Tried to buy a Mitsubishi Mirage yesterday

[JustinH]

we bought a santa cruz mostly because of warranty and 2.9% @48 months.

Mitsu doesn't do anything special for the warranty and they arent offering a low rate so why even look there.

Get an elantra or a accent if you like that body of car.

 

[JavierH19]

Another day another string of typical stealership antics, what's new. The Cadillac stealership was annoyed that i was gonna mostly pay my escalade in full since they want to you to give them interest for years and years and years. I financed only for 4 months since i was a smidge short and didn't want to withdraw a small amount from my retirement account to avoid taking the penalty though i wish i'd've done that instead. They tried scamming me with a some absurd 6 point something % rate and i had perfect credit and a perfect history with gm financial, and this was back in October of 2020 where rates were low. In the office the shameless finance department scammer was smiling and all joyful telling me how it was a great rate... I gave him a cold stare during the entire process then declined, it was funny watching his face die when I said "I'll decline on that, i haven't checked my bank's rate first". Went to my bank instead for a lot less. I hate stealerships so much. They also tried to scam me into buying some absurd windshield insurance for an insane 2 grand that would only last a few years even though almost every full coverage policy has that included anyway.

 

[fsdork]

Not my point.

Why pay ANY interest on a consumable?

One reason would be to invest the money in such a way that it offers a return which exceeds the interest paid. Just yesterday, I received a 5.5% promo interest offer on a savings account with my bank, so putting money there makes more sense than paying down lower rate credit.

 

[CKN]

Unless there is a low factory interest rate you get your own loan from a credit union or bank before ever walking in the dealership.

 

[AZjeff]

Just pay cash.

Of course good advice that not everyone can do.

The difference in the payment on a $15,000 48 month loan between 7.75 and 6.49 interest is $9/month. If this is a hard to find car that you really want is it worth 10 bucks/month to get it? Make a few extra principal payments early on and you'll erase the difference.

 

[Pablo]

One reason would be to invest the money in such a way that it offers a return which exceeds the interest paid. Just yesterday, I received a 5.5% promo interest offer on a savings account with my bank, so putting money there makes more sense than paying down lower rate credit.

That makes sense at certain times. Nice if you can get a 1-2-3% loan. OP mentioned ~6% IIRC. My home loan is 2.7%, even simple accounts are paying above 5% as you mentioned (some things much more, nice)

But I say no for a HIGH depreciatable consumable, like a car. I diverted enough cash over a year or so, paid cash on my new 2019 Tacoma.

 

[Pablo]

Of course good advice that not everyone can do.

The difference in the payment on a $15,000 48 month loan between 7.75 and 6.49 interest is $9/month. If this is a hard to find car that you really want is it worth 10 bucks/month to get it? Make a few extra principal payments early on and you'll erase the difference.

Yes but you are still giving the devil interest $

Sure they want to make MORE money on us. But they will sell you a car, for cash with the same discounts.

The ONLY thing that angers me, and yeah I get it, but..... I write a $30K check (or whatever), that thing is not rubber. Car dealers still must run the whole credit check. How about this: I write the check, we sign a contract, I come pick up the truck when check clears. Toyota dealer wouldn't even do that.

 

[GON]

Yes but you are still giving the devil interest $

Sure they want to make MORE money on us. But they will sell you a car, for cash with the same discounts.

The ONLY thing that angers me, and yeah I get it, but..... I write a $30K check (or whatever), that thing is not rubber. Car dealers still must run the whole credit check. How about this: I write the check, we sign a contract, I come pick up the truck when check clears. Toyota dealer wouldn't even do that.

Never heard of that before for a cash buyer......... That would make me walk........

 

[ARCOgraphite]

Not my point.

Why pay ANY interest on a consumable?

My reasoning is If I am making 9% easily and the loan is 3.45% money is staying invested.
Plus making and paying loans has given me the highest credit score.

Today's Market for the average investor is flipped now - so the cash or loan decision is a wash I suppose.
But it is nice (or important actually) to have cash for emergency expenses. I don't want to trigger the TAX Man when having to pull pre-tax invested monies from the IRA.

This is even more of a shell game in retirement than I imagined it would be. Even Medicare thinks you are rich if you take some money out for a DP to buy real property - they will jack up your part B cost at some cutpoint.

And I have been getting hammered with "surprises" this first year of retirement

So much "fun" so little time!

 

[TheOilWizard]

Sure they want to make MORE money on us. But they will sell you a car, for cash with the same discounts.

When was the last time you purchased a vehicle?

This statement may have been somewhat true pre-COVID, but I completely disagree in the current vehicle market.

 

[PF52]

Kind of hard to do when the OP said this was a hard to find model and he had to go to a different state to find one.

That's our little secret!

 

[Pablo]

Never heard of that before for a cash buyer......... That would make me walk........

Not saying all dealers would do this, Toyota of Kirkland did August 2018

 

[Pablo]

My reasoning is If I am making 9% easily

Easily? Where??

 

[Pablo]

When was the last time you purchased a vehicle?

This statement may have been somewhat true pre-COVID, but I completely disagree in the current vehicle market.

August 2018

Please point out where I am wrong.

 

[zzyzzx]

Of course the dealership is there to make profit -- but I agree with the OP that padding the APR for additional profit comes across a little questionable at best.

According to Car Edge, they will often drop the interest rate padding if you ask about it. As in show me the rate. If they refuse to show it to them then mention something about transparency, etc. Or just get your own financing ahead of time / pay cash.

 

[TheOilWizard]

According to Car Edge, they will often drop the interest rate padding if you ask about it. As in show me the rate. If they refuse to show it to them then mention something about transparency, etc. Or just get your own financing ahead of time / pay cash.

Good info, thank you.

I think my biggest issue with it is the lack of transparency. If the dealerships were up front and said, "the bank rate is X% and our mark up is an additional X%, I think I would be more comfortable with it. It's all of behind-the-scenes adjustments that I don't like.

 

[zzyzzx]

Paying cash doesn't really motivate dealerships anymore and can actually work against you. Why would they want to sell a car in full when they can get another customer in their financing office with a nice padded APR? This is a much more lucrative and profitable option in a sellers market. The only exception is when/if there is as vehicle they are wanting to get rid of quickly.

True, but the trick is not tell them that you are paying cash until you get to the financing part of the deal. If they ask about it upfront, tell the salesperson that you are uncomfortable talking personal finances outside the finance office.

Having written that, given that people are having issues getting financing lately, this might be the rare occasion where, if asked, mentioning cash up front might actually be a good thing.

 

[TheOilWizard]

August 2018

Please point out where I am wrong.

I'm not an expert on the topic so I can't tell anyone they are "wrong". I simply stated that I disagreed, and that's coming from someone who has purchased two new vehicles since 2020. The market is completely different and dealerships are able to pull off tricks they couldn't before.

 

[dogememe]

True, but the trick is not tell them that you are paying cash until you get to the financing part of the deal. If they ask about it upfront, tell the salesperson that you are uncomfortable talking personal finances outside the finance office.

Having written that, given that people are having issues getting financing lately, this might be the rare occasion where, if asked, mentioning cash up front might actually be a good thing.

I don't believe for a moment that people are getting declined for car loans. The loans are just longer and higher interest. As I look out the window at my car that I bought with no down payment with a credit score of 600.

The issue is how long people are upside down on the vehicles. This whole thing is FINE until something breaks on the vehicle the customer can't afford to fix. THEN they're really screwed as the car will be practically worthless. We're going to see that a lot. Repos due to mechanical issues. Everything is so expensive to fix on modern cars people are just going to look at the $5-10K repair bill whether it's a Nissan CVT or a Volt hybrid battery or a Charger with a Pentastar and ruined cam and lifters and tell the bank to come get the broken car. At which point people have no car, a repo and collections on their credit, and the bank just lost big $$$ too.

 

[Tdbo]

That's when you get up and tell them there are three dealers you're considering, and you're now on your way over to the lowest one.

And you continue putting one foot in front of the other until you get to your car.
Then you get in to leave, never to return.
Anyone who mouths such a "Special kind of stupid" like that does not deserve patronage.