Scion Financing???

[ruskymx]

Here how the financing works on Scions. The dealers are required to post the interest rates that Toyota Financial provides to each tier of credit. This is copied and pasted directly from my dealer's website which is also posted in the showroom.

Finance Rates ---up to 60mo/ 63mo/ 66mo/ 72mo/ 75mo/ 84mo
Zone 1+ Fico 720+ ---3.24/ 3.24/ 3.49/ 3.74/ 4.24/ 5.24
Zone 1 Fico 719-690 ---3.74/ 3.74/ 3.99/ 4.24/ 4.74/ 5.74
Zone 2 Fico 689-670 ---6.09/ 6.09/ 6.34/ 6.59/ 7.09/ (N/A)
Zone 3 Fico 669-650 ---8.59/ 8.59/ 8.84/ 9.09/ 9.59/ (N/A)
Zone 4 Fico 649-630 ---12.69/ 12.94/ 13.09/ 13.54/ 14.04/ (N/A)
Zone 5 Fico 629-610 ---15.70/ 15.95/ 16.14/ 16.39/ 16.89/ (N/A)
Zone 6 Fico 609-580 ---15.80/ 16.05/ 16.30/ 16.55/ 17.05/ (N/A)
Zone 7 Fico 579-520 ---16.80/ 16.80/ 16.80/ 16.80/ 17.30/ (N/A)

Now, the dealer can use any bank they want to provide you with the loan, but they cannot charge any higher than the posted rate. Reasons for doing so would be that the dealer may be able to make a few more bucks from sending the deal to another bank. When I say a few more bucks, I am not talking about $1,000's. Here's an example: Toyota Financial will pay it's dealers a "Flat Fee" for each contract they send them and this varies depending on the amount financed. Starting at $5k loan, the flat fee is $50 and I think it maxes out at $300-350 for a $30k plus loan amount.

Now say Bank X has the same or slightly lower rate, say 2.99% for example, but they are willing to pay a $300 flat for a $25k loan where Toyota would only pay $200-250. The dealer picks up another $50-100 and the customer gets a lower rate. WIN-WIN!

Another scenario would be if Toyota Financial doesn't approve a customer for a loan. In this situation, the dealer is free to use whatever lender would approve the loan and there are no requirements as far as interest rates (other than what state & federal laws mandate). For example, in Pennsylvania, the state max on new cars is 18% and 21% on used cars.

Toyota Financial is not just a bank for customers with excellent credit. If you have terrible credit for whatever reason, but have a huge down payment like 40-50%, they will give you the loan at their highest rate unless your score falls within the ranges posted above. The reason for this is because if you have that much invested into the car already, you are MUCH more likely to make your payments. In the event that you don't make your payments, they will repossess the car, sell it at auction and make a nice profit. Example: You put $10k own on an FRS and buy the car for roughly $27k after taxes etc. Your loan amount is for $17k. Even if you don't make a payment and they pop the car in 3 months, they will still get $19-20k for the car at auction if not more.

Not Scion related but to give you another example of Toyota being more than just a "prime" lender, the score cutoff for 0% on Corolla, Camry, Rav4, Tundra, etc is 650 on Experian. Banks that provide auto loans will typically use a credit report with a "Fair Issac Auto Loan Model V2" version of your credit score. I think it weights your previous auto loan history higher than other stuff. I don't know exactly what it is but that is just my guess. I know I have seen something to that effect on the credit reports that we pull at my dealership.

Hope this helps explain some things for people. I personally think that your credit score should be your credit score and it doesn't matter if you pulled it yourself, are buying a house or car or whatever. All the different versions and scores just confuse consumers make it more difficult to understand.

Ruskymx

[fistpoint]

Originally Posted by Chillyairplane

Mine is direct from Toyota and they are the only one that would approve me since I had such a high down payment.....

My rate is TERRIBLE due to my 0 creidt score Waiting to Re-FI!

It sounds like you are saying the others wouldn't approve you because of the large down payment. It works exactly the opposite, the only reason you got a loan was the large down payment. It helped, not hurt you. The post above mine explains it.

I put 40% down on my RSX and made sure I pointed out to the bank that it is in their best interest to give me the loan and pray that I DO default on it immediately because under no circumstance could the car depreciate faster than what was owed. Even if I never made a single payment the auction value(after repossession) or insurance payout(stolen/totaled) of the car would greatly exceed what I still owed.

The opposite of all that is what GAP insurance is for. GAP insurance is really just for people who don't have the money to make a realistic down payment and probably shouldn't be buying a new car in the first place as a result of not having enough money for a DP.

[shaggy]

Originally Posted by xrs

Toyota and other automotive manufacturers are in the business of building and selling cars, not banking.

Actually banking is a big part of their business. Toyota Financial owns the lean on my 2010 Highlander. That's an extra $500-$4k profit that they can make throughout the course of your term. Multiply that by how many cars that they finance. I actually went to B of A directly for my FR-S. They gave me 2.49% apr while Scion was only able to give me 3.1% which saved me a few hundred bucks. Just 5-6 years ago, people were paying 7%.
Also I've heard that dealers sometimes adjusting the finance rate to offset whatever haggling that you do up front with the price. And when they offer 0% financing, you can be sure that they will be very firm on whatever price they are offering the car for. They may even mark it up a bit.

[mrwiggles]

Ruskymx is exactly right.

I bought my FR-S and was expecting 3.24%. My understanding is there was a bit of a 'bidding war' and when it was all said and done, I got financed at 2.4%. Not bad

[hybrid4g]

I believe TFS (toyota financial services) is the financing arm for Toyota Corp. for all dealers EXCEPT in the SouthEast.

Those dealers go through "Southeastern Toyota Finance"

Just fyi...

[DeeezNuuuts83]

Originally Posted by FR-Shadow

The dealership reaches out to other banks/financial institutions to receive your loan. Basically what you could have done on your own with your own bank of choice they did for you. Bank of America was the lucky winner who received your business. This is how i believe all dealerships operate. I think mine is through a credit union however i still make all my payments on Toyota Financial Services website.

Not all dealerships work like that, but it typically depends on the manufacturer, as not all of them have their own financing divisions. I believe companies like Acura/Honda, Ford, GM, Toyota/Scion and others have their own financing companies. But again, they are not always utilized, especially if it's a situation where the customer has less-than-stellar credit.

Originally Posted by mezdup

mine's Chase. they just go to whoever gets you the best rate i believe.

Not all the time, but you have to be careful and examine your paperwork carefully. Dealerships do get a small percentage of the estimated interest paid (typically low single digits), but if they find a lower rate, they might tack on some dealership offering to compensate for the difference while getting the profit from the sale of whatever the offering is (i.e. extended warranty, car cover, alarm). So when they crunch the numbers, they may say, "Hey, we got you a better deal, now for the same price, you are getting yourself an alarm." So it works out since you're not "losing" anything, but you may be getting something that you don't care for at a sale price hugely beneficial to the dealership.

[BlaineWasHere]

Originally Posted by xrs

Toyota and other automotive manufacturers are in the business of building and selling cars, not banking.

That's not true at all... Why does Toyota loan people money then? It's not to loose money.

My loan is through Toyota.

[Techfl3x]

Originally Posted by terrypm

Look at your copy of the documents that you signed while in the dealer's finance managers office. It should be listed who was providing the financing, the interest rate, the monthly payment and length of the loan. All this is covered in the Truth in Lending laws. I would guess your dealer went with B of A because they paid the dealer some back door fees to steer you there.

Thx. I reviewed the docs and still don't see bank America stated anywhere. It does show the interest rate, monthly amount, and duration but nothing about b of a providing the financing. I wouldn't have minded if they were transparent with me upfront but now it's left me with a sour taste.