Auto Financing 101 - and Loans in General

Depends on the car, the market, the dealer, and the sales/financial rep.

FWIW, I recently helped someone (iffy credit, great income) buy used from a well known used dealer.

He went in with a approval ready to sign, it was for 12.5%, though I told the sale rep it was for 10.5%.
The sales rep glanced at it, told the finance rep to beat 10%
1.5 hrs later they called with ~9.49% (or there abouts).
I lol’d @ him on the phone.
30 mins later it was for ~8.49%.
He went in & signed the next day.

For reference, at the time through the banks direct lending (bank to consumer, no dealer) the loan would’ve been priced @ 10.99%. I checked.

:tup:

One thing I would like to say is that an educated consumer is usually the easiest and nicest one to deal with so do what everyone said and do your homework before making a decision. Another thing I would ask is that you don’t beat up your salesman/finance guy or who ever you buy your car from because in most cases the finance income is the only income a dealer will get. Prices are so tight/competitive that much of the markup is gone and costs are going up so please be reasonable when buying a car and remember that you don’t go to work for free, either should the person you are buying from. This goes for any business, not just the car business.

it will also be affected if the bank gives the dealer a special rate because they do a large amount of business with the bank. we do a ton of buisness with M&T Bank and they will almost always give us what we want because they don’t want to lose the loans we give them

EDIT: This thread has the best info in it out of all the “Finance you car advice” threads, +1 for Nikuk

:tup:

realistically then, my loan rate of 5.9% probably could not be beaten then? that will make me sleep better at night.

very good info in this thread.

i guess what i dont understand is how a car dealership can survive off of finance income alone, especially with all of the overhead costs. realistically, assuming a dealership makes 2k per car in direct margin, they would still have to sell a shitload of cars to cover overhead and generate any kind of substantial income. oh well, i guess thats another discussion for another time.

if your rate could have been beaten it wouldn’t have been by much because thats a hell of a rate

as for the margin part, i’m glad you see how much it costs to operate, your one of the few. most people think we have 10,000 in markup on 20,000 dollar cars and i want to tell them to stop smoking crack

my dad and grandpa (both now deceased) owned Russo Chevy in niagara falls back in the 80s, and during my teanage years, my dad taught me quite a bit. obviously the environment has changed, and a lot has happened with gm and the auto industry in general since then.

everyone thinks they are experts in buying cars. bottom line is, dealerships are businesses, as are banks, as is chevy. everyone needs to make a profit, otherwise being in business is useless. it is just difficult for me to fathom pushing high enough volume in car sales for it to be worth it. but it must be. :gotme:

+1 for an informative thread, thanks guys.

What you both missed, is that if you are not buying a new car, then you can typically beat the snot out of a dealer/bank rate from a CU (if you have good credit). Can either org. touch a 2.X interest rate on a used vehicle these days? Granted, thats an employee CU, but still… CUs will also typically beat Bank and Dealer rates, because they are “owned” by the members, rather than being profit centers like a bank or dealer.

stickied. Good thread, Nick.

Quite true. I went through my local CU for my loan when I bought my Cobra, I got a new car loan with I think 3.5% interest rate. Pretty dang good if you ask me. (this was in early 04, the best the dealer could do then was i believe 6.9)

I will reluctantly agree with some of this statement. here’s why: credit unions obviously loan there own money so they don’t care what the FED has the prime rates at, they just loan the money just below what everyone else can. I am not saying that you shouldn’t let the dealer try however. Since each car deal is different, based on what we have learned so far in this thread, the dealer can sometimes beat the credit union. This is because not every customer gets these amazing rates. Credit Unions mark the rates up when their customers have issues just the same as banks do.

lastly, Credit unions DO NOT REPORT to the credit bureau’s. This is bad because you could have several loans through your CU and still not have a credit score. that means when you go try and get a mortgage or a loan you can’t get through your CU, you will have difficulty doing so.

I’m confused, when I ran my free credit reports I saw my car loan from my CU on there. Is this different than the figures that are used to make up my credit score?

I’m going to have to go ahead and disagree here. I have had 4 loans through 2 different CUs over the past 6 years and all show up on my CRs. They were the cornerstone of my early credit history, and all I had (aside from revolving) when I got my 1st mortgage.

I do agree on the first part of the post though, everyones situations are different, and you should always evaluate all of your options before doing anything :burnin:

FALSE

Credit unions are audited by the NCUA and are required to report loan status under the Fair Credit Reporting Act passed in 2001. I just got done making changes to the module that our 600 something credit unions use to do this automatically. Those 3 asshole credit bureau’s really need to stop playing with their file formats.

As for CU rates, it’s hit and miss. My co-worker just bought a new car and Fucillo was able to beat the best rate the CU was able to give him. So as someone said, it’s best to find the best rate you can from your local bank and CU, then take that with you to the dealer. Maybe even knock a 1/2 a point off that rate when you give it to the dealer so they don’t try and beat it by .1 percent while keeping the profit. Torqdss seems like a real straight up guy, but there are a ton of people in the car business who will take you for every cent they can.

I guess we are all learning something new here. I have been looking at credit bureau’s for my whole life and I’ve never seen a credit union on one of them. If they have to report why aren’t the loans showing up? Is that what the file formats do?

you’ll have to excuse me i’m technologically retarded…

edit:we need someone at one of the bureau’s to chime in here. why are the bureau’s I pull at the dealership different from the ones everyone can pull themselves? I am a bit annoyed that there is information missing because that means there have been people trying to buy cars that weren’t able to because the info provided to the dealer was incorrect

What credit union do you belong to? Is it NCUA backed? I’ve seen some lax auditors before but I can’t believe they’re getting away with no reporting loan information.

I don’t belong to a credit union, I’m talking about the customers who come in to buy cars and I look at their bureau’s I don’t ever see anything from a credit union and I never have. I use Transunion, Equifax (90% of the time) and Experian when we pull bureau’s.

I just got a PM from someone who told me they saw their CU loans on their free credit report so I’m wondering if the dealer reports are different than the ones consumers pull themselves

Talk to your sales rep from the CBs…

We used to see FCUs on CBRs @ the bank.

I know that my personal ones have shown my FCU loan

OK, I looked into this a little further today at work. Dug out the big old regs book and this is what I found.

They are required to report any delinquent loan activity.
It is a business decision if they report on time loan activity.

That being said though, 99% of our CU’s report all loan activity because it only benefits their members to have positive loan activity reported. If you’re not seeing loans on a regular basis you should definitely talk to customer service at your reporting bureau.

the CB’s didn’t give me an exact reason but they said there is a report type that is specific to auto dealers. i asked them to change that so I can see what CU’s are reporting and today I pulled a Bureau and there was the “Olean Area Fed CR UN”

THAT BEING SAID IF YOU ARE USING CREDIT REPORTS MAKE SURE THEY EXPLAIN EVERYTHING BECAUSE I MUST HAVE SIGNED UP FOR A DEALER SPECIFIC TYPE AND IT DIDN’T GIVE ME ALL THE INFO