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-   -   How bad are dealer loan rates? (https://www.camaro6.com/forums/showthread.php?t=438786)

Redline_2ss 07-29-2020 10:56 AM

Quote:

Originally Posted by MrChrisLS3 (Post 10837837)
I too was thinking WTF at that post until I realized what he was talking about.

Financing through a dealer, especially if you have Tier 1 credit can be beneficial to you. First, the dealerships have contracts with several lenders. Whereas, if we, the customer, go to our own bank, we are going to get a rate that is profitable to the bank. The only thing a bank does is sell money. However, a dealership has more bargaining power with lenders because dealers generate more business for them.

There is truth that a dealership can bump the rate up to 2 points. However, how that really happens is not that raise your rate, they negotiate with the bank to lower the buy rate for the dealer. This is why many people show up with pre-approval from their bank at 3or 4% and the dealer gets them out of finance at 2.5 or 2.9%, from the same bank. The dealer negotiates the buy rate down. Sure, dealers are out to make money, they are not 501c operations, and neither are the banks.


Very well put! Been at a chevy dealer for years and yes we consistently get the same or better rates than when people come with pre-approvals. Banks reach out to us and let us know when they're willing to get more aggressive on loans since they haven't been receiving as many as usual. We call them and let them know to match or slightly beat your rate and they usually give us a small flat fee. It's a win-win

foshjowler 07-29-2020 11:10 AM

Quote:

Originally Posted by Redline_2ss (Post 10838086)
Very well put! Been at a chevy dealer for years and yes we consistently get the same or better rates than when people come with pre-approvals. Banks reach out to us and let us know when they're willing to get more aggressive on loans since they haven't been receiving as many as usual. We call them and let them know to match or slightly beat your rate and they usually give us a small flat fee. It's a win-win

That's what happened to me. Came in with a pre-approval through Cap-one and left with something like .5% better through Wells Fargo. I'm happy, the dealership is happy, I assume the bank is happy.

Cap-one's online portal is miles better than Wells', but Wells has actual locations, so it'll be easier when it comes time to sell if I decide to sell privately.

ember1205 07-29-2020 11:13 AM

Quote:

Originally Posted by foshjowler (Post 10838103)
That's what happened to me. Came in with a pre-approval through Cap-one and left with something like .5% better through Wells Fargo. I'm happy, the dealership is happy, I assume the bank is happy.

Cap-one's online portal is miles better than Wells', but Wells has actual locations, so it'll be easier when it comes time to sell if I decide to sell privately.

I have Citizen's banks near me, so paying off a loan was "simple" but the process to get the title is horrid as it comes from a main "documentation warehouse" and they won't send it with signature required (mine was lost in the mail as so much of my mail is due to complete ineptitude by the local post office).

MrChrisLS3 07-29-2020 11:10 PM

Quote:

Originally Posted by ember1205 (Post 10838063)
When you pay early, that [usually] does reduce your total amount of interest paid because the amount paid to principle reduces the principle amount earlier in the cycle. However, the way that some banks amortize your loan, what ultimately matters is the principle balance on a specific day of the month as opposed to compounding interest daily.

In your example, you are assuming that the extra $50 is paid toward principle. From your previous post, some lenders do not do this automatically and apply the money directly toward your "next payment" amount. Unless that money is directly credited to the principle amount, it very well may NOT reduce your overall interest liability as it will not slow down the rate of compounding.

The note on my 5th gen was with Wells Fargo. For the first few years they did the reduce your next payment thing. Which I still made the full payment plus 50. Then they switched it to applying to principal. Either way I was still on pace to pay off a year early.

All auto loans are no prepay penalty as far as I know. They are amoratized, so you pay more interest up front. They use a per diem, interest per day, which reduces as your loan matures.

BigGuy81 07-30-2020 03:31 AM

Quote:

Originally Posted by Coded4SS (Post 10837341)
Avoid dealer loans. They do things like not let you pay off the principal faster you have to mail in hand written checks to pay off the principal. There is things like this with dealer loans they work to their advantage. Why go through a third party middle man for what you can do on your own?

Go to credit union get the best rate you can and if you want to see if your dealer can beat it then go ahead. In my experience it's always always better to avoid the dealer.

I have literally never had this happen.

Invertalon 09-16-2020 01:05 PM

Just as a point of reference... While awaiting for delivery of my Camaro in a few weeks, I was pre-approved through my credit union at 1.99% APR for 60-month... If I wanted, 2.49% was available for 72-month.

No penalty or fee for paying off early.

Curious if the dealer will try to beat it.

ember1205 09-16-2020 01:35 PM

Quote:

Originally Posted by Invertalon (Post 10869073)
Just as a point of reference... While awaiting for delivery of my Camaro in a few weeks, I was pre-approved through my credit union at 1.99% APR for 60-month... If I wanted, 2.49% was available for 72-month.

No penalty or fee for paying off early.

Curious if the dealer will try to beat it.

They would happily run your credit against various other lenders. Here's the rub:

Your rates are already very good. Running your credit again will hit your credit report and drop your score slightly. And, unless the specific lender that they are trying to get better options from is willing to negotiate, they likely don't have much chance of beating it.

There are a few lenders that will actively negotiate terms, but many will not. So, you'd probably be best suited to make sure you know your actual credit score and talk very frankly with the finance person to understand whether or not there is actually a chance that they can get you better financing.

Redlinez 09-16-2020 02:48 PM

I've bought around 60 cars in my time since 1989 and with good credit, you can often get a better rate from one of the dealer's lenders than your own. I've gone back and forth with Navy Federal as well as dealer lenders.

ember1205 09-16-2020 02:53 PM

Quote:

Originally Posted by Redlinez (Post 10869137)
I've bought around 60 cars in my time since 1989 and with good credit, you can often get a better rate from one of the dealer's lenders than your own. I've gone back and forth with Navy Federal as well as dealer lenders.

Similar here to the point that I simply stopped checking with local lenders. I've only ever secured a loan outside of a dealer one time because I could get better rates on my own.

If you have excellent credit, the dealer will typically be able to get you rates that are "at least as good" as you can get on your own. The rates mentioned a couple of posts ago, though, are pretty good for the current market. So, a solid conversation with the dealer prior to allowing them run your credit makes sense. I did this sort of thing when I bought my Camaro this year to ensure that the dealership understood that I was looking for a very aggressive rate. They came back with two lenders that were close to each other. I wanted to use the lender with the higher rate and asked them about negotiating the rate down to at least match the other lender. The lender in question doesn't negotiate, so they lost my business over what amounted to a few hundred dollars over the life of the loan.

The real loser in that situation was me, though, as my loan is now being service by a lender that I hate. lol

3.8TransAM 09-16-2020 05:51 PM

1.9 on new cars thru my credit union. I have it preapproved when I'm shopping and no one has beaten it yet. We shall see again next year when hopefully my 1LE comes in since I plan to order late Dec./early Jan.

aronSlusa 09-16-2020 06:03 PM

Quote:

Originally Posted by 3.8TransAM (Post 10869243)
1.9 on new cars thru my credit union. I have it preapproved when I'm shopping and no one has beaten it yet. We shall see again next year when hopefully my 1LE comes in since I plan to order late Dec./early Jan.

What credit union? clearly you're a prime customer.... its hard to believe a bank or CU would buy that low on a new car unless theres substantial trade in equity and or deep customer contribution.

Dabjbr 09-16-2020 07:29 PM

1 Attachment(s)
Not the absolute best new rates but I really like Provident credit Union. They occasionally allow you to skip a payment without penalty. More importantly, the rates are the same for new OR used.

ember1205 09-16-2020 07:30 PM

Quote:

Originally Posted by aronSlusa (Post 10869247)
What credit union? clearly you're a prime customer.... its hard to believe a bank or CU would buy that low on a new car unless theres substantial trade in equity and or deep customer contribution.

Trade-in equity will have little to no bearing as lenders don't care about that. They care about loan to value and your credit score. As long as the item being used to secure the loan is genuinely worth the value of the loan and you're a good credit risk, they would be dumb NOT to write the loan.

The other thing is that many of the lowest rates out there are shorter terms. 36, 42, 48 month terms are common for the lowest rates with steps up increasing the rate simply because the longer term still lowers the payment and the consumer will take it.

seethruya 09-17-2020 01:02 AM

Quote:

Originally Posted by aronSlusa (Post 10869247)
What credit union? clearly you're a prime customer.... its hard to believe a bank or CU would buy that low on a new car unless theres substantial trade in equity and or deep customer contribution.

These are the terms for the 2016 Mustang GT I purchased and it’s with my bank Capital One. I put $1,500 down. If you’re wondering, true story, $27,4xx, under $30k out the door, brand new.

I couldn’t find better nor could the dealer that year, including their attempt with Capital One through their finance department. It does happen but is not the norm.

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