Can you get a better deal on a new car if you finance?

[nsl]

I've got cash to pay for any of the cars I'm interested in, but I've heard you can actually get a better price on cars if you play the finance game for a couple of months, then pay it off in full.
Am I wrong, or is it better just to be up front and pay cash?
Also, what about some that have very low or 0% interest?
How does that work?

 

[doublesharp]

Cash is king.

 

[tt66]

Many dealers get incentives if you finance with one of their lenders. Some of dealers will pass that savings along.

In my opinion, if you can get very low, especially 0% interest, that is better than taking money out of the bank. We have a Subaru financed at 1.9% and I don't want my wife to pay it off. What you will make with interest compounding in the bank is more than the cost of the 1.9 or lower interest rate. I also would rather have the money in the bank in case of emergency. You can't go borrow it on a personal note for anywhere near that rate.

 

[NYlakesider]

I've got cash to pay for any of the cars I'm interested in, but I've heard you can actually get a better price on cars if you play the finance game for a couple of months, then pay it off in full.
Am I wrong, or is it better just to be up front and pay cash?
Also, what about some that have very low or 0% interest?
How does that work?

Short answer YES.

Dealers make more money on the finance end than they do selling the actual car.

 

[nsl]

Many dealers get incentives if you finance with one of their lenders. Some of dealers will pass that savings along.

In my opinion, if you can get very low, especially 0% interest, that is better than taking money out of the bank. We have a Subaru financed at 1.9% and I don't want my wife to pay it off. What you will make with interest compounding in the bank is more than the cost of the 1.9 or lower interest rate. I also would rather have the money in the bank in case of emergency. You can't go borrow it on a personal note for anywhere near that rate.

Subaru is one of the makers I'm looking at.
Think the Forester is about 3.5%.
Anyway, does that low percent based on you paying the $33K original price, or the $30K "internet price" most dealers have?
I've been out of the car game so long that I have no clue as to how most of this stuff works now.
Used to be able to get the best deal with cash, but not today.

 

[tt66]

It looks like Subaru is only offering a finance option. Some manufacturers offer cash or low finance rates.

As far as the Forester goes, we love ours.

 

[stevebarracuda]

Also look at leasing . Some mfg. offer excellent rebates on leases , you can pay the lease payments up front then the balance or pay
monthly then the balance when the lease is over.

 

[nsl]

It looks like Subaru is only offering a finance option. Some manufacturers offer cash or low finance rates.

As far as the Forester goes, we love ours.

Where you able to talk them down more than the so called internet price?
The new Forester Sport and Outback 3.6R are the ones I'm interested in most.
Doubt I'll be able to get a decent deal on the Sport as they are selling fast here, and we have no snow (Arkansas).
I guess tax return time is a bad time to be shopping.

 

[wood714]

I bought a Tacoma last Halloween day, picked it up November first. I financed it, but made sure there were no pay off penalties.

I paid it off in March.

Interest was really low, but I just hate making payments.

 

[fiasconva]

When I was new car shopping a couple of years ago I walked off several car dealerships' lots because they didn't want to deal with me when I told them I wanted to pay cash. They weren't interested in selling me a car unless I wanted to finance it.

 

[tt66]

Where you able to talk them down more than the so called internet price?
The new Forester Sport and Outback 3.6R are the ones I'm interested in most.
Doubt I'll be able to get a decent deal on the Sport as they are selling fast here, and we have no snow (Arkansas).
I guess tax return time is a bad time to be shopping.

We purchased a XT, which it the turbo that is no longer available.

They discounted the new car and we had a trade in which they actually valued higher than what I had. My buddy went last spring and bought a Crostrek and they discounted it as well.

I have been in the car business for 29 yrs, most of that in the F&I area. Each manufacturer is a little different and then seasonality can also make a difference as well. I would recommend getting a quote from another dealer so you will have a little ammo when you go to your favorite dealer.

 

[Goldstar225]

With the last two trucks I bought, part of the discounts were $6000 off only if I financed through the dealer (at 6.5%!). OK, I'll play your game. Made the deal and a month later refinanced at my credit union at 2.5%.

 

[Ole Joe Clark]

I cannot stand to make payments and pay someone/company interest.

No house pymt, auto, or other type, thank the Lord.

Have a blessed day,

Leon

We do have a a credit card that we pay off each time we use it, and another card that we pay more than the minimum amount to prevent interest being added.

 

[magmag]

In theory yes you could eventually get a better deal when financed. As said dealer gets incentives from financial institutions on a financed deal.

Although you have cash, you can play their game, have it financed get a better deal and pay it off right after. However read your finance contract very carefully, some contracts do have a pre-payment penalty and some contracts depend on your state have simple interest loans and "rule of 78" loans. Interest calculation on Rule of 78 loans are much different on the simple interest loans.

Bottom line read the fine print yourself and don't go by what the dealer F&I guy says!!!

 

[crankyoldlady]

Short answer YES.

Dealers make more money on the finance end than they do selling the actual car.

Which is why it's a good idea to not say how you are paying for the vehicle until the deal is made. Then get out your checkbook. Till then, keep clam.

 

[VaTom]

Only if you get 0% financing. My last two Toyotas had that. Bought in February when sales were slow and they start offering the incentives to move cars. Many dealers get incentives, more cars from manufacturer based on how many they sell. I would advise buy towards the end of the month. Toyota has their own financing outfit.

 

[03hemi]

Short answer YES.

Dealers make more money on the finance end than they do selling the actual car.

This is the bottom line at a dealership (I sold cars).
If you finance, you'll definitely get a better deal "up-front."
Then turn around and pay it off, just make sure there's no "early pay-off penalty" hidden in the contract.

 

[JcMack]

I am flawed, therefore most of my thoughts are flawed. If you've got 25-30K to pay off a car. Don't. Instead finance the thing. That kind of cash could come in handy down the line. You never know. When you drive it off the lot your new car loses 15% of it's new value instantly.
I get the feeling most on this forum are worth more than I so my opinion is probably valueless.

 

[NYlakesider]

Over the course of my life I have bought many new cars and trucks.

For about 25 of those years I worked up a good no BS required relationship with a sales guy at a major dealership.

Of course I did my homework, (trust but verify) but we could do a good fair deal without a lot of the drama and time waisted.

Since he retired and I moved 60 miles away I have been getting my vechicles at other dealerships and "playing the game"

One of my stradigies is when negotiation is to sort of in the middle ask about financing with the dealer. That way normally will get you the best price as they think that is what you will do if the deal goes through. I normally am cleared with a low price bank or credit union which of course they do not know.

Now if the deal is consummated and their finance person can match my outside arrangements I will do it with them. If not I go to plain B. Many times the dealer can match, they just do not make as much as they would with other less informed purchasers!

 

[kwselke]

The answer is sometimes yes, sometimes no. Years ago I got a three year 2% loan through Ford Motor Credit while having the cash to pay it off in a commercial money market account that paid over 4%. The cash price was the same as the credit price. The credit manager explained that some advertised promotional rates had credit requirements that few could meet, and they had to make enough loans under the advertised terms to keep from being guilty of false advertising. Just remember the car purchase price, trade-in price, and financing costs should be treated as three separate transactions and getting a good deal on one does not necessarily offset a bad deal on another.