Isn't This Kinda Cart Before The Horse?

[DEEKAYPEE8569]

I've read; just read I said; when buying a new car, it's a good idea to secure/obtain financing first. That seems backwards; when you don't know what the bottom line, out-the-door price is going to be. Is it a matter of saying to the sales manager, when negotiations stall, 'You cannot meet the price I am prepared to pay,' and walk out the door? Did I just answer my own question?

 

[rhenderson]

Yep! you just answered your own question. The important thing is know your options to dealer arranged financing before you start shopping.


The idea is look around for new car financing and get pre-approval for a loan amount based on an estimated purchase price, down payment, monthly payment limit, etc. Once you are pre-approved you know what payment you can afford. One advantage of doing it this way is you have time to think about the real impact of the monthly payment on your finances without being "in love" with a car you cannot or should not afford. Also, if you find your own financing, the dealer's share of the loan origination would not be incurred. However, many manufacturers run their own financing companies now and you may get a better rate from them than from your local finance sources.

 

[GWguy]

Def get financing first. I knew the vehicle I wanted, took an estimate of a loaded version and got pre-approved for that much. Went to the dealer, negotiated, and actually financed about 1/2 of what I was pre-approved for. You don't have to take the whole amount you get pre-approved for.

 

[DEEKAYPEE8569]

Def get financing first. I knew the vehicle I wanted, took an estimate of a loaded version and got pre-approved for that much. Went to the dealer, negotiated, and actually financed about 1/2 of what I was pre-approved for. You don't have to take the whole amount you get pre-approved for.

You say, "estimate." Now, I've also heard of folks somehow getting a purchase order, or whatever it's called; THEN going to their bank to arrange financing. Seems to me, the better option is to use something like truecar.com first; then taking those numbers to your/a bank; acquiring financing based on that paperwork, then going to the showroom, since those numbers are usually lower than the price the dealership advertises.

 

[DEEKAYPEE8569]

Dealership Cheaper Than Truecar

$672 cheaper, in favor of the dealership over truecar; 'course that's all drowned by tax/title/tag fees.

 

[Hodr]

It's great to get your own financing lined up, but also remember that you don't have to take it. I walked into a dealer with a pre-approved 2.3% loan from my bank, and they ended up extending their 0% promotion to my vehicle (which isn't normally covered) in order to get the origination fee. A win for them (some money being better than no money), and a win for me (their fee/points being cheaper than the interest I would have paid over the life of the loan).

 

[DEEKAYPEE8569]

It's great to get your own financing lined up, but also remember that you don't have to take it. I walked into a dealer with a pre-approved 2.3% loan from my bank, and they ended up extending their 0% promotion to my vehicle (which isn't normally covered) in order to get the origination fee. A win for them (some money being better than no money), and a win for me (their fee/points being cheaper than the interest I would have paid over the life of the loan).

I can get 1.99% for 36, 48 or 72 months.
Dealership is offering 2.50% for 72 months; $4863 due at signing plus T T & T. I don't like even the little I know about leasing, so wouldn't even consider that.

Back in '12 I walked in with $5K; financed for 72 months and had payments of $261.70/month. So I paid the loan off early; earlier this year as a matter of fact. Sale price was $16,666. That should've scared me off, but it didn't.

On paper, the payments on a BSN 2016 with a $20,399 price tag would be higher by a few bucks. I know that. I'm just trying to do better research THIS time; and if the numbers fall somewhere within my "budget" :snort: I'll seriously consider it. Just lookin'.....

 

[DEEKAYPEE8569]

It's great to get your own financing lined up, but also remember that you don't have to take it. I walked into a dealer with a pre-approved 2.3% loan from my bank, and they ended up extending their 0% promotion to my vehicle (which isn't normally covered) in order to get the origination fee. A win for them (some money being better than no money), and a win for me (their fee/points being cheaper than the interest I would have paid over the life of the loan).

I don't mean for this to sound stupid Hodr, but here goes anyway.....I know.....TOO LATE!
To get this pre-approved loan from your bank, what paperwork did you submit?
Banks want a purchase order from the dealership before they will process/approve a car loan. I know you know that. So once that P.O. is given to you by the dealership, doesn't that all but eliminate any negotiation?

I guess what I'm not wrapping my head around is what $ amount you go to your bank with to apply for the loan......based on the advertised "reduced" price or post-negotiation price contained in the P.O.?

Dealership is offering 0.0% for 36 on select models.
So, maybe it is better to have a pre-approved loan for the 'asking price' in case the one being looked at isn't a 'select model' and the dealer won't come off said asking price? Again, this goes back to first having to have a purchase order to submit to the bank when applying for the loan to walk into the door with. NAAAHHH.....I'm not confused.
I think I mentioned somewhere already.....I walked in the door with $5k and basically paid sticker (list not MSRP) for what I've got now. (Lesson learned)

 

[GWguy]

To get this pre-approved loan from your bank, what paperwork did you submit?
Banks want a purchase order from the dealership before they will process/approve a car loan. I know you know that. So once that P.O. is given to you by the dealership, doesn't that all but eliminate any negotiation?

I guess what I'm not wrapping my head around is what $ amount you go to your bank with to apply for the loan......based on the advertised "reduced" price or post-negotiation price contained in the P.O.?

You're not taking a loan when you pre-approve. All you are doing is getting an OK from the bank that they are ok with the amount you're asking for. This process, btw, does show up as a hit on your credit rating scores, as does each request from different places, including the car dealership. Pre-approval does NOT mean you have to follow thru and take the money.

There is basically no paperwork. You sit down, talk the the officer, you fill out a one-page request with your name/address/phone, etc..... your financial institutions and the amount you are asking for. In my case, it was the credit union where my money is kept. They can give you an answer while you're sitting there and tell you what the monthly payback will be. Ask for an amount that would cover what you expect to have to take a loan on. It does not have to be to the penny, round up to the nearest thousand. I pre-approved for the entire price of the vehicle using the most expensive one in my category, taxes, tags, etc., and added a "buffer". THEN I went to the dealer and haggled. Between the haggled price and a hefty down-payment, I went back to the credit union with the invoice and took a loan for half of what I pre-approved for.

You do not need an invoice to pre-approve. They know this. It's a very common practice.

After negotiating with the dealer, he will most likely ask to finance with him. If you have a good credit rating and can take the additional hit on your score while they check the numbers, let him run the numbers. It may be a better deal than your bank/credit union.

 

[Gilligan]

You're not taking a loan when you pre-approve. All you are doing is getting an OK from the bank that they are ok with the amount you're asking for. This process, btw, does show up as a hit on your credit rating scores, as does each request from different places, including the car dealership. Pre-approval does NOT mean you have to follow thru and take the money.

There is basically no paperwork. You sit down, talk the the officer, you fill out a one-page request with your name/address/phone, etc..... your financial institutions and the amount you are asking for. In my case, it was the credit union where my money is kept. They can give you an answer while you're sitting there and tell you what the monthly payback will be. Ask for an amount that would cover what you expect to have to take a loan on. It does not have to be to the penny, round up to the nearest thousand. I pre-approved for the entire price of the vehicle using the most expensive one in my category, taxes, tags, etc., and added a "buffer". THEN I went to the dealer and haggled. Between the haggled price and a hefty down-payment, I went back to the credit union with the invoice and took a loan for half of what I pre-approved for.

You do not need an invoice to pre-approve. They know this. It's a very common practice.

After negotiating with the dealer, he will most likely ask to finance with him. If you have a good credit rating and can take the additional hit on your score while they check the numbers, let him run the numbers. It may be a better deal than your bank/credit union.

Exactly ^. I've never even heard of this "purchase order" thing and certainly never had a bank ever ask me for one. ?

 

[glhs837]

My last three car purchases were preapproved loans. Two of which I flew out of state to buy. What you get is some paperwork and a check that is good for no more than your approved amount.

 

[DEEKAYPEE8569]

My last three car purchases were preapproved loans. Two of which I flew out of state to buy. What you get is some paperwork and a check that is good for no more than your approved amount.

Remember the Pontiac Firebird Formula? I went to my bank; applied for a $30K+ loan and was handed a check within a week. Cooler heads then prevailed and less than a week later, I turned the check back in. In hindsight, I'm glad I did.

THIS is what I've put on my latest wish list.
https://www.google.com/?gws_rd=ssl#q=2016+Mazda+Mazda6+i+Sport+Sedan.....I'm a little more toned down nowadays.

 

[DEEKAYPEE8569]

My last three car purchases were preapproved loans. Two of which I flew out of state to buy. What you get is some paperwork and a check that is good for no more than your approved amount.

Ahhh.....I see (I think).....take a check for $30K, for example, and try/hope/intend to negotiate down.
Well, I won't be travelling out of state if I decide to get something new. So, if negotiations don't work out, it's just a drive vs. a flight home.

 

[Gilligan]

Well, I won't be travelling out of state if I decide to get something new. So, if negotiations don't work out, it's just a drive vs. a flight home.

Yeah, buying new does not typically require any traveling to other states. I've bought many used vehicles that required me to fly somewhere to complete the transaction and arrange shipping back home. Haven't driven one back home yet, but it's an option always on the table. It was a tough decision for the F-450 tow dually I bought in Arizona a few years back. Decided to have it shipped..

 

[glhs837]

Both out of state deals were negotiated beforehand, with the dealership understanding that I was brining a check for exactly that amount and emails from the sales manager stating so. In the Neons case, it was MSRP plus tax tag and title, not a dime more. For the Jeep, I actually had cushion, but they didn't need to know that The Neon, simply couldn't get one anywhere in the country besides FL and CA at the time. The didn't ship them anywhere else the first four months or so. The Jeep, that combination of options just couldn't be had any closer than Ohio given it was after the end of that model year, and three or more months before we could hope to get one from the new model year. In each case, the travel added maybe $300 or so to the deal.

You would be amazed at how accommodating dealerships will be for travelers. In Ohio, they sent a guy to pick me up a the airport, a 30 minute drive away. I get crazy when people say "I couldn't get a better deal, no local dealership would work with me.". So they spend a few thousand that $200 in airfare could have saved them.

 

[DEEKAYPEE8569]

Both out of state deals were negotiated beforehand, with the dealership understanding that I was brining a check for exactly that amount and emails from the sales manager stating so. In the Neons case, it was MSRP plus tax tag and title, not a dime more. For the Jeep, I actually had cushion, but they didn't need to know that The Neon, simply couldn't get one anywhere in the country besides FL and CA at the time. The didn't ship them anywhere else the first four months or so. The Jeep, that combination of options just couldn't be had any closer than Ohio given it was after the end of that model year, and three or more months before we could hope to get one from the new model year. In each case, the travel added maybe $300 or so to the deal.

You would be amazed at how accommodating dealerships will be for travelers. In Ohio, they sent a guy to pick me up a the airport, a 30 minute drive away. I get crazy when people say "I couldn't get a better deal, no local dealership would work with me.". So they spend a few thousand that $200 in airfare could have saved them.

In '92 when I bought my Plymouth Laser; the other version of the Mitsubishi Eclipse; in Norfolk, VA, I was hit with a mistake the sales manager made. I initially paid the tax/title/tag fees for VA; this after telling the man I was registering the car in MD. About a week after having the car, I get a letter stating he made a mistake and that I'd have to pay what amounted to double what I initially paid for the aforementioned fees, because I registered out of state. Funny part was, they advertised being the oldest Chrysler/Plymouth dealer in the area. Seems like they would have known not to make that mistake.

 

[glhs837]

Both of mine ended up with me getting some sort of small refund because the dealers charged something they should not have. In the FL case, it was a couple hundred, in the Ohio, was I think $35. Nice thing about Navy Federal, when I explained that I was buying out of state, they figured tax tag and title, and direct deposited that amount of the loan right into my checking account so after I got home and went to the MVA, I had that ready to go, since the Ohio dealership obviously couldn't do that like they do for locals.

 

[DEEKAYPEE8569]

Both of mine ended up with me getting some sort of small refund because the dealers charged something they should not have. In the FL case, it was a couple hundred, in the Ohio, was I think $35. Nice thing about Navy Federal, when I explained that I was buying out of state, they figured tax tag and title, and direct deposited that amount of the loan right into my checking account so after I got home and went to the MVA, I had that ready to go, since the Ohio dealership obviously couldn't do that like they do for locals.

I have to ask if my bank can/will do this even though I wouldn't be buying out-of-state.

 

[glhs837]

I have to ask if my bank can/will do this even though I wouldn't be buying out-of-state.

No need, really, and dealership in state can do all of that for you, saving you a trip. It's what that obligatory documentation fee pays for.

 

[DEEKAYPEE8569]

No need, really, and dealership in state can do all of that for you, saving you a trip. It's what that obligatory documentation fee pays for.

:timtaylorgruntofrealization:

When the sales manager starts asking, 'Do you want GAP insurance?'.....and things like that; I just say 'no.' I'd never heard of GAP insurance until 2012.