Never Finance through a Dealer (long read)

[OldSkoolToys]

Originally Posted by 70NYD

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)

$18,500 car, you put 9,250 down and 9,250 in a savings account.

9250, 60 months, 5% =$2,621.07 in interest paid

9250, 60 months, 5% savings = $2,621.07 interest paid to you

I mean yeah, you basically counter interest with interest. But what about....

You pay the car completely in cash, and take what the car payments WOULD'VE been, and put that into your savings account over the course of the would be term.
$176 is what the payment would have been, over 60 months. Using compound interest of 5%....
You come out with $1,409 earned in interest over 5 years, and a total of ~$12,000 in your savings account at the end of the 60 months.

In my scenario you do nothing but pay what is owed and keep the rest of the money. No interest because you never borrowed. Hell, in my scenario, you probably got the car for $17,500 because you paid all cash up front.

Or you could just say screw it to saving money like I put, pay the car upfront in all cash, and negotiate a lower sale price. Save money that way.

[OldSkoolToys]

Lets use Dragon's interest rate here to give you the advantage....

9250 @ 4.5% (dealer could only do this) = $2,329 paid in interest
9250 @ 7% savings = $3,863 in interest paid

$1534 earned over the course of 5 years. In this scenario, yes, you end up saving more. Heh, kudo's to you guys in Australia....you won't find something like that in the U.S. Its always better to buy the car upfront in total than split it.

CD rates typically go about 1.2 to 1.5%...savings are under 1%. You won't get an auto loan with an APR that low. The best I've seen is my brothers savings account at a credit union doing 4%, but it has strings attached. If you welch on any of the strings, it goes to the market average.

Edit: Did a quick search at an Australian bank...savings accounts are very nice in %...but the personal loans, for say automotive, are way higher! 11% from the bank...I could get 3.5% from my own bank if I used my account to withdraw the money.

It makes sense now!

[tranzformer]

Originally Posted by OldSkoolToys

Heh, kudo's to you guys in Australia....you won't find something like that in the U.S.

But they pay more for their car and other toys compare to us so any benefit they get from higher interest rates is probably a wash after you consider the price premium they pay for items compared to us here in the US.

[OldSkoolToys]

Yeah, I just noticed that after some quick searching....

They pay much more in interest on their auto loans than we do.

I thought that sounded too good to be true. Its always better to pay outright for something than to finance it (personal wise, not business), especially if you're clever in finding ways to gain even more from the transaction, as I pointed out in a previous post.

[iff2mastamatt]

VERY few CDs will pay more than 2%, so it's always better to pay with as much cash as you can.

[tranzformer]

Originally Posted by iff2mastamatt

VERY few CDs will pay more than 2%, so it's always better to pay with as much cash as you can.

What does VERY few mean? That wasn't the point. The point was that at best you can get ~2.4-2.5 in the US with a 5 year CD. However your money is locked in for those 5 years. Doesn't matter if there is 1 account or if you have 10,000. This was to point out the upper end to our friends in AUS.

http://www.bankrate.com/cd.aspx

[ToyotaObsession]

Originally Posted by Dragonitti

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!

So you're surprised a business is trying to make as much money as possible?

Next thing you'll tell me that you're surprised that Wal-Mart tried to sell you that extra warranty you don't need or that it says it covers 2 years but the first year is covered by the Factory Warranty.....

It's easy to get a great rate.

1. Get Preapproved.
2. Negotiate price. Don't even talk about financing. If they won't budge or price or want to usher you into the financing department. Leave.
3. Once you get it to the price you want tell them you're preapproved now sell me the car.

If they want to talk financing tell them to back off. If they won't leave.

No matter what they are selling it at, you can find a car at a different dealer that's the same thing for the same price. The problem isn't that people aren't educated they don't take command of the situation. You let yourself get led around by the salesmen. Which by the way is what makes a good salesmen.

This is just so thread just cracks me up because people are still to this day surprised how a Business is trying to make as much money as they can. It's not Charity. If they just gave away every car they wouldn't be in business for long.

Every single business you buy anything from is designed to suck as much money as possible from you. You would not believe how much money Grocery Stores spend on studies to get you to impulse buy as much junk as possible. Everything from where displays are setup, to where you can enter.

[Allch Chcar]

Originally Posted by ToyotaObsession

So you're surprised a business is trying to make as much money as possible?

Next thing you'll tell me that you're surprised that Wal-Mart tried to sell you that extra warranty you don't need or that it says it covers 2 years but the first year is covered by the Factory Warranty.....

It's easy to get a great rate.

1. Get Preapproved.
2. Negotiate price. Don't even talk about financing. If they won't budge or price or want to usher you into the financing department. Leave.
3. Once you get it to the price you want tell them you're preapproved now sell me the car.

If they want to talk financing tell them to back off. If they won't leave.

No matter what they are selling it at, you can find a car at a different dealer that's the same thing for the same price. The problem isn't that people aren't educated they don't take command of the situation. You let yourself get led around by the salesmen. Which by the way is what makes a good salesmen.

This is just so thread just cracks me up because people are still to this day surprised how a Business is trying to make as much money as they can. It's not Charity. If they just gave away every car they wouldn't be in business for long.

Every single business you buy anything from is designed to suck as much money as possible from you. You would not believe how much money Grocery Stores spend on studies to get you to impulse buy as much junk as possible. Everything from where displays are setup, to where you can enter.

Lawl, anti-capitalist rant.

The mark of a good businessman isn't how much money he makes. It's how good his products are, how cheaply he can profitably sell them, and how satified his customers are. Business is about delivering a good or service, money is just a byproduct.

What you're talking about is greed, Toyota Obsession. Do you think Toyota wants to mark up their cars above the MSRP? Or is it a greedy Dealership?

The Dealerships are pushed to suck money from an unnecessary process. They don't build the cars, they can service them but they tend to be ridiculously higher than the average cost for Toyota spec parts and labor that is generally the cheapest paid, newbies they can find.

[Random_Art]

Originally Posted by Allch Chcar

Lawl, anti-capitalist rant.

The mark of a good businessman isn't how much money he makes. It's how good his products are, how cheaply he can profitably sell them, and how satified his customers are. Business is about delivering a good or service, money is just a byproduct.

What you're talking about is greed, Toyota Obsession. Do you think Toyota wants to mark up their cars above the MSRP? Or is it a greedy Dealership?

The Dealerships are pushed to suck money from an unnecessary process. They don't build the cars, they can service them but they tend to be ridiculously higher than the average cost for Toyota spec parts and labor that is generally the cheapest paid, newbies they can find.

I have yet to find a dealership sales department that cares about building customer relationships. Supposedly luxury brands are a bit less douchey in the sales department, but I can't verify.

However, I've had better experiences with dealership service departments particularly when the service advisors aren't paid on commission. My favorite toyota dealership even helped me in getting my insurance to pay for replacing a hydrolocked engine in my Celica.

[Allch Chcar]

Originally Posted by Random_Art

I have yet to find a dealership sales department that cares about building customer relationships. Supposedly luxury brands are a bit less douchey in the sales department, but I can't verify.

However, I've had better experiences with dealership service departments particularly when the service advisors aren't paid on commission. My favorite toyota dealership even helped me in getting my insurance to pay for replacing a hydrolocked engine in my Celica.

Now that there is social media like facebook and twitter, etc. They better improve their customer caring and service or they're going to get a poor reputation and lose business.

News travels faster now, but bad news travels even faster.

[Random_Art]

Originally Posted by Allch Chcar

Now that there is social media like facebook and twitter, etc. They better improve their customer caring and service or they're going to get a poor reputation and lose business.

News travels faster now, but bad news travels even faster.

So true. I know the Chevy dealership that tried to hold my trade-in hostage to get me into a crappy Cobalt went out of business shortly after. Serves them right

[ToyotaObsession]

Originally Posted by Allch Chcar

Lawl, anti-capitalist rant.

The mark of a good businessman isn't how much money he makes. It's how good his products are, how cheaply he can profitably sell them, and how satified his customers are. Business is about delivering a good or service, money is just a byproduct.

What you're talking about is greed, Toyota Obsession. Do you think Toyota wants to mark up their cars above the MSRP? Or is it a greedy Dealership?

The Dealerships are pushed to suck money from an unnecessary process. They don't build the cars, they can service them but they tend to be ridiculously higher than the average cost for Toyota spec parts and labor that is generally the cheapest paid, newbies they can find.

ROFL the exact measure of a Good salesmen is how much money he makes. A friendly Salesmen that can't complete a sale sucks at their job. Money is the only reason they do it. You can sugarcoat it however you want. But money is the driving force, you take money out of the equation and nobody would be a salesmen. The idea that money is a byproduct is just naive.

Greed is those Payday Loan joints. 400% APR.

Toyota sets the MSRP. Toyota sells the Cars to the Dealership who then have to try and sell them again for a profit. Toyota doesn't own the Dealership nor do they take back cars that don't sell.

I don't see your point.

[Allch Chcar]

Originally Posted by ToyotaObsession

ROFL the exact measure of a Good salesmen is how much money he makes. A friendly Salesmen that can't complete a sale sucks at their job. Money is the only reason they do it. You can sugarcoat it however you want. But money is the driving force, you take money out of the equation and nobody would be a salesmen. The idea that money is a byproduct is just naive.

Greed is those Payday Loan joints. 400% APR.

Toyota sets the MSRP. Toyota sells the Cars to the Dealership who then have to try and sell them again for a profit. Toyota doesn't own the Dealership nor do they take back cars that don't sell.

I don't see your point.

You completely missed my point because you are admitting that their entire job is greed based and then saying it isn't greed when it's a fact of life .

A good salesman would fulfill the customers' needs first not their greed for a fat wallet. Not to say that the former wouldn't benefit the latter, as it would in fact be more profitable over time. So what you are saying is true but how he achieves that is the biggest factor to how long he lasts and how satisfied his customers are.

I'm mostly saying that dealerships need to straighten out or they're going to lose business and lose money.

The Dealership is fulfilling a need/desire and that is for cars. The salesman is there to sell the cars and even if there is no haggling over price there is still the paperwork, trade-in, etc to take care of.

If there was no money, there would still have to be some exchange going on for it to be profitable. Not all profit is measured in money. Money is just a product that can be exchanged more easily than other products. And very few people will waste their time selling cars if there is no profit in it for them.

There was profit in business long before there was money or currency. And the mark of a good salesman or a good businessman is his customers not just how much profit he makes. But you're just nit picking what I said. I didn't say money had no purpose .

[ToyotaObsession]

Originally Posted by Allch Chcar

You completely missed my point because you are admitting that their entire job is greed based and then saying it isn't greed when it's a fact of life .

A good salesman would fulfill the customers' needs first not their greed for a fat wallet. Not to say that the former wouldn't benefit the latter, as it would in fact be more profitable over time. So what you are saying is true but how he achieves that is the biggest factor to how long he lasts and how satisfied his customers are.

I'm mostly saying that dealerships need to straighten out or they're going to lose business and lose money.

The Dealership is fulfilling a need/desire and that is for cars. The salesman is there to sell the cars and even if there is no haggling over price there is still the paperwork, trade-in, etc to take care of.

If there was no money, there would still have to be some exchange going on for it to be profitable. Not all profit is measured in money. Money is just a product that can be exchanged more easily than other products. And very few people will waste their time selling cars if there is no profit in it for them.

There was profit in business long before there was money or currency. And the mark of a good salesman or a good businessman is his customers not just how much profit he makes. But you're just nit picking what I said. I didn't say money had no purpose .

You're an idiot if you believe that doing a job for money is being "greed based". I build airplanes for a living, if they didn't pay me I wouldn't do it. I enjoy my Job. But it's a Job. I do it for the money.

Salespeople sell things to make money. It's not about greed. It's about doing a job and getting compensated to do it. I'm assuming you have a Job correct? You get paid to do said job, so does that make your job greed based?

A good politician means telling a person to go to hell in such a way that the person is actually looking forward to the trip.

Being a salesmen is a lot like that. They need to sell as much as possible without going so overboard it pisses everyone off.