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Old 01-19-2013, 01:13 AM   #1
mix1983
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Financing a car, questions

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).


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Old 01-19-2013, 06:13 AM   #2
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Not always true anymore--That's like a cash deal to the dealer so they may not be as flexible on price.
If they can match your interest rate from the bank--may be a better deal to finance thru them as they are likely to make money on the back end and will be willing to go down on price more--so a win/win for you and the dealer!
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Old 01-19-2013, 06:16 AM   #3
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Look at the total deal--ideally it should cover total cost including TTL. That is the price you pay and need to budget for.
As for your last question--definitely possible--depends how good a negotiator u are and how desparate the dealer is to move that inventory!
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Old 01-19-2013, 01:13 PM   #4
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Don't fall for the "what can you afford for a monthly payment routine" Know what your car is worth and the bottom line price.
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Old 01-19-2013, 01:26 PM   #5
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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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Old 01-19-2013, 03:55 PM   #6
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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.
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Old 01-19-2013, 07:24 PM   #7
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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.
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Old 01-19-2013, 07:59 PM   #8
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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.
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Old 01-20-2013, 01:23 AM   #9
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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.
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Old 01-20-2013, 09:23 PM   #10
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Quote:
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.

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