No thanks, I’d rather walk.
New car buying guide: the algorithm (2021)
11–20 of 162 posts
Re: New car buying guide: the algorithm (2021)
#12This BS is why I bought a Tesla.
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Re: New car buying guide: the algorithm (2021)
#13> You do not want to use financing products that dealerships offer - they are worse than the ones you can shop around for. Get preapproved with your bank or and other bank and get the preapproval letter ready before step 5. That seems unlikely to me, though this depends on which car company you're buying from. Take Ford for instance. A significant amount of Ford's business is banking/financing. Much like how the Deal…
Many car dealers work directly with banks to provide financing for customers. In these cases, the car dealers take a cut, so a customer who walks into the same bank might be pre-approved for a lower interest rate. (This doesn't always apply to big institutions like Chase and Ally that have huge, separate direct and indirect auto lending arms that never talk to each other.) But this profit is totally arbitrary - dealers can choose to make no profit (or even lose money) on financing if it helps them to make a sale. Most people don't realize this because you can't walk into your local credit union and negotiate the terms of an auto loan. That being said, even at $0 profit it's hard for dealer financing to beat a direct auto loan, because you (the customer) get your pick of the world's financial institutions, whereas the dealer is restricted to the lenders they happen to partner with.
Relatedly, it is significantly more convenient to accept dealer financing because you don't have to act as a middleman between the car dealer and your bank.
The point is that dealer financing is usually a rip-off (because it's fundamentally another axis along which dealers try to extract money from you), but it can still occasionally be a good deal.
Re: New car buying guide: the algorithm (2021)
#14Car dealership in US are in their own league. Coming from Europe it is difficult to appreciate at first. But when you see headlines like: "Roma was purchased last month by Texas car dealership magnate Dan Friedkin, who is worth $4.1 billion." Yes, that a Texan car dealership buying the AS Roma (soccer team, Italian capital). When I came in US, I had no car, I saved money, went to dealership (Toyota) and pointed a use…
> Unfortunately I had to leave the car, so they do a final inspection and prepare some papers. I came a week later to pick up the car.
I wonder how he would have felt if you had to take the car and keep the money for a week before you could pay.
Re: New car buying guide: the algorithm (2021)
#15Not sure who needs to hear this, but you can buy a nearly new car used and save 1/3 to 1/2 of the cost. One big benefit is you let somebody else find out if new models are lemons. Another benefit is you don't need to haggle, as there will be many different options at different prices and you can quickly find out if the price is reasonable by checking KBB.
You grossly increase the chance of a lemon with your strategy. Why would anyone sell a near-new car for 30%+ off *unless* they knew the vehicle is crap? -------- Buying lightly used (~3 year or ~5 year) cars is likely the superior strategy. There's a set of rich buyers who want to keep up with the latest trends. This leads them to leasing vehicles for 2, 3, or so years. Other times, they have enough income that they…
I think you and OP are saying the same thing; you just have different ideas of what "nearly new" means.
Re: New car buying guide: the algorithm (2021)
#16Are you seriously buying cars like this? Create strategies for "financing them"? It's like someone is about to buy a knife but opens facebook and falls into japanese-superchef-damascus stell kitchen knife rabbit hole. Or am I the one who falls straight into the claws of kind of people who later buy AS Roma?
Re: New car buying guide: the algorithm (2021)
#17Last time I bought a car, I just messaged my credit union's Auto Buying service with the make/model I wanted. They told me the best price they could find and the dealer drove the car to my workplace once I set up the financing.
If your bank offer this service, you still have to figure out which car you want and what the fair price for it is. But those are minor roadbumps compared to haggling at the dealership.
There was no payment for the service or obligation to get the loan through the credit union. I did finance through them anyway since I intended to pay the car off pretty quickly.
TLDR: investigate if your bank offers a car buying service.
Re: New car buying guide: the algorithm (2021)
#18> You do not want to use financing products that dealerships offer - they are worse than the ones you can shop around for. Get preapproved with your bank or and other bank and get the preapproval letter ready before step 5. That seems unlikely to me, though this depends on which car company you're buying from. Take Ford for instance. A significant amount of Ford's business is banking/financing. Much like how the Deal…
Many car dealers work directly with banks to provide financing for customers. In these cases, the car dealers take a cut, so a customer who walks into the same bank might be pre-approved for a lower interest rate. (This doesn't always apply to big institutions like Chase and Ally that have huge, separate direct and indirect auto lending arms that never talk to each other.) But this profit is totally arbitrary - deale…
> That being said, even at $0 profit it's hard for dealer financing to beat a direct auto loan, because you (the customer) get your pick of the world's financial institutions, whereas the dealer is restricted to the lenders they happen to partner with.
You're underestimating the power that the car-based financial institutions have.
For example:
> (This doesn't always apply to big institutions like Chase and Ally that have huge, separate direct and indirect auto lending arms that never talk to each other.)
Speaking of Ally bank... have you ever looked at their name before 2008?
GMAC: That's General Motors Acceptance Corporation. You're literally talking about GM's piggybank for financing deals.
Ally bank has changed a lot over the last century. But they still have tight connections with GM.
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It depends, it very, very strongly depends on the dealership, the auto-firm (ex: GM can get a very good deal with Ally bank... and Ford can get a very good deal from *Ford Motor Credit Company*, the in-house bank).
Toyota... not so much. Ford / GM? Yes. It depends.
Re: New car buying guide: the algorithm (2021)
#19Earlier quoted context omitted.
Many car dealers work directly with banks to provide financing for customers. In these cases, the car dealers take a cut, so a customer who walks into the same bank might be pre-approved for a lower interest rate. (This doesn't always apply to big institutions like Chase and Ally that have huge, separate direct and indirect auto lending arms that never talk to each other.) But this profit is totally arbitrary - deale…
> That being said, even at $0 profit it's hard for dealer financing to beat a direct auto loan, because you (the customer) get your pick of the world's financial institutions, whereas the dealer is restricted to the lenders they happen to partner with. You're underestimating the power that the car-based financial institutions have. For example: > (This doesn't always apply to big institutions like Chase and Ally that…
I used to work at a big car dealership making indirect auto loans, so I don't think I am underestimating the power of in-house financing. And I definitely know Ally's history! ;)
Re: New car buying guide: the algorithm (2021)
#20Are you seriously buying cars like this? Create strategies for "financing them"? It's like someone is about to buy a knife but opens facebook and falls into japanese-superchef-damascus stell kitchen knife rabbit hole. Or am I the one who falls straight into the claws of kind of people who later buy AS Roma?
I find a knife to be a much lesser financial burden than buying a car, especially if I think about buying a brand new car. The price of the average new car in the US is what, $48,000? I imagine it's quite a bit lower for knives.