Hello, I am going to be buying a new Toyota in the fall when the '08 models come out. I will probably be getting a Rav 4. I currently own a 2000 Echo, which I financed through Toyota Financial at the dealership. My question is this- am I likely to get a better interest rate getting a car loan from my bank? Are there other advantages using a bank? What, besides the convenience factor, would be the advantages if using Toyota Financial? This will only be my second car I have bought, so I am not familiar with going through my bank. Any advice would be appreciated.
On the day I bought my car, Toyota's rate was the highest, by about 1/4 point. A week later, a friend of mine shopped around and found Toyota's rate to be the lowest. Nobody can answer the "better rate" question until several days before you actually buy the car. Even then, you'll need to figure in any incentives they may be offering.
Go to your bank's website and the websites of other local banks and national banks and credit unions and see what their rates are.
Also, get copies of your credit report and credit scores from the three credit bureaus. If you have anything in your credit report, now is the time to fix it.
Yes, you know what the finance costs are upfront. If you get a preapproved loan from a lender, and Toyota offers you better terms, you can take the terms from Toyota. But you aren't stuck with Toyota.
Look up bank auto loan rates by searching google or yahoo.
And there is a financing guide here:
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The dealer makes more money off you.
Just stop at the bank and ask to speak to an auto loan person.
The rate I can get at my credit union is 6.2% up to 48 months. PNC Bank has auto loan rates at least 1.5% higher.
Shop around. And that's easy to do on the internet.
Good luck and shop around!
And don't buy the insurance at the Toyota dealer that pays the loan off if you die. What do you care? You're going to be dead.
Joe and Jeff give good advice. Be aware that Toyota offers a returning customer discount called the Encore Program of one quarter percent, I believe. You can check their web site for the details.
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You may want to check their special offers page as well for anything in your state or region.
Also be aware that if you sell you vehicle before the payoff term, you will have to have the title released by a Toyota agent. This can only be done by sending the title with the payoff amount to Toyota and them returning it to you. This process can take from three to ten days. It can not be done by a dealer. If you finance with someone local, you can usually walk in with the payoff and have an agent sign it off while you wait. Just a thought.
Here's the deal: money is a fungible. It simply doesn't matter WHERE you buy the money; the only thing you should consider is the cost of buying the money. That's the interest rate and loan terms (early payoff, where/when does interest accrue/pay off, etc.).
In theory, then, you just shop around until you find the best price for your loan.
BUT: never, ever, ever buy the money from the same guy who's selling you the car. Why? Because then he owns more pieces of your car deal than you want him to own. If he owns the process of selling you the car, AND the process of selling you the money, AND the process of trading in your own car, he can do absolute wonders with those numbers and make you think you're getting a heckuva deal when in fact you're paying $5000 over sticker for the new car and getting screwed on your trade in.
Ask the guy who's selling you the car to give you a number for the car. Period. Go somewhere else, anywhere else, and buy the money you need. Give that money to him, he gives you the keys, everybody is happy. The guy who sells you the money has one thing in mind--your money buying business. He will do whatever he can to get it. The same for the car guy. But in each case, you get to see the bottom line numbers independent of one another.
Too many ignorant people let the salesman handle the whole deal and talk in terms of "monthly payment". There is no better way to hide high prices than to let one guy handle it all and simply give you a "monthly payment".
And sell your old car yourself, whether it's private party or whether it's driving it to a used car lot (any used car lot) and asking him how much he'd give you for it.
Because I promise you, whatever he'd give you for it is what the new car dealer would end up giving you for it. Oh, he might use the new car sale and the money sale to make it LOOK like he's giving you more for the used car, but he's not.
Remember: car salesmen do this several times a day, every day of their lives. You do it once in a blue moon. Don't give them the whole business. Buy your money from a guy who does nothing but sell money. Buy your car from the guy whose PRINCIPAL job is to sell cars. And sell your car to another guy whose PRINCIPAL job is to buy cars that he can sell on his lot.
But... what if you do this: get the cost of the new car squared away, with no talk of whether you're going to trade or sell privately, & no mention of how or where you're going to finance. Just get the cost of the new cat nailed down - to the point where you want it, that is. *Then*, once that's squared away, can talk car loan (assuming you know exactly how much you plan on financing & what the banks & credit unions have on offer) with the dealership - if the buyer's interested in that route.
Let's follow your scenario. I have the car in stock, with a $1,000 dealer pack, that you want, and I go to down to the lowest price, $200 over our invoice, including ALL incentives and rebates. You buy the car, I make $200 to cover my cost of selling the car plus another $800 or so from the 3% carry over that I will get on my quarterly, plus another $600 in smoke and mirrors added on every car on the lot plus anything the F&I can can sell you. I now earned a minimum $1,600 and obtained all the cash I need to buy another car for stock, to start over. All on one day on one sale
Instead of closing on the price I offered, you throw in a four year old trade. I now know I need not offer you a fictionally high trade price toward a car at MSRP, since the selling price is set. I offer you the real price at which dealers trade cars that are nice, wholesale or less. You either take it or you don't, If you do I will make another $2,000 plus, on the deal when I sell it at retail. I will need to take some capital to make up for the amont I paid you to cover the cost of another new car for stock, untill I sell your trade. It may take me three months, or more if I take a trade on your trade, to make all my costs and profit. That is one reason we like "no trade" deals, we make our money more quickly but we make a lot more taking trades on trades, over time
If you don't trade, I'm back where I started. If you try to sell it by yourself, you will be lucky to get wholesale. That hurts you, not me. IF you are lucky enough to find a buyer, with 11 or 12 thousands in cash and no trade, you will still be out between $750 and $1,000 in tax and fee savings, available on the value of your trade in most states, than had you traded it to me at wholesale. If you live in a state live Virginia you can even be liable for personal income tax on the value of the car you sold. If you are smart you will ask me to do a trade through, which I will do to make the new car sale and get the transfer fees that would just go to another Notary
If you end up financing at the manufacturers, lower than bank rates, through me, I will earn 1/2 to 1 1/2 points on the interest, depending on whether I go recourse or not.
What you want to do, before you come to my store is find the lowest interest rate, for the term you want to finance. then get from me, YOUR total cost of buying that car from me. That includes by not limited too the selling price, trade allowance, taxes fees and the F&I guys interest rate, term and add-ons. Then compare that total drive home price with other dealers, on the same exact car, of the same brand as well as with similarly sized and equipped cars from other brands to determine which deal is best suited to your budget
Yep, BTDT - 4 times. Well, if from the shelter - as the one who's presently on my lap & I'm reaching over her to type, there's a fee, but worth it. One of my other cats - who was free, was a starving, pregnant stray, & she was a sweetie. But later on she was also -very- pricey, medically. But still, worth it.
Yes. It's very easy to have a lot of respect for a cat, IMO.
Yep. If they want to do something, they'll find a way - will just wait for one's head to be turned, or to walk out of the room... whatever. And if they don't want to do something, you'll -know- it.
My present two definitely have their own agendas, re: each other - which do not mesh well. But at least they've reached a state of détente.
If you read what I wrote about trades, you still lose and we lost nothing if you don't trade. We prefer no trade deals, for the reasons I listed. The best deal for the dealership is a no trade, financed through us.
"Incidentals," insurance and death benefits on the loan, extended service plan, undercoat, rust proofing, fabric guard, paint sealant, trim stripes, gold package, leather package, upgraded sound systems, mud, door, grill and bumper guards, remote starters. remote locking, alarms, window tint and VIN etching, custom wheels and tires, nitrogen inflation, lifetime 'free tires,' 'free' oil changes, 'free' inspections, custom roofs, hood and side scoops, custom and spray in bed liners, roof and box rails, floor and trunk mats, hitches, plows, salt spreaders, electric drive clutches (for towed vehicles) etc. Some buyers still will even buy seat covers. All of which are high profit items, that can add thousands to our gross on a single sale. The 'free' stuff, on which we made a fortune, was the most "popular" choice. Buyers prefer to add that kind of stuff to their car payment rather than paying for it separately, elsewhere, later. We of course earned more money on the higher loan a amount ;)
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