What do you guys normally do? Do you go to banks by yourself and shop for rates or do you let the dealer ship search for the best rate for you. My credit union has went up on rates.... searched online and see suntrust has the best with 3.4.

I wanna assume the dealer could beat that?

What is the best route I should take. Asking for help as I have only made 1 purchase of a vehicle in my whole life so I'm as seasoned or knowledgeable as some of you gentlemen.

 

You should definitely do both of what you stated. You should shop personally for rates so you know what interest you can get. Actually talk to the bank and see what you would qualify for.

Then take this info to the dealership and they will probably beat it. They get kick backs for sending loans to banks so they like it when you finance through them. But the higher the interest rate you agree to the more kickback they get.

I knew my qualified rate was 2.89% at my credit union and the dealership matched that at first but then with my down payment amount and trade was still above the monthly payment I wanted to be at. They were already at a good price so didn't have anymore room to move on that so they lowered the interest rate to get the deal done.

 

I love the magic that stealerships can use to magically sell a truck.. Haha!

 

Shop around to find a rate and bank/credit union you are comfortable with. No earlier than 30 days before taking delivery get pre-approved for the loan. Taking the pre-approval letter to the dealer and negociate from there.
We got pre-approved a few days before the Fed's raised rates. When we took delivery the dealership was not able to beat the rate we had.

 

Always remember the dealerships add a few points to loan rates. They get commission on loans. My wife used to work at a credit union doing loans for car dealerships. We went to go buy a car and my wife knew who the loan guy was, but he did not recognize her name. They quoted us a rate and she quickly reminded him who she was as she had talked to him a few days ago. Needless to say, the rate markup was removed.

 

The important thing is to sharpen your pencil and determine what you can truly afford. All you're doing when borrowing money is trading future time and money to get some thing right now, in the present. This comes at a cost, the truck loses value as soon as it is driven off the lot, but you still owe the money on that value, plus interest. Then factor in the cost of ownership, to include registration, insurance, maintenance, tires etc and it adds up quick. Savvy buyers know that a three year payoff plan is the way to determine affordability. Longer term notes means it will depreciate faster than it can be paid off.

 

Oh the humanity, folks making money!

But yes, I always tell people the best way to get a rate is to find out what your bank will do and then let the dealership beat it for you. If the dealership doesn't mark the rate up the bank does, so it's not a "stealership" thing. It's the business of loans!

 

Nobody is saying people shouldn't make an honest living.

 

Example, my son recently purchased a 2017 SD ask me to help him through the process, made the deal had to wait till next day to take delivery due to dealer trade, so l called dealer later in the day to ask what the interest rate would be, was going to check our credit union rate, the rate quoted was better than he could get at CU, finance manager had negotiated a subprime loan I suppose. While doing the paper work the next day a different finance manager was handling the paperwork so I asked him just to check what the interest rate would be and the number he quoted was not what I was told the day before. So I threw out the BS flag, I suspect this guy bummed the rate as a kick back to the dealer. So he backed up and gave him the rate quoted day before .

 

I'd say this comment served no other purpose:

 

Well let's not get off track. All I'm suggesting is that people tend to "steal" from their own tomorrows so they can drive something they can't really afford, today. It's not smart.

 

Is it normal to finance 72 months? 6 yrs.

 

Best advice I could give anyone is to do your homework or the math so to speak, know what your budget will allow. Knowledge is power! Be informed when you go into this thing whether it be for negotiating a deal or your interest rate. Frantz right dealer needs to make a profit to stay in business, being well informed will determine how much profit they and you can live with.

 

It might be "normal" today... but then take a look around you.. historically, no, because it's bad finance.

Keep in mind a lot of financial transactions are perfectly fine for people who have lots of disposable income. What the sharpies have done is package up these deals for people who have no business doing them. The housing market was a classic example.

If one can afford to simply write a check for a truck, borrowing instead can still make sense simply because interest rates are low, and it avoids tying up money, and if worse comes to worst, simply pay off the note and be done with it.

On the other hand If you CAN'T really afford the truck, then a 5 or 7 year note means yer STUCK with it, because it will depreciate faster than it is being paid off. If something happens, and you have to sell, you'll have to pay the difference, which will be substantial. Oftentimes people will then trade it in, even though they are far underwater and start the cycle all over again. Thousands of dollars get vaporised this way.

Financial advisors recommend a three year note. Divide the price of the vehicle by 36 months, if the monthly nut is too high for you, it's too much truck. The point is don't just look at how much you CAN borrow, or how much they'll let you bite off, because it will likely be way more than you can chew.

 

Its becoming that way unfortunately for a lot of people. Its not something I would ever consider, but if you think it OK then go for it. Just remember you'll probably owe money on a truck with no warranty left.