Never Finance through a Dealer (long read)
 

True story:

So, my wife and I thought it was time to get rid of our gas guzzler of a Crossover. We have enjoyed the luxury of our Infiniti FX35 for quite some time, but with the way gas is going and factoring in that we drive nearly 45min (one way) to work each day, it was time to get rid of the 18mpg avg. vehicle for something more fuel efficient. Our eyes were set on a 2009-2010 Camry. After much shopping around and looking at vehicles this was the car that was at the top of the list for us.

So, I bank with Suntrust. Suntrust is also who we financed our FX35 through. They give us discounts and what not for being a Suntrust customer as well as a discount for having our loan payment automatically withdrawn out of the account.

I called up Suntrust to let them know my intentions and to put in an app for a new loan amount. I was pre-approved for the loan amount requested and was giving a round about % rate of 4.9%. At that point, all we had to do then was find a car.

Wife after a few days of looking, finally finds the Camry that suited our requirements. To make sure no one else bought the car, we wanted to get over there as fast as possible as the price was really good on it. So, we left work around 4:00pm (Suntrust closes at 5:00pm). They were already expecting us since my wife had called ahead of time to let them know we were coming.

Before arriving, we were going over the game plan. Rule #1, never let the dealer know your hand. Keep your poker face on. I.E. Don't let them know you are already pre-approved for a loan elsewhere. As we were on the test drive, the salesman was riding with us. He asked if we were going to be financing through them or Suntrust. My wife sorta hinted to him that it would be Suntrust, but I followed up with a "It depends on the % rate and pricing Toyota gives us".

After dealing with the hassle of them low balling us on our trade-in, we came to a happy ground on the price of the trade-in. Now we move to the next phase which is financing for the Camry. Since it was after 5:00pm by this time (Suntrust was already closed), we wanted to make sure the car wasn't sold to someone else. We liked it and wanted it. The salesman indicated that we could go ahead and finance through Toyota and that we have 30 days to search around for any other lender to try and get a better rate. Sounds like a good idea then to go ahead and fill out the financing paperwork through Toyota and then just have Suntrust draw up a new and refinanced contract since we are already setup through them and most likely will get the best % rate. Dealerships do not expect you to perform this step. Many consumers do NOT shop around either, but they tell you this as a ploy to get you into the paper work and the mindset of already having the car, thus causing you to not even deal with the hassle of looking around for the best rates.

We move over to the financing department and get the paperwork drawn up. During this time the Salesman is giving us the make me feel good talk by saying "I told our finance guy that he better give you some good % rate cause you might be going over to Suntrust or look around. Again, they do not expect you to actually do this. Toyota returns back with the taxes, tags, title, %...etc. They put me into a rate of 6.5%. So, we take the deal and the very next day, I get the process started over at Suntrust for them to rework the financing and put it under them. Toyota starts getting phone calls from Suntrust to get paperwork from them and it's taking them 3 damn days to produce a one page Purchasers Contract with a signature on it. I had to call them up to see what the damn hold up was. The finance guy calls me back after I left him a voice mail. He tells me

Toyota - Travis, before we go into the info to give them, what about if I get you down at 4.5%?

Me - Hmm..

Toyota - What is Suntrust giving you?

Me - 4.3% (after I had the full amount for the car and vin and all that, it worked out to 4.3%)

Toyota - Man, that's low, I can't beat that.

This is where it pisses me off! From the get go, why the hell would you give me a 6.5% when you could have dropped down to 4.5% from the start? It's because the system is designed to suck every last DIME of your money. The average consumer sees that % rate and think that it's locked in and it's going to be like that everywhere you go because this % rate isn't like it's negotiable or something. Average consumer sees that number and immediately thinks "this is what my % is going to be anywhere because it's based on my credit history/credit score. So, it must be what I'm going to get period". This is NOT true. Toyota realized that I had found something better, and they dropped DAMN NEAR 3 DAMN % POINTS!!!!!! OMG, that boils my blood. Dealerships are not there for you. They are not there to make sure you get the best vehicle, best experience, best deals. They are there to try and squeeze money out of you without you knowing it. They sneak these little quirks in and are widely successful and flying under your nose....in the end, to satisfy one goal....Make as much money off your stupid ass as possible! They think everyone is stupid. And a large % of them are. So, they stick to these tactics. I will NEVER EVER finance ANYTHING through a dealer EVER for reasons like this. ALWAYS finance through your bank/credit union. And ALWAYS, ALWAYS do your research and go through that hassle of shopping around. IT'S WORTH IT! 3% DIFFERENCE IS WORTH IT!

Good point. I'd go a step further and say to not even trust a bank, go with a credit union.

My credit union in Utah has 2.99% rates.

The one here in AZ has 3.99%.

Unfortunately I don't like the AZ one very much. They're too corporate...

Did you get the loan swapped over?

BTW I think it's funny he'd drop the rate a full 2% but not 0.2% further.

Yeah, he was suppose to fax over the info yesterday. It's Sat. so I don't think it will be fully done until Monday. I don't have a credit union, but yea I hear they are great.

man that sucks... I got 4.00% on my tC but they initially tried to charge 4.99%

I don't know anything about car loans, is it better to pay in full upfront then if you can afford it?

No if you can get a rate of about 4~5% you end up making money if you keep most of your money on a saivings account, as interest the bank gives you there is about 5~7% (depending on the bank) making your repayments at 0~-2% (the car ends up being LESS thank the actual price you payed for)
So if you get a loan at 5% for 5 years on 20k, and you keep around 20k in the savings, you will profit about 1-2k in the end (meaning the car cost 18k rather than 20 actually) if you don't ofset it like this(by using interest for you) the car will cost around 25k (being 20 in the start)
Very good writeup dragon :)

I hate to say it Dragon but your experience is run-of-the-mill regardless of the industry. Many people walk into situations they don't know how to control and end up getting crapped on.

A vendors worst enemy is an informed customer.

You guys are lucky in AUS. That doesn't hold true here in the US.

A good savings/MMA interest rate right now is about 1-1.1%. You could do a 5-year CD and get around 2.4-2.5% but then you have locked your funds in the CD and can't get to them if you have an emergency/unexpected purchase you need to make.

So the situation you described does not hold up every where and certainly does not hold up here in the US. I sure wish I got 5-7% as I am a saver and would appreciate that great rate.



You could always open up an account at a credit union. Great personal loans, usually higher interest rates on checking/savings accounts, more perks....etc. than the big banks like BoA/Wells Fargo/Chase/Citibank. Might be worth thinking about for your next car.

I was recently called about opening an additional savings account offering a 3% interest rate. Sounded great at first, but after talking with the banker for a while it was revealed that the 3% only applied to the first $500 and it only lasted 12 months. I'm normally at 1% or less, it's pocket change.

I've financed two cars now and hated it both times, mostly because I was ridiculously uninformed when it came to purchasing cars and said all the wrong things. Next time around, I'll definitely be paying cash.

Yep, I agree. Cash only for me. I try to put away money every paycheck specifically for my next car. I don't change cars every few years and tend to drive them for a long time. By the time I am ready for a new car I have the money saved up to pay cash. Then you start the whole process over. Also I don't lease and never will.

Credit unions huh? I'm going to look into that. I'm with 53, and they suck. I'd have close my account a long time ago if I could pay my student loans electronically without a bank account. I've paid $$$ in overdraft fees and fines and I am very careful with my account. They are brutal and do not forgive mistakes.


Thanks for sharing this story Dragonitti. I'll keep this in mind :thumbsup:.

Thanks for the story. But like Tranzformer said I want to pay cash only.

Yup Dragon, as Rye said, a vendors worst nightmare is an informed customer. Did you happen to go to Alexander Toyota?

When I worked there I knew 10x more about the cars in the used-lot than the salesmen themselves. I jokingly asked "So, if I traded in my Corolla, how much would you guys give me?"

"Oh, probably about $500."

I laughed at the guy so hard then told him if we put the car at the front of the lot as if it were for sale, it would sell days ahead of any car he would pick out already on the lot. Didn't believe me of course, but eh, never got around to proving him wrong.:bellyroll:

Amen to that. I've grown smarter and smarter each car purchase. I know what their game is.


Which will be the FR-S :)


Rivergate. I did buy my tC from Alexander though. That's another pet peave I have with salesmen. They never know shit about the cars on the lot. They look at papers and numbers and that's it. They look at the paper, see the $ sign and think..."How much money can I make off of this car". In the end, the consumer is the LAST item on the list to receive satisfaction.

I got to thinking though...Car salesmen are like strippers. They pretend to be nice to you, so they can squeeze every dollar out of your pocket. At least with a stripper though, I can bring my wife with me and get a hard on by another woman and she won't get mad about it....LOL.