So I just ended up getting a car, and I actually went with dealership financing at just about 2%. There were other options (credit union had the second-best rate, or just paying cash), but the credit union rate was higher and with short-term bonds/CDs paying 5-6% it didn’t make sense not to take the financing. A couple things I’d say:
Go in with financing ready, which it sounds like you’re trying to do–I’d check not only your bank but any credit unions you have some kind of association with, and some of the credit card companies actually have car/home loan options too. I want to say Capitol One and Citi had decent rates when I was looking, but that was months ago. As far as hard pulls, a bunch of queries for the same product in a short amount of time should all be considered the same request score-wise…this is pretty standard otherwise no one would be able to shop around for anything.
Ask about dealership financing offers and listen to what they say. You don’t have to tell them anything about your already-arranged financing except “Thank you, but we’ve dealt with that separately” (in fact I would absolutely not tell them what rate you’ve already got), but if their best offer is better than you can get on your own, it’s worth considering
Make sure you’re putting down enough on the car that they can’t tack on any special insurance requirements to pay off the loan if anything happens in the very short term. That sounds like not an issue here, but just fyi.
Watch out for add-ons, and I don’t just mean the kind that ‘come with’ the car. You probably don’t need their super-special every-three-months detailing package or custom oil change nonsense or whatever.
May edit later if I’ve forgotten something, but I think that’s most of what I remember about the dealership itself. Good luck!
ETA (thought of one more )–know what your insurance covers or could cover if you’re shopping around. Kind of goes with the last bullet, but in my case for an extra ~$1000 they’d cover 5 years of windshield replacement in the event of damage (which, being in Colorado and using my car primarily to go up into the mountains is not an unlikely event). However since my insurance company offers the same thing for $75/year, the math didn’t work at all.
Not really advice but solidarity in financing - we could have paid for our car entirely up front but chose to finance most of it. Then when it was paid off we did it again for our other car (both were older and starting to get unreliable and we had an infant/toddler). Both times we went through the credit union we already did business with. Since we already had a car in mind we knew what it cost and were able to see a couple different options - how much did we want to finance, for how long, etc. - and they were very nice about walking us through it. It was really nice to be able to spread out the financial hit and the rates were low enough that it wasn’t a significant different, the percentage was an acceptable “fee” for the security of keeping more of our money in the bank at the time of the car purchases.
We did dealer financing on our current vehicles (used cars, purchased 2020 and 2021). They presented us with a choice of rates including ones that would have been serviced by local credit unions, and a choice of loan lengths. IIRC the dealership rates were cheaper than what we got quoted from our local banks.
I don’t think it’s a bad idea to finance a car! The markets for everything feel wonky right now. Our auto loan APR is less than the yield we’re getting on our high-yield savings account (Discover), soo…I have no regrets. Good luck with the car search!
We did dealer financing because it was a 0% apr. When looking at local credit unions in March the rates were 6.5-7%. We priced out Bellco, colorado credit union, and CapitalOne auto. Most credit unions have their rates listed on the website. Not sure if our rate would have been better with a hard pull or not.
If you’re going to buy new, look at doing the Costco Auto program. They have pre negotiated rates with dealerships on new cars and include extra warranties and things. No haggling on the price.
We bought a 2023 Hyundai tuscon with the Costco program and didn’t put any money down because of the 0% rate. I love the car!!
There are some dealerships that specialize in selling used cars to people with bad credit. Those are the ones who advertise “We offer financing to everyone!” The charge very high interest rates because they’ve got a fairly captive audience, and they make their money on the financing, not the car.
That’s a different business model than regular dealerships.
Our dealership financing has always been better than our CU financing options. Only once was it better.
A car loan isn’t the end of the world. Especially when it’s a situation where it lets you use tax advantaged space instead. That’s what we’ve done historically even when we could use cash for the full purchase, max an IRA instead. (When it was a good tax move for us and we qualified etc).
UFH YES our last car purchase there was like, “non optional” window tinting and a cleaning package and stupid shit they tried to add. Had to fight it but it all took off like $1100.
Yeah the other note on dealer financing is we got cash incentives to go with them versus other financing options. I think Toyotas certified used gave us $500 to use their financing? And it was the best rate anyway lol.
Yep, basically same. And what’s more, you can always refinance if interest rates go down or if you find a better rate. I’m 100% in favor of financing as long as it doesn’t cause you to spend more than you should have based on all your other financial factors.
Oh we also paid more than we needed to on our car loan to pay out off sooner (we said this up front, the loan people were fine with it). That let us do it at a level we were comfortable with but if we needed a financial release valve we could reduce the payments to the actual monthly amount. I could be misremembering the numbers but I think the actual loan amount was $300 and we paid $500 a month?
We did this with our initial mortgage too, especially since early mortgage payments don’t reduce the principal much. For the car it was just because we preferred the shorter time line though.
If you are purchasing the same brand of vehicle that you currently have you may be able to get a loyalty discount for interest- mine rate was 1.9 dropped to .9. This was a few years back.
Review the build of the model you are getting, if there are certain features you didn’t want they may reduce that amount off the price. Ie. window etching of the VIN number; trailer hitch or towing stuff that can’t be removed. As SO says, pretty much anything they want to add you do not need ie rust and fabric protection, etc.
Also, if you purchase brand new, if you get a longer warranty the dealerships will be nicer to you when you bring it in for stuff. At least in our experience they have been, with helping to fix stuff under warranty that maybe shouldn’t have been, or not charging for things.
I got an Amazon order with three journals wrapped together, one of them was damaged in shipping but the other two are fine and I’ve already started using one. Is there a way to just get a partial refund for the damaged one? Going online it looks like my option is just to return the whole set of three.
was it an amazon purchase? I ordered a set of three - something? from Amazon, and only two arrived. I sent them a message in their customer chat, and they refunded the difference
I don’t remember how you get to it but keep trying on the chat and you’ll figure out which options not to select. I have gotten slightly damaged items that I would rather get a partial credit for than an exchange.
The choice is something like…“no, it’s something else.” And then when they ask you to tell them more, you can just type representative. And at least for me, I’ve been able to do it on the phone or desktop. They make it hard to find, but they generally will refund you.
)–know what your insurance covers or could cover if you’re shopping around. Kind of goes with the last bullet, but in my case for an extra ~$1000 they’d cover 5 years of windshield replacement in the event of damage (which, being in Colorado and using my car primarily to go up into the mountains is not an unlikely event). However since my insurance company offers the same thing for $75/year, the math didn’t work at all.
Good luck with the car search!
(a Highlander and a small work truck)