Question about external financing. The dealer told me
09-15-06, 07:47 PM
#1
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Question about external financing. The dealer told me
i could get the car, finance through them, and then come back in a few days with my credit union loan which is a lower rate. How does this work?
I'm thinking i should just wait a few more days until my credit union loan app is complete, but i dunno.
I'm thinking i should just wait a few more days until my credit union loan app is complete, but i dunno.
09-15-06, 08:11 PM
#2
Wait until you get your credit union financing in order. There's too much that can go wrong if you sign, then sign with somebody else, and then come back and "undo" the original contract signed with Lexus. The dealership/salesman is just trying to push cars out, because they don't get paid until you take delivery of the car.
Javier
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09-15-06, 08:14 PM
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Of course they want you to do this. What he's not telling you is the stealership makes anywhere from a few to several hundred dollars in commission/kickback from whatever financial institution they give the loan to. The amount depends on several factors, but generally, the higher the rate they finance you at -the more they get. Under this deal, they have no incentive to get you a good rate on the initial loan since you'll be refinancing anyway soon, so they'll go for whatever deal profits them the most. And then... when you come back with your credit union financing, they may have an arrangement in place to get a cut from your credit union too if they do the refinance.
My advice is DON'T DO IT! It's a lot of extra hassle for you just to get your ride a few days earlier, and only puts more money in their pocket. You can always try and ask them to give you a cut of the loan profit on your deal, but don't hold your breath. They'll say they don't make money on financing (liars). They're car stealers after all.
My advice is DON'T DO IT! It's a lot of extra hassle for you just to get your ride a few days earlier, and only puts more money in their pocket. You can always try and ask them to give you a cut of the loan profit on your deal, but don't hold your breath. They'll say they don't make money on financing (liars). They're car stealers after all.
09-15-06, 08:30 PM
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Here's another possible scenario. Sometimes in a situation like this where you may need a few days to secure funding... the stealership will let you take the car that day. You write them a check for the total amount and they agree to cash it in a few days. You also sign a backup contract for financing. In case your loan doesn't go through or you try to be clever and stop payment on the check, they execute the backup contract. They get paid for the car, and you're financed regardless. Again, they have no incentive on the backup contract to give you the best deal, so expect a higher rate if you have to use it. Just make sure you are clear that they're giving you a "backup" or "contingency" contract and make sure you give yourself enough days for your funds to be in place for the check because they will cash it on the very day you agree upon.
09-15-06, 11:24 PM
#6
Here's another possible scenario. Sometimes in a situation like this where you may need a few days to secure funding... the stealership will let you take the car that day. You write them a check for the total amount and they agree to cash it in a few days. You also sign a backup contract for financing. In case your loan doesn't go through or you try to be clever and stop payment on the check, they execute the backup contract. They get paid for the car, and you're financed regardless. Again, they have no incentive on the backup contract to give you the best deal, so expect a higher rate if you have to use it. Just make sure you are clear that they're giving you a "backup" or "contingency" contract and make sure you give yourself enough days for your funds to be in place for the check because they will cash it on the very day you agree upon.
09-16-06, 12:31 AM
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Never, ever buy a car if you don't have the cash or are not pre-approved with financing from your bank or credit union. If financing, always get it pre-approved, then you can put the heat on the dealer to match or beat it. Walking in cold like that is a recipe for certain disaster - you might as well walk in with 'Sucker' tattooed to your forehead . . .
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09-16-06, 06:32 AM
#8
Never, ever buy a car if you don't have the cash or are not pre-approved with financing from your bank or credit union. If financing, always get it pre-approved, then you can put the heat on the dealer to match or beat it. Walking in cold like that is a recipe for certain disaster - you might as well walk in with 'Sucker' tattooed to your forehead . . .
09-16-06, 11:58 AM
#9
+1
wait and be patient, your bank will always (in theory) give you a better deal on your rate. I have never used dealer financing unless the rate is better then my credit union, even if you have tier one credit, they always seem to sneak in an extra half point, and sometimes a full point, that gets kicked back to them from the finance company.
notice how the dealer never tells you what your credit rating is? you should know that anyway before you go in.
always be preapproved and never get emotional about the car they are trying to sell you, waiting has its advantages. like everyone here has said, the stealerships just want to move cars, once you have taken possession of the car, you own it no matter what happens with the financing.
wait and be patient, your bank will always (in theory) give you a better deal on your rate. I have never used dealer financing unless the rate is better then my credit union, even if you have tier one credit, they always seem to sneak in an extra half point, and sometimes a full point, that gets kicked back to them from the finance company.
notice how the dealer never tells you what your credit rating is? you should know that anyway before you go in.
always be preapproved and never get emotional about the car they are trying to sell you, waiting has its advantages. like everyone here has said, the stealerships just want to move cars, once you have taken possession of the car, you own it no matter what happens with the financing.
09-16-06, 12:33 PM
#10
+1
wait and be patient, your bank will always (in theory) give you a better deal on your rate. I have never used dealer financing unless the rate is better then my credit union, even if you have tier one credit, they always seem to sneak in an extra half point, and sometimes a full point, that gets kicked back to them from the finance company.
notice how the dealer never tells you what your credit rating is? you should know that anyway before you go in.
always be preapproved and never get emotional about the car they are trying to sell you, waiting has its advantages. like everyone here has said, the stealerships just want to move cars, once you have taken possession of the car, you own it no matter what happens with the financing.
wait and be patient, your bank will always (in theory) give you a better deal on your rate. I have never used dealer financing unless the rate is better then my credit union, even if you have tier one credit, they always seem to sneak in an extra half point, and sometimes a full point, that gets kicked back to them from the finance company.
notice how the dealer never tells you what your credit rating is? you should know that anyway before you go in.
always be preapproved and never get emotional about the car they are trying to sell you, waiting has its advantages. like everyone here has said, the stealerships just want to move cars, once you have taken possession of the car, you own it no matter what happens with the financing.
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