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Breauxsif
LSU Fan
Member since May 2012
5440 posts

re: Better to finance $31,800k at 4.19% or $35,100 at 0%?
You really should look at Credit Union rates as opposed to financing through a dealership. If you, or had anyone in your family serve in the military USAA has rates around 3.500% and some Credit Unions are even lower than that.

A new vehicle at 4.19% rate, with your credit score is on the higher spectrum. Sounds like the dealership is holding a half a point, or a full point of APR on you.


lynxcat
Rutgers Fan
Member since Jan 2008
20089 posts

re: Better to finance $31,800k at 4.19% or $35,100 at 0%?
quote:

You really should look at Credit Union rates as opposed to financing through a dealership. If you, or had anyone in your family serve in the military USAA has rates around 3.500% and some Credit Unions are even lower than that.

A new vehicle at 4.19% rate, with your credit score is on the higher spectrum. Sounds like the dealership is holding a half a point, or a full point of APR on you.


He has a financing arrangement for 0% on the table already! Why is this thread still going on? He has free money being offered - it cannot be beat.


baldona
Auburn Fan
Florida
Member since Feb 2016
9078 posts

re: Better to finance $31,800k at 4.19% or $35,100 at 0%?
quote:

He has a financing arrangement for 0% on the table already! Why is this thread still going on? He has free money being offered - it cannot be beat.


Incorrect. He has 0% interest but the cost of the loan is $35,100-$31,800= $3,300.

At 4.19% his loan cost for 48 month loan= $2,795, or total= $34,595.
At 4.19% his loan cost for 60 month loan= $3,503, or total = 35,303.

At 2.99% his loan cost for 48 month = $1979
At 2.99% his loan cost for 60 month = $2476

That is all using an online generic auto loan calculator OP. If you have a 750 credit score you should easily be able to beat the 4.19%.

The $35,100 0% interest comes out to the same cost as a 3.95% loan over 60 months OP. If you can beat 3.95% you will be better off taking a loan.
This post was edited on 4/16 at 10:24 am


lynxcat
Rutgers Fan
Member since Jan 2008
20089 posts

re: Better to finance $31,800k at 4.19% or $35,100 at 0%?
This is apples and oranges. OP only needs to take a $35,100 loan if the cost of the vehicle is at least that amount.

If he is taking a $31,800 loan then it just means he is covering the $3,300 with a downpayment or via a trade-in. Either way, that is economic value he is spending.

The purchase price of the vehicle is fixed and the way it is financed does not change the principle covered to pay for the expense. The interest rate to cover the financing is the issue at hand.

He is only taking out a $35,100 loan if the purchase price is greater than that amount.


lynxcat
Rutgers Fan
Member since Jan 2008
20089 posts

re: Better to finance $31,800k at 4.19% or $35,100 at 0%?
quote:

hendersonshands
quote:

Putting enough money down on the 4.19% with the rebate can lessen the total amount paid.



There are other factors here that the OP hasn't called out explicitly enough to get an accurate answer.

If there is a rebate that gets an extra discount then you just added a variable that no one in this thread can calculate.

If you can get financing at 0% versus a rate higher than 0%, then you should always take the free financing [assuming no other variables at play].


Breauxsif
LSU Fan
Member since May 2012
5440 posts

re: Better to finance $31,800k at 4.19% or $35,100 at 0%?
On equal terms on each amount of $31,800k at 4.19% or $35,100 at 0%, produces a delta of ~$203

As Baldona stated, taking the 2.99%, give or take another 0.5% is more advantageous in the short-run, because the OP is financing for a term of 5 years and is looking to pay it off way sooner than the the 5 year duration.



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Epic Cajun
New Orleans Pelicans Fan
Lafayette, LA
Member since Feb 2013
18045 posts

re: Better to finance $31,800k at 4.19% or $35,100 at 0%?
quote:

The purchase price of the vehicle is fixed and the way it is financed does not change the principle covered to pay for the expense.

It doesn't sound that way. It sounds like he's being offered two different offers from the same dealership on the same vehicle. I'm just guessing, so I could be wrong, but it sounds like there is a $3,300 rebate that can only be used if he finances through them and that rate financed is 4.19%. Or, he can not take the rebate, and pay the full value of the vehicle at $35,100 with 0.0% interest.


baldona
Auburn Fan
Florida
Member since Feb 2016
9078 posts

re: Better to finance $31,800k at 4.19% or $35,100 at 0%?
quote:

it sounds like there is a $3,300 rebate that can only be used if he finances through them and that rate financed is 4.19%. Or, he can not take the rebate, and pay the full value of the vehicle at $35,100 with 0.0% interest.



Exactly this. Or what I believe is regularly offered also, is that the 0% interest is an offer but can not be taken with one of the other rebates.

So its generally either buy the car at $31,800 or buy the car at $35,100 with 0%. If you buy the car at $31,800 you can usually use your own financing or the dealerships.


lynxcat
Rutgers Fan
Member since Jan 2008
20089 posts

re: Better to finance $31,800k at 4.19% or $35,100 at 0%?
These negotiations need to be decoupled. Settle on price and then decide on financing.

Source: Read the Will Cover method

quote:

1. Arm yourself with information. LINK / , LINK / , LINK and LINK are excellent sites to research the vehicle of your choice (Invoice vs. MSRP, manufacturer rebates, dealer holdback, etc.)
2. Never show emotion even when going for a test drive (do NOT provide dealer with your driver’s license). Instead, prior to your arrival at the dealership, make a copy of your driver’s license and furnish the dealer with the copy of your driver’s license.
3. Never show emotion when negotiating.
4. Never offer or accept the first price.
5. Start off negotiations by saying “that’s not good enough.”
6. Never offer a counter price.
7. Silence is golden. When in doubt, shut up and you will pay less.
8. Know what power you possess by being able to “walk away.”
9. Never negotiate off “MSRP.” The negotiation process should start from the DEALER COST (which is less than INVOICE) price or the WHOLESALE price if purchasing a USED vehicle.
10. Rebates can be deducted from INVOICE price and not MSRP as the dealership will lead you to believe.
11. Know the dealer’s “hold-back” price and what type of incentives that may be offered from the manufacturer or dealership.
12. Don’t discuss a trade-in until you’ve settled on a price for the car you’re buying – each transaction should be separate and not dependent upon one another.
13. Settle on the price of the vehicle you’re interested in before you bring up financing — don’t let the rate of a loan influence the price of the car.
14. Have your financing pre-approved before you walk into a dealership.
15. Extended warranties never make financial sense.
16. Be aware of “extra” charges such as administrative fees, handling charges, advertising fees, paint protection, VIN etching – simply do not pay these as these are deal breakers. And believe it or not, even “delivery” charges are negotiable.
17. Get the deal in writing. Full disclosure, in writing, of all fees pertaining to your vehicle purchase, such as destination, title, documentation, licensing and registration. If the dealer will not put it in writing, “walk away.”
18. The “If I” sales tactic. This is the last step in the sales negotiation process. Ex. If I decide to purchase the vehicle today, you have to include free window tinting. If I decide to take the red vehicle instead of the white vehicle, you have to include 5 free oil and tire rotation services. If I decide to purchase the vehicle today, you have to include floor mats at no additional cost. If done correctly, this will allow you to get another “service and/or product” that you normally would not have received and by this time, there is no way will the dealership allow you to “walk” because there is too much time invested between both parties. The dealership knows you are in a buying mode and doesn’t want to run the risk of you becoming a “be back” customer for another dealership since most people buy within 48 hours of stepping onto a dealership’s lot.
19. Put deposits on a “credit card” only. Do NOT pay with a check.
20. If you got a great deal, show your appreciation. Thank the dealer and be sure to send your friends to them when they go car shopping.



TigerDeBaiter
LSU Fan
Member since Dec 2010
7578 posts

re: Better to finance $31,800k at 4.19% or $35,100 at 0%?
quote:

I’m intrigued how OP is sure financing 35k then adding miles won’t create a GAP risk.

Also, what happens if you have it for 2 years and decide to switch it to a new car? You’ll be completely upside down for not taking the cash rebate

I’d buy it at 31k and pay it off as fast as possible


I made have made a false assumption in that the more expensive car is actually newer and even nicer. I just assumed the 4.19% was rate for used and 0% for new


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BACONisMEATcandy
LSU Fan
Member since Dec 2007
45996 posts

re: Better to finance $31,800k at 4.19% or $35,100 at 0%?
When we were buying our last car VW did this nonsense and they wouldn’t budge. They only offered the lower price if we financed with them. Went to 3 dealerships and it was all the same. Needless to say we did not buy a VW.


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