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Topic Review (Newest First)
02-18-2013 03:49 AM
I have some questions about financing a car. I've never financed a car, always bought them by paying all at once. Also never bought from a dealer.

I've been approved for a loan up to a certain amount. I was told this is the best way to go, because it gives you a little advantage at the dealer vs. going through their bank. It supposedly lets me talk the price down easier because I basically have a blank check in my hand. Is this true?

Another thing is title, taxes, fees, etc. Is this paid up front on the spot, or does it get added into your payments for the car?

Also, how much do dealers usually budge on a used car? For instance, I'm looking at (among other cars) a '07 Mazda MX5 with 91k miles. It's listed as $12,944. What if I said give it to me for 12 out the door (meaning including taxes, fees, etc).
I sell cars for a living

1. Great job getting approved ahead of time! Have that check on your persons at the time of purchase. I gotta tell you at the time of the sale that makes such a huge difference.

If you can pay on the spot it makes a HUGE difference because you've removed so much uncertainty from the deal. And that makes it easier to get the price lower.

Don't be scared of dealer financing, let them make you an offer. Sometimes dealer financing can be a better deal then your own bank. If it's not then you stick with your bank.

2. Know what the car is worth and set a price that you will be happy with. Example if they say it's $12,944 and your happy at $12,000 great work towards that. However maybe they will go lower, hold your cards to the chest.

But also know what is a stupid price, and what a respectable price is.

3. Don't be afraid of walking out of the door, that is the most powerful thing a customer can do.

Will a dealer sell a car for a lose? Sometimes it depends on how badly he wants to get rid of the car. If let's the car is popular and he has a ton of buyers for that car he's not going budge. But if it's been on the lot awhile there is more room.

4. Haggle out price first, and then throw TTL on top. Don't haggle on anything BUT the car price. TTL is based upon car price anyways so the lower TTL the lower your overall out the door price is.

Keep the different parts of the deal seperate.


You got your price
You got taxes
You got your trade in
You got your finance

Keep all of that separate don't let them combine it. If you let them combine it they can find ways to pad it. And remember they do what your about to do on a daily basis. I handle car deals all day long.

I would encourage you to test them until you get to the bottom line. At some point the dealer is going get fiesty and say "Look enough is enough"
02-18-2013 02:49 AM
Originally Posted by whynotthinkwhynot View Post
It is always a good idea to get a car when you don't NEED a car.
There's a lot to be said about the very least don't let them know you have to have it now.

I paid about 3K too much for mine because I HAD to have a car right then. It didn't help that I absolutely loved the MK3 Focus and it was the only one nearby (and was setup about how I would've preferred).

But anyways, the biggest thing is probably to keep the final purchase price in mind. A lot of sales folk will try and get you to focus on monthly payments, and all they're doing is just tacking on more payments the lower they go. Sounds great at face value, but you're paying more in the end. So make sure that you're satisfied with the final price, and that if you do pursue lower lower monthly payments they're not playing games and making you pay a bunch more.
01-21-2013 08:51 AM
Originally Posted by jetrinka View Post
How about finding out what your payment would be, saving that amount each month until you have the amount needed to buy the car outright. Then you aren't paying some bank any obscene amount of interest over 5-6 years.
well based on the OP's credit and how much of a down payment they are making..interest should be doable. My gf bought her Mazda new with 0% and my little brother just bought a Cooper S and his rate is less than 3%. My brother just graduated college and doesnt exactly have a long credit history either.

Financing 15k @ 3% for 60 months is less than 1200 in interest over those 5 years. The monthly payment would be about $270, if you were able to over pay your monthly and do $300. Your interest paid would be much lower.

It ultimately comes down to the buyer and what they are comfortable with. If i was only able to get a 5-7% rate, I would not be wanting to finance unless I was sure I'd be able to pay off early and avoid all that interest or would be looking at a more affordable car. To answer the initial question, I feel its better to have financing pre-approved. For me its more comforting knowing what my limits are and how much its going to cost me up front. Of course if you can get a better rate with the dealer, that's a plus
01-21-2013 02:18 AM
mix1983 That's kind of how I thought of it. If I'm bringing "my own" money they know I can easily take it somewhere else.
01-20-2013 09:23 PM
Originally Posted by jetrinka View Post
If anything it makes them more flexible. Don't show all your cards. If they are asking 10 grand for the car, bring what you think is fair for the car, and tell them you would be paying cash. Cash talks, even to dealers.
Cash means NOTHING. Whether you give them cash or a finance company gives them a check it's all the same to a dealer.

Either way they're paid.

01-20-2013 01:23 AM
jetrinka If anything it makes them more flexible. Don't show all your cards. If they are asking 10 grand for the car, bring what you think is fair for the car, and tell them you would be paying cash. Cash talks, even to dealers.
01-19-2013 07:59 PM
jetrinka How about finding out what your payment would be, saving that amount each month until you have the amount needed to buy the car outright. Then you aren't paying some bank any obscene amount of interest over 5-6 years.
01-19-2013 07:24 PM
whynotthinkwhynot It is always a good idea to get a car when you don't NEED a car.

I personally always recommend that people go through a bank instead of a dealer. Since you don't need a car, you might can try a little trick- if you have a smart phone. Look for compound interest calculators online. Talk to the dealer like you want financing from them. See what they say- plug those numbers into the compound interest calculators and see what they are doing to you. If it's anything like what they tried on my sister, then you can feel free to call them rip off lying scumbags and create a scene. Basically my sister was "qualified" for a 3% interest deal on car (back in the 90's), and the salesman told her how much her payments were going to be- she already knew the principle. Well, she figured it up, and they were telling her 3%, and then the actual loan was 22% interest. They didn't know she'd been working in the loan dept for a bank for 10 years and knew how to calculate interest on a calculator.

Maybe in this day and age with smart phones and online interest calculators- dealers are more honest. I doubt it, but if I were you- I'd see just for kicks. At least you know who you're dealing with. I personally don't want to purchase a vehicle from a den of thieves.

One good thing about purchasing from a bank is that you can buy from an individual- if the purchase price is below value. Keep in mind that banks will only write loans for vehicles out as far as 7 years from the manufacturing year. For example, you can get payments on a 2013 out as far as 2020- if you need it. However you can only get loans out as far as 2015 on a 2008 model vehicle- that's only 2 years. This makes it more difficult to make payments on a used Porsche than it is to make payments on a new Porsche that costs 3x as much. That is from a bank. Now dealers can work out things with 3rd party financing to sell car loans that go out past what banks will do. However, these will be high interest loans.
01-19-2013 03:55 PM
mix1983 Thanks for the information. I am still looking at all my options, seeing what dealers offer me vs. what my pre-approval offered. I am set on the type of car I am looking for, but I will not pay something that I don't want to. I am going to walk in with an idea of what I want to pay and if they can't come close, someone else can have the car. I don't "need" a car, I just want something more fun to drive, so I am not desperate, so I think that will help me get what I want.
01-19-2013 01:26 PM
SkyPilot There are a million variables that go into buying/financing a car.

Getting pre approved is a good idea, shows you what price range you can look in.

Tax, Tittle, and License can be financed or you can chose to pay them your self. In reality the bank doesnt care if you do or not. All they really worry about is the amount financed.

As for negotiating a price its anyones guess. It all depends on the dealer, and the car your looking at. They are not going to sell a car at a loss. So the price on the sticker might be firm it might not. It all depends.

Know what you can afford before hand. Dont be set on a car payment of lets say $300 a month. You could finance a $50,000 BMW for $300 a month but its going to take forever to pay off. Get a realistic monthly payment in mind, and a loan term of no more than 5 years (60 months) this will make payments more affordable than a shorter term. yet keep the amount owed close to the value of the car. (theoretically, not always true, just an example)
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