranties.

- Be very careful about add-ons. Dealers make most of their profit here. They are way overpriced. If you have adaptive cruise control, a windshield replacement plan might be a good idea. (It's expensive to calibrate the cruise control with a new windshield.) I would not recommend paint protection, fabric protection, rustproofing, credit life or gap insurance.

- Dealers like to pretend they're you're buddies. They're not. Sure, always be polite and friendly. But it's not like you're going to meet up for beers every week. Buying a new vehicle is a business transaction. Treat it as such.

- Make sure you get the truck YOU want. Don't buy something you don't want because the dealer says they don't have it. Ask them to check other dealers. They may not like it, but dealers swap vehicles all the time. As long as you're a serious buyer, they will do so. Here in Pandemicland, finding what you want could be a challenge. But make sure the dealer looks!

 

[Tokolosh]

Thanks! so the whole idea that a dealership could run a check 2-3 times in order to get a higher interest rate isn't accurate?

My jeep is scheduled to be delivered anytime between the 16th and 28th. So I don't get multiple dings against my score, I should probably wait until my Jeep is actually on the lot before having my credit run anywhere, right?

Multiple checks aren't going to change your score enough to impact the rate, especially if all of the pulls are within a 10-14 day period. Plus, if your score is excellent even a multi pull hit stretched out beyond the 10-14 day period will not drop you enough to impact rate. Rate impact score changes come from things like missed payments, high debt balance to credit available ratio, or collection type accounts.

Also, you can finance at the dealer to get the 1% and refinance with the credit union a month or two later to get a lower rate if they offer one. You don't have to keep the loan in one place and can maximize benefits offered by moving it within a couple of months.

 

[Sazabi19]

Appreciate it, didn't realize the dealership would go that low, but I think to qualify for that last 1% it has to be financed through their in-house capital.

I know financially with that low rate it makes sense to finance a majority of it, but honestly I don't mind losing a bit of money for the piece of mind to not have debt. I hate the idea of debt and would pay a bit more to be out from under it. At the end of the day even at $1000 difference, I'll pay an extra $1000 to not have a car payment for the next 3 years.

You can get a longer term loan with lower payments and lower interest usually. Just realize those are the minimum payments and you can always pay more to pay it off early. Just make sure they put the extra money towards the principle payment, not interest as some will try to do.

I've also seen best rates at credit unions and small non-nation banks. These entities often want your business and can't compete with the big banks for name recognition and will sometimes offer lower rates to get you in the door. I financed my Kia through a no-name here and got almost a 1% lower rate from them than anyone else. I also paid my car off about 18 months early by adding more money to each monthly payment.

 

[Sazabi19]

Thanks! so the whole idea that a dealership could run a check 2-3 times in order to get a higher interest rate isn't accurate?

My jeep is scheduled to be delivered anytime between the 16th and 28th. So I don't get multiple dings against my score, I should probably wait until my Jeep is actually on the lot before having my credit run anywhere, right?

If it's that far off I'd personally wait. Those credit pulls are only good for so long before they have to pull them again. Even if it won't bring you down tiers or "too much", why ding your credit at all if you don't have to? You've worked hard to build it, don't just let people chip away at it because you've got some to spare so to speak.

 

[AmosMoses01]

Good info shared thus far - only items I can add are looking potentially at other lenders. For example, State Farm has had a bank (though is an extension of US Bank I believe) that has had very competitive rates if you use them as your insuror. I'm blessed to be at an age and financial point where I don't have to finance, though have financed to get "best price" for two different vehicles because the dealer would only honor best price if the vehicle was financed, due to kickbacks with lenders already mentioned earlier. If you find yourself in that situation, the only extra advice I'd have is to ensure that there aren't any early payoff fees or restrictions. For the first time I encountered this, the lender (Chase) required three months of payments before allowing the loan to be paid off without a (higher than three months of interest) fee. The second time, there was no restriction at all, so my first payment was the full payoff amount.

Good luck, and enjoy your new ride!

 

[Challenger85]

You will only get that 1K rebate if you use Chrysler Capital, I know because I just did it. They do not have the lowest rates, I was offered 3.41% but I’m around a 760/770. You may see better if your higher than that. I was offered 2.9% from a local credit union but I took the 3.4% and the additional rebate, plus Gupton’s 1% extra for using their financing. I never ran any other dealer offers because I didn’t want more credit dings as the interest would have had to be 2.5% or better to make up that 1K and I wasn’t convinced the dealer could hit that.

In your case, ask them for Chrysler Capital and see if it’s competitive and run the deals. Any dealer that is honest will gladly give you the two deals at each percentage with a total loan cost. If they’re sub 3% you might be close enough that the 1K ends up being a better deal even though your paying more in interest since you’re financing less money up front. Upside, you can pay down that interest charge, can’t create free money. Good luck. Also I might be wrong but I’d be pretty shocked if anyone beats a 1.9% rate from a dealer. Outside of promo deals, that’s really low.

 

[Panthers65]

Thanks for all the good info everyone. I'll wait until I hear from my dealership on a definitive date before getting approved. The jeep is custom ordered so I talked to my CU 2 months ago when I ordered it. Their pre-approval is good for 30 days so I knew it had to be some time within a month of taking delivery. The only incentive I had to finance through Jeep is the extra 1% below invoice, about $420 in my case. I ordered a Sport S so the current $1000 rebate doesn't apply to me.

As far as benefits from my CU, The last rate I got there was the lowest rate they advertised, (7 years ago) and my credit score has only gone up since then, so I should be around 2% there. I'm an AT&T employee and they started as the CU just for AT&T employees, but have since opened up to everyone. Opened my account 20 years ago and I do really like everything being in one place.

Honestly, even with the extra 1%, if the dealership just matched my CU Rate, the convenience really has be considering just going with my CU. I know there is no early payoff, the loan appears in my online portal just like my accounts and I can transfer money to the loan just like my normal accounts.

 

[SelfmodJT]

1.99% is a great rate. My score was 824 when I purchased and the best rate I could get was 3% smh.

 

[jeepers29]

I have been qualified for 1.9 for 66 months from our CU. In our area, one of the incintives is 0% for 36 months. will probably go this route as I hate paying interest.

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