How to get the best rate on a new car
 

Wife needs something cheap and reliable with good gas mileage.

We are not particularly loyal to one brand or the other.

So we are OK with Honda/Mazda/Hyundai/Nissan/etc.

But don't want to spend a day or two (or three) hassling with the dealers... and here is the big thing. Every time we are for a rate on a loan, won't they run a credit check? Every time they run a credit check doesn't that hurt my credit rating?

What is a boy to do? :confused:

Credit hopping is OK and recognized by the FICO folks. They know you are shopping for a car when they see multiple checks from one particular type of business, i.e., car dealerships. Don't go out and price financing on furniture and a spa on the same day you are buying a car!

You can get the "invoice" price from many services, namely Consumers Report or Edmunds. There are others. You can buy from the Internet sales person or you can find the fleet manager. I usually go for the fleet person and get right down to business. If you don't, they will lose interest in you and your deal.

I bet kaisen can fill in the rest.

what about going to a credit union and get approved? my wife did this. she had all the loan BS done before we stepped into a dealership. once we found the car, she called the credit union with the final # and the magic happened.

or check the internet and find the promotional loan rates at the various manufacturers? dunno, been awhile for me.

Most places have online quote requests. Figure out the car you want, ping their online sales person. Some places will play games - cross them off the list. Other places will send you a list of what they have along with the price. Take the one you like. Coordinate financing and other issues (call or fax important numbers, email negotiations), then go in and pick up the car. I've done that the last 4 vehicles.

All dealers are not created equal. I emailed all the LA Subie dealers for the last one. The one closest to me wanted to play games and was largely incompetent. 3 others sent me prices. I picked one, drove my trade-in down, signed papers, drove away with the new car in will under an hour.

You're asking two separate questions. 1) Cheapest price, and 2) Best loan rate.

For the cheapest price, do what nostatic suggested above. Email the internet salespeople for some SoCal dealerships. Tell them what you want and what you want to pay. Some will respond, some won't. Take the best price quote you get and then see if the dealerships geographically closest to you will meet/beat it. Takes maybe two or three days of email tag to do this, but it's the least painful way to go, IMO. I've purchased my last two new cars like this.

For the best finance rate, other than what vash suggested I don't know what to tell you as I've had the fortune of paying cash for cars.

Yes, you have to know what the going interest rate is. And, never trade in a car.

You have to know:
the price you will pay
the interest rate you will pay
any incentives available (they won't always tell you about loyalty discounts or student discounts, etc., but they can be there and the dealer does not pay for them)

Milt gave the best advice. First I would figure out exactly what I want, lots of research & a few test drives. Find out what kind of deals people are getting on that particular model in largest model specific forum. Email all local Internet & Fleet Managers with low-ball (within reason) offers on exactly what I want. I even check all the local dealers inventory to make it as specific as possible. I'll get replies of the dealers absolute lowest price. I found it doesn't help to try to get them to compete against each other. Just go with the lowest.

Best case, I get it for $500 under invoice plus keep the rebate, worse case the car is in great demand & I get it for $1000 under MSRP which is still $1k cheaper than the best deal I could have got walking on the lot.

I have found the dealer has the best financing terms even if they're not advertising 0%. I've done it this way three times now & every time has been smooth with very little hassle other than them trying to sell aftermarket crap. I walk into the dealer with a done deal & drive away an hour later.

Right now car manufacturers are offering great financing plans that banks and credit unions cannot touch. I believe Porsche still is offering 1.9 %.

That being said, I bought my wife an Odyssey. Purchased it thru the online sales manager and used a credit union that I joined just for the financing to get the best available package for my needs.

Cash, no trade...and if you belong, go with the COSTCO buying service, which gets fleet buying prices.

Alas, this works only for routine cars...but would fit in your case. I assume you're talking new?

Milt's advice was spot on...

I sold cars for a short time, but long enough to know the inside game. Sales staff is trained by people who are trained by people who went to Harvard and then went to work in marketing at the manufacturing level. While many of the sales staff are idiots, the devices they use can be and are no less than brilliant.

You have to see it coming.

I'd be happy to, if you'd like the advice.

First, are you sure you need/want a NEW car? Some cars are best purchased new (i.e. Honda Civic), some are way better overall 'deals' as used cars. Tell us which ones you're looking at (Fit size? Civic size? Accord size? 4 cyl or V6? Loaded or appliance?) an I can tell you what the market is doing.

IF you are looking at a NEW car, the captives (Ford Credit, Toyota Credit, etc) are offering 0% on many models. Sometimes that's the best, other times taking the rebate and going to a local credit union makes more sense. Often it depends on how long you are keeping the car, or how long you will truly take to pay it off.

Either way, it pays to get pre-approved through a local credit union. Shop around. There are great deals on auto finance right now, like mid 3 to mid 4% range for 60 months for new or same-year-used cars.

A common 'trick' of the slimy sales guy is to get you to talk about payments rather than the price of the car. Having a rate locked-in helps you do the math in your head, so you can look at a car that's in your budget but not let the sales guy show you what he wants to sell (high profit). If 0% for 60 months, it's $16.67 per thousand total borrowed (ex, $20K loan = $330/mo), or 72 mos it's $13.89/thou. For a 60 month loan at 4%, it's about $18.50 so that same $20K loan is $370/mo.
However, worrying about getting screwed if one lender is 3.89% but the other is 4.29% is kinda meaningless....it's only $3.50 per month on $20K. I lose more each week in various seat cushions.

New cars are easy as they are commodities. The internet is a great tool for avoiding the 'showfloor circus'. Email the internet manager, develop a personal relationship, and put them to work for you. Being humble and genuine pays off. They're not out to get you, just earn your business. So if you expect honesty, be honest. If you expect no games, don't play them. If you expect friendly, be friendly. You get the point.

Used cars are much harder, but I'll supply the market data on cars you'd like, and maybe suggest the deals out there.

We're car guys (that's why we're Pelicans) so the process should be enjoyable. Have fun!

this is what i did and it was very painless

BTW, dealers can typically get much better rates than most local banks.

Large dealers are signed up with several lenders, and can easily shop rate. The lenders know that they have to be ultra-competitive to earn the dealer's business, which can be millions. A few tenths of one percent can be the difference between getting 100 loans through one dealer, or none. So dealer's 'Buy Rate' can be much less than walking into that same bank. Sometimes much less.

In California, the government has chosen to step in and 'cap' the profits that dealerships may make by marking-up the rate. If the buy-rate is 4.00%, the dealer may write your loan for 6.00% and keep the difference it makes over time. In California, the spread can only be a couple percent, depending on certain factors.

So, you want the dealer to write the loan at the buy-rate. Instead of making the spread, they make a 'flat' of $100-500 for originating the loan. But that's better than the big fat zero they'll make if you finance elsewhere on your own. So let them know that you're happy to finance with them for their buy-rate and let them make something rather than nothing. They'll probably find you a rate that's much better than you found on your own.

But knowing your baseline pre-approval puts you in the driver's seat when it comes to deciding on whether to finance through the dealer.

I knew he'd get at the fine points. You know, whether you go thru the showfloor or the fleet person's office, you ultimately face the F & I person. "Finance and Insurance" is a term long used but the duties of the person in that position have changed somewhat. This is where you will be hustled for extras. Used to be where the Lojack was sold before cars had their own on board systems. And more stuff, maybe even some seat cushions. :D

The F & I person will definitely try for some of the spread. One guy I worked with upped the monthly payment just less than a dollar on each deal. On a 60 month loan, he made a little over fifty bucks. 4 loans a day and he made over 200/day on that alone. Of course he split this and other "profits" with the manager team.

this pisses me off. last time, helped my GF (now wife) buy a camry. the salesperson, dropped a number like, "i got the manager down to $450 per month!! you can handle that easy!"...quick button pushing on my HP48Gx, showed us he was totally ripping us off!. i showed the number to my wife on the calculator, and we silently got up in the middle of his sentence...and walked away. he chased us down..with a "what did i say look?".. i asked him if we looked stupid..

it was fun. kinda.

You were looking at the old "four square" method.

Price..................Down Payment
.
.
.
Trade In.............Monthly Payment


They conveniently leave out the interest rate.

I never dealt with any of this crap on the last few cars. Emailed dealers, got their best price. Went with the dealer that was the best to deal with based on how quickly the responded, nature of their comms, and "vibe" I got from the email traffic. Then closed the deal and that was that. I did trade my last car in, but got what I considered to be a fair price for it, and that was negotiated via email as well. I was honest about condition, they gave me a price. Could I have gotten more for it selling it outright? Maybe, but no way it would be worth my time and aggravation. I'm willing to pay for convenience, ymmv.

I would kinda like to buy new... I am just paying off my Hyundai that has been on auto pay for three years so I should have good credit rating with them.

Basic formula is four doors, 30mpg, $15K

I like the Sonata because of the high safety rating and 16 YO step-daughter will be borrowing the car from mom but they seem to be running $20K

Other options are Toyota Corolla, Honda Civic, Mazda 3... but again most of those run closer to $20K (new) than $15K we are shooting for.

Guess I need to send out some emails and see who is hot to sell.

I drove down to Costa Mesa to buy my Hyundai because they gave me the best deal via email (drove past a half dozen Hyundai dealers on the way) three years ago.

Thanks for the replies,

PS, I do have Costco and will check into that also.

I will back up and say that if you bring your trade-in to the deal only after everything else is locked in, it is a neat and clean way to get rid of a car if all you want is somewhere around wholesale. They will wholesale it and come out even and you do less work.

2010 Mazda 3i manual base will be advertised as loss-leaders for $15999, add $1000 if automatic

2010 Nissan Sentra S with CVT auto will be just under $16K

2010 Hyundai Elantras are as low as $13's base-base, under $15K manual 'normally equipped' and under $16K GLS with auto

Forget anything near $15K in Honda or Toyota

OR, a used 2010 Hyundai Sonata GLS with under 20K miles should run under $15K

Thanks Kaisin and everyone else.

Why on earth would running your credit hurt your credit rating? That's about the dumbest thing i've ever heard.

Credit unions invariably give the best rates on auto loans. A personal loan is even better, with an even lower rate, and if you fall behind they won't repo the car.

You will also save an enormous amount of money if you buy a car that's 3 years old vs a new one, or, alternatively, get way more car for a set price.

Used to be that way. Credit bureaus got nervous when you were running all over town talking about taking out a loan. As I mentioned, it may not be in your best "interest" to be putting in credit apps at unrelated businesses all at the same time.

People getting ready to file for BK have been known to do this and skip with some new stuff that they never intended to pay for. Retailers will rely on a sudden drop in your score to deny your app.

The funny thing is, when you get to the 3rd or so car dealer, they can see where you were earlier that day! I've seen it. It's real funny when the customer tries to tell you that they aren't shopping around that much.

Yeah, right.

But, if they've been to the furniture store and opened an account, then get to the auto dealer later that day, they won't be getting the "buy rate" kaisen told you about.

1. I agree with credit union rates.
2. Buy a car at the end of the month when the dealer is looking to boost numbers.
3. Walk over to the sales board and see who has sold the least amount of cars, then walk over to their desk!
Good luck!

ND

My pop is very happy with his Costco experience, he got a good deal on an Accord. Simple, to the point and a good price.

Check if Honda has a VP/Value Package right now. The are sort of between the dx/lx level and usually priced to move.

I suppose that makes sense.

last second hand car I bought, i got them to go higher than they should on the trade in and low on the sales price, acting like I believed them when they said it was the best they could do when they offered me a 5 year note at about 8% higher interest than I probably should have had to pay. They thought they were going to make all their money on the loan, but failed to realize that I had the dough to pay the car coming before the interest on the note began to accrue.

Paid it off a few weeks after I bought it. Got a call from the sales manager the day the check cleared asking how the car was, that sort of thing, worked his way up to asking about me paying it off being a good idea, turns out they can get the loan for about 7% less than he thought, blah blah.

Told him I felt like he was trying to rip me off on the loan, because there is absolutely no way my credit went up enough to cut the interest in half in a few weeks. Felt great to screw them, and get to tell them on the same deal.

The Ford dealer tried to screw me over on a new car earlier in the day I bought the second hand one. Had gone the day before looked at a car, came to an arrangement, which they changed and thought I would not notice. Had the wrong price, wrong rate on the loan. I got up, told the guy he must have thought I was kidding when I came to buy a car, guess I won't be back for the Lincoln in three years. The following Monday, the sales manager from the Ford dealer called, trying to salvage the deal I had walked away from. Sorry, I don't need a car, I bought one on Saturday.

I did this once. I bought a Mazda B2300 for $3700 that was listed for $5500. Business was very slow that day and I just browbeat them. They even knew I was stuck there when my then-GF threw a fit and drove off, leaving me stranded with no way home. But they finally agreed and I drove the truck home.

There is a 2009 Hyundai Sonata GLS V6 at Manheim's So Cal auction in Fontana that was part of a dealer's floorplan reposession. It is 'new', I guess, with 136 miles on the odometer. Books and remotes are missing.

It will likely sell for ~$15K or so, based on recent transactions.

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