Financing rates

Hey guys, just a quick question. Im looking at getting a brand new or newer car. Now obviously buying new gives you the worry free brand new car that has not beens abused, however, for the same $, you could get a 1-2 year old sports car with low mileage. However, I have no experience with financing of used cars, and I have gotten a mantra from my parents and I dont really like the idea of paying someone to grow fat off my high interest. Now for example my dad got 0.9% on a new Si, thats not bad at all. In some cases you can even get 0%. A friend of mine got 3.9% on a VW Jetta GLI. Couple years used, good condition, but a bit on the higher end for % wise I would think. Is it possible to get lower rates? I have very good credit and an even stronger co-signer. For the price of a brand new Si, I could get an MS3, top of the line Mx5, Rx-8.... (all with 12,000km or less). Insight and advice would be appreciated, as Im heading into unfamiliar territory and I want to be armed against the kniving dealer. Thanks so much.

Location: Canada, but cant be too much different

I'm paying ~6% on my '02 WRX.

Also, there is no such thing as 0%, or .95, or 3.9% interest. They give you the good rate and make it up somewhere else. TINSTAAFL

The problem with rates on a used car is the risk. Lenders offer better rates on new cars becuase they have warranties.

Now, that being said, if you want a good deal, get approved for the loan BEFORE you go shopping. Then you know what you have to spend. Furthermore, it comes to the dealer the same as cash. The saleman likes it becuase he doesn;t have to worry about the finiance guy topedoing his deal.

What you want to do is negotiate the price of the car seperate from the finiance deal. Like Dave said, they will throw numbers at you and confuse the two. A big trend is to try and get you to buy a monthly payment, rather than the car. The will ask you what you can afford a month before even looking at cars, or talking price. Don't answer that question.

Get the loan at a rate you are happy with, then go to the dealer and find a car within that loan range.

That being said, finiance guys work on comission just the same, and even of you are approved, on occasion they can get you a better deal, but don't rely on them.

DILYSI Dave wrote: I'm paying ~6% on my '02 WRX. Also, there is no such thing as 0%, or .95, or 3.9% interest. They give you the good rate and make it up somewhere else. TINSTAAFL

With those special rates the manufacturer is subsidizing the rate, typically through their wholly-owned "captive" finance company, to encourage sales. It's just another form of incentive. They pay $ to buy reduced interest rates vs. paying you cash as an incentive.

Pentagon Federal Credit Union is consistently the cheapest rates I've seen outside of subsidized financing at dealers, and even then typically cheaper. Current rate is 4.5% for up to 60 months new or used. I got 4.25% last month for my BMW. I doubt you're able to join PFCU being in Canada, but you may want to check with them to see.

All advice above is good. Around here credit unions have the best rates. Get pre-approved and talk cash to the dealer. Older cars probably won't get a good rate. Always pay it off early.

I talked a dealer into giving me 5.25% on a new toyota..

And I got it too.. with nothing added.. Cause I ambushed them at the last second with some alternative financing..

Ninja hide in the woods negotiation..

http://www.capitalone.com/autoloans/blank-check/index.php

I used these guys when I bought my Boxster a few years ago.

You get your check in the mail and it's sort of a bargaining chip like cash. You can walk out of one dealership and into another if necessary. Don't know how the rates compare now.

-James

edit: can't believe I'm giving a plug to Capital One

Well, my dad bought a brand new off the lot Si. He payed MSRP and got 0.9%. What am I missing here? I dont see how they got around that...

rwdsport wrote: Well, my dad bought a brand new off the lot Si. He payed MSRP and got 0.9%. What am I missing here? I dont see how they got around that...

Honda eats it on margin.

He paid MSRP, that's how.

The salesmens don't like it when you add up the payments to come up with the total cost by the end of the loan. They'd much rather say "if you move to a 60-month loan instead of 36, your payments are only $400 instead of $500!" and have you picture a nice shiny hundred-dollar bill every month.

i've never bought anything big on credit before. i have a decent score. i went to the lincoln dealer today to look at a 2002 for $8995 for the hell of it, and they told me i'd be paying 19-20% interest for my lack of credit history.

i'm saving my cash, i hate interest.

DILYSI Dave wrote: I'm paying ~6% on my '02 WRX. Also, there is no such thing as 0%, or .95, or 3.9% interest. They give you the good rate and make it up somewhere else. TINSTAAFL

It depends how desperate they are. When I bought the wife her Malibu it was an 02 leftover. I had no money and needed something now. They needed to get rid of something yesterday. Sticker was 18 something. They started at $16,000. We traded my father in laws POS 91 Lumina for $1800, got 0 down and 0%. Ofcourse in the end the joke is on me because I own a Malibu, but at the time I was in a bad spot. Luckily GM is always a little more desperate.

One seceret loan lesson, If you don't have "early repayment Penalties" finance long term, buget shorter, pay it off even quiker.

As I had it originally exsplained to me in R.E. terms, finance for 30, buget for 20, pay it off in 15. That extra is going strait to the capital, less capital means less you pay in interest in the long run.

In economics in my senior year, we had a lady from the bank come and talk to the class, I mentioned this, and it was SOO great watching her squirm and try to dance around the question.

^^ That's a great idea. Here is something I learned the hard way, though: do not do this as EFT of any type. Write 2 checks, one for the regular payment and the other for the amount to be applied towards the principal on the loan. It's very important to have a written record of the additional principal payments. A canceled check is considered a legally binding contract.

VERY IMPORTANT: write on the 'For' bar on the principal check: 'Apply to principal on loan ___'. If you don't do this, the second check will be applied towards the interest.

If you are new to car shopping in general, i'd suggest

www.carbuyingtips.com

The site is a bit confusing and poorly laid out, but if you read everything there, you'll have a good starting point and you'll learn some pitfalls and scams to stay away from.

Zombie Canoe. See the dates...this is a 2008 conversation.

...Including an old post by Scott, RIP

A well-timed thread callback, though. One of the vehicle options we're considering in our house is a new or off-lease CPO-type car from a lot for the girlfriend. It's totally new territory for us, so I wouldn't mind seeing this thread get some new information added to it.

In reply to alex:

Rates have gone down, but PenFed is still the way to go. 1.5% on a USED car for 60 months, it's almost free money!!

You can now join even if not in the armed forces.

In reply to DILYSI Dave:

on used cars correct, but I got 0% on my mazda2