Looking to buy a used vehicle, need some help about financing alternatives?

[steppinthrax]

I never bought a vehicle from dealer, but rather from private party and always had cash on hand to pay in full. It looks like I will have to use a dealer for the vehicles I?m looking at. I?m in the range of 17K or so (used, no-trade-in). I can put as much as 3K down (more if worth wild). My wife and I are looking to pay it off in a little over a year (aggressive). I have rel good credit (just student loan of 15K or so, no late, bankruptcy etc?). I was curious what some of the best options are for me and what I should look out for. I don?t want to be dragged over the coals.

1. Is it best to come to the dealer with cash in hand? From a bank etc? Or to use the dealer for financing.
2. How much room do I have in price haggling.
3. Is it better (for such a low price) to get a personal loan and use this to pay for the vehicle.
4. What other fees, are added or does the dealer try to add in the purchase or the finance of a vehicle?

 

[CurseTheSky]

Other fees include sales tax, interest for any dealer financing, registration, delivery charge (IIRC), and probably something that I'm forgetting. Your best bet would probably be to see what rate the dealer's financing option is offering and compare it to the rate your bank offers.

Your best bet would be to shop around at several dealers first, using sites like autotrader.com or cars.com. That will give you an idea of what the vehicle you want is going for, and you can work from there. Once you've established a baseline for a vehicle - say a 2007-2008 Fusion, SE V6, with 20-35k miles and a few options (using this example, since that's what I've bought), and a general price range, say $12.5-15k - you can contact each dealership via email to explain what you're looking for and what you're willing to pay. Avoid sounding needy ("I need to get a vehicle before Halloween!") or unsure of yourself ("I'm looking at Altimas, but if it starts snowing soon I might look at a Tundra or Explorer instead... that is, unless you guys happen to have a Miata or S2000 on the lot, I always liked those."). See who's willing to work with you, and make trips to the dealerships to check out the vehicle and work on the file details based on that.

Buying used is somewhat of a mixed bag. Normally for a new vehicle, you just have to consider the vehicle you want, the trim level, and any additional options. When you're looking at used, you also have to factor in mileage, wear and tear, and any damage or bad history. Dealers that are overly eager to work with you may know that the vehicle has some kind of hidden problem, while other dealerships may think their original price is God's gift to America.

I'm sure others can give more tips than I have; I've only bought one vehicle from a dealership in my life (all others have been private party). It can be stressful, but it can be somewhat fun too. They're the ones making the sale, they should work around your schedule (provided it isn't ridiculous...).

 

[ponyo]

Originally posted by: steppinthrax

I never bought a vehicle from dealer, but rather from private party and always had cash on hand to pay in full. It looks like I will have to use a dealer for the vehicles I?m looking at. I?m in the range of 17K or so (used, no-trade-in). I can put as much as 3K down (more if worth wild). My wife and I are looking to pay it off in a little over a year (aggressive). I have rel good credit (just student loan of 15K or so, no late, bankruptcy etc?). I was curious what some of the best options are for me and what I should look out for. I don?t want to be dragged over the coals.

1. Is it best to come to the dealer with cash in hand? From a bank etc? Or to use the dealer for financing.
2. How much room do I have in price haggling.
3. Is it better (for such a low price) to get a personal loan and use this to pay for the vehicle.
4. What other fees, are added or does the dealer try to add in the purchase or the finance of a vehicle?

1. Dealer just wants to get paid. They prefer you finance through them so they can make some additional money on the spread but won't turn down cash or check.
2. Depends how desperate they are and how good your negotiating skills are.
3. Personal loan will have higher interest since it's unsecured. Not attractive route unless you like paying 10%+ interest. Unless the factory is offering subsidized loans, it's usually cheaper to go with credit union. Penfed offers 4% on used car loans. Dealer might match.
4. Doc and other admin junk fees. They'll tell you it's set in stone. It's not. Everything is negotiable. Only thing you're required to pay are vehicle, tax, and title. Everything else is optional.

 

[kornphlake]

Others have covered it pretty well, the other option for financing would be a credit card if you've got one with a low introductory interest rate and a high limit. Credit cards can be dangerous though, if you don't get the balance paid off before the introductory period ends you may have to start reading fine print to figure out why the minimum payment went through the roof.

I'd be prepared by shopping for loans from a credit union or bank, then see what the dealer can do. When we bought our car the dealership gave us about 1/2% less than the credit unions. You never know what might happen, let the dealer think you're going to let him finance then when the deal is done let him know you already have financing, they're being sneaky bastards you have every right to be one too. You might find that the dealer will give you a better purchase price expecting that he'll get some extra from the financing, once he's given you his lowest price you can take the wind from his sail and use the better interest rate you've shopped for before hand.

If you have a vehicle for trade in, make every effort to sell it private party before hand if possible. The dealer will start by low balling you on the trade in citing mechanical or cosmetic defects that have no effect on actual trade in value, then if you protest he'll start shuffling the numbers around so the trade in is higher but so is the purchase price of the new vehicle. You'll get a better deal if you tell the dealership you don't have a trade in, negotiate a fair purchase price then say you want to keep that purchase price and factor in the trade in of your vehicle, negotiate the trade in aside once the purchase deal has already been made so you don't get into a number shuffle game.

Dealer's will try to give you 10 year financing on a vehicle that is 9 years old with 200,000 miles to bring the monthly payment into your price range. It's a bad idea, you'll be making payments on a vehicle long after it's sent to the wrecking yard. If the dealer asks what you price range is give him a purchase price, not a monthly payment. If he gets an idea of what you can afford he'll come up with all kinds of options that are not in your best interest. Be sure to keep on purchase price and interest rate, don't let monthly payment become part of the discussion.

Good luck and have fun if you can. I hate buying vehicles, I see the games the dealers are playing and it drives me nuts, I tell them if they don't cut to the bottom line price I'll leave. I've walked out of several dealerships with salesmen at my heels, once I leave the table I don't turn around. My time is worth money, unlike the salesman I don't get paid for spending 6 hours negotiating, if the dealership doesn't respect my time, I have no confidence that they are trying to get me a fair deal.