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Originally Posted by seethruya
Credit Union’s are great if you are building your credit but you will consistently beat their rates if you have established credit.
Beginning of 2016 when I purchased my 2016 Mustang GT, Capital One gave me a 6 Year @ 1.95% with $2,000 down. Had just under a 700 credit with each major credit agencies back then. Summer 2020, around 750 now, yet they only offered a 6 Year @ 3.98% with $2,000 down. If GM Financial offers another 0% type promo when my 2021 Camaro is delivered in October, I would more than likely go with them this time around versus my bank Capital One. In other words, it varies who has the best rates.
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I'm curious why you would limit yourself to what GM Financial is offering or Capital One only? I financed through the dealership and landed with Citizens One (whom I hate after they screwed up upon my paying off a loan and promptly losing my title) for about the best rate anywhere at the time (two months ago). GM's rates were significantly higher and Capital One didn't even show up on the radar in terms of who was offering competitive rates at the time. My score is definitely on the high side with one of the financial institutions documentation of having pulled my credit showing my score at well over 850, but none of the lenders would budge on their rates (I asked to have one drop their rate to at least match Citizens and they wouldn't do it).
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Originally Posted by MrChrisLS3
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.
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This is a really good point... Yes, the dealers have profit baked into the loan you just got but it's because they are buying money from the banks in volume. And the banks don't have to do a bunch of the legwork, so they don't need all of the profit directly and will "share" it with the dealership. I suspect that this is largely why the dealerships will tell you that you have to maintain your loan for a minimum number of months (I know they told my parents that they had to hold the loan on their new car for four months in order to properly qualify for some rebate they had gotten as paying off earlier would have required them to forfeit that or something).