Auto Financing Rates: Advice?

[LondonKB]

I'm looking to finance approximately $20,000 over 60 months for the purchase of a slightly used vehicle. The majority of the 'big banks' offer what appear to be extremely high financing rates. I'm purchasing the vehicle from a small volume used dealer which does not have a financing referral arm. I'm finding the larger volume dealers can secure lower interest rates for their customers.

I'd prefer a loan vs a line of credit and have looked at both scenarios already.

Any suggestions on where to get a low rate for a 60-month term?

[bizzmanager]

I'm looking to finance approximately $20,000 over 60 months for the purchase of a slightly used vehicle. The majority of the 'big banks' offer what appear to be extremely high financing rates. I'm purchasing the vehicle from a small volume used dealer which does not have a financing referral arm. I'm finding the larger volume dealers can secure lower interest rates for their customers.

I'd prefer a loan vs a line of credit and have looked at both scenarios already.

Any suggestions on where to get a low rate for a 60-month term?

If you are financing $20,000 taxes included, we can offer you as low as 8.59% over 60 months. Vehicle must be 2004 or newer and not branded, Taxi or commercial. PM me if you are interested.

[rems]

If you are financing $20,000 taxes included, we can offer you as low as 8.59% over 60 months. Vehicle must be 2004 or newer and not branded, Taxi or commercial. PM me if you are interested.

wow that's pretty high...maybe ive been looking at mortgage rates too long.

[Nanodollars]

I'm looking to finance approximately $20,000 over 60 months for the purchase of a slightly used vehicle. The majority of the 'big banks' offer what appear to be extremely high financing rates. I'm purchasing the vehicle from a small volume used dealer which does not have a financing referral arm. I'm finding the larger volume dealers can secure lower interest rates for their customers.

I'd prefer a loan vs a line of credit and have looked at both scenarios already.

Any suggestions on where to get a low rate for a 60-month term?

If you own a house, you can use the property as collateral for a secured loan, even if you are still paying off the mortgage. The banks will usually give 80% of the equity in the house. The benefit is a low-interest LOC of prime+1 from most of the banks. You also get flexibility in how you pay it off. I was just at the bank and the Branch Manager mentioned that almost none of their credit products that they process recently are fixed loans due to the excellent interest rates.

Other than that, for 20k you could consider some of the auto manufacturer's for new vehicles such as Hyundai, Kia,Mazda even Honda who are offering excellent financing rates as low as 0% for 60 months.

[Vladimir]

wow that's pretty high...maybe ive been looking at mortgage rates too long.

no kidding. My insurnace company said if u are thinking about buying a new car make sure to ask us about our financing.
So I asked how much? They said 7.49%. ............. I don't think there are ANY manufacturers right now that are financing anywhere close to that high for new cars. Most are 0-3%.

[londotx]

Ouch!

Keep saving money or use your line of credit.
My unsecured line of credit is much much lower than 8.59%. You are better buying new for that rate.

[99rs]

just wondering if u finance a car can u write off the whole value or only the interest part for being self employed/business.

[rems]

just wondering if u finance a car can u write off the whole value or only the interest part for being self employed/business.

i thought you can only write it off if it's leased.

[Warwick]

no kidding. My insurnace company said if u are thinking about buying a new car make sure to ask us about our financing.
So I asked how much? They said 7.49%. ............. I don't think there are ANY manufacturers right now that are financing anywhere close to that high for new cars. Most are 0-3%.

I went to Ford looking at a 09 Mustang and they wouldn't go below 7.9%. Walked out.

Talked to Dodge about a new Challenger and they were only offering 8%. Walked away from there too.

My line of credit is 5.5%. How can these guys justify their high rates?

Now I'm looking at Lancers, Jettas and Civics. At least they have competitive financing rates.

[bizzmanager]

i thought you can only write it off if it's leased.

You can expense a financed car. It seems to be a combination of Interest and depreciation based on numbers available from rev can. Please note that you should speak to your accountant prior to buying so he may advise you of proper structure for maximum advantage.

And yes you can find lower interest rates by buying a new car. BUT, do you want to be the sucker paying 50%+ of the vehicles value in the first 3-4 years?
Furthermore you will find that most of the hottest selling vehicle models out there are not as deeply sub vented as others. These sub vented rates of 0-3% a just a buy down from the manufacturer to keep moving their metal.
Did you know you could also request your dealer to "Buy Down" your rate as part of your discount?. Theoretically he could get your rate down to 0%.

[thephenom]

i thought you can only write it off if it's leased.
In a financed car, you can write off depreciation, where as a lease is an expense, almost like rent. I'm sure there are complication to write off depreciation, but it can be done.

[onlineharvest]

i thought you can only write it off if it's leased.

No, you can also "write off" financed and owned vehicles as well. It would just be a different method (e.g., straight line depreciation, or based on mileage, etc)

[onlineharvest]

And yes you can find lower interest rates by buying a new car. BUT, do you want to be the sucker paying 50%+ of the vehicles value in the first 3-4 years?
Furthermore you will find that most of the hottest selling vehicle models out there are not as deeply sub vented as others. These sub vented rates of 0-3% a just a buy down from the manufacturer to keep moving their metal.
Did you know you could also request your dealer to "Buy Down" your rate as part of your discount?. Theoretically he could get your rate down to 0%.

I was specifically looking for a used SUV for business purposes. I wanted a decently reliable 2-3 year old used car. However, going used, the financing rates were not that good (whether through the dealer or through the bank). And since I am putting 60k kms per year, I needed the mileage to be as low as possible to last at the very least, the financing period - 5 years. I found that although I wanted a used car, I opted for a new which was roughly the same price with 0% financing than with 4-6% used. In my case, I didn't care whether or not the car depreciated, because I essentially am buying a car and running it into the ground (approx 300,000 km in 5 years assuming 0 to start).

[ES_Revenge]

I went to Ford looking at a 09 Mustang and they wouldn't go below 7.9%. Walked out.
Keep in mind that dealerships have absolutely no control over financing rates on new vehicles. That is determined by the financing company (which is often a division of, or related to, the manufacturer).

So it's not a matter of them "not going below" any given rate, it's more that it's the rate that's offered right now and that's that.

[Warwick]

Keep in mind that dealerships have absolutely no control over financing rates on new vehicles. That is determined by the financing company (which is often a division of, or related to, the manufacturer).

So it's not a matter of them "not going below" any given rate, it's more that it's the rate that's offered right now and that's that.

I understand that and the salesman seemed honestly frustrated. But they have to do something about those rates, whether it's changing financing companies or browbeating the manufacturers. Right now they aren't even close to be being competitive with other brands. Ford lost a guaranteed sale from me simply because of their rates.

[evoviii]

Seems like the financing is really difficult for American companies but they offer really good cash incentives. Whereas the japanese offer great financing and Hyundai offers both depending on model.

Too bad the Germans, aren't doing too much

[canoetrpr]

I just signed a deal for a 2009 Ford F150. You are right - the factory financing sucks right now.

However, the dealership has worked with TD to provide a open car loan for upto 72 months at 5.49% variable.

This is close to my unsecured line of credit from TD which is sitting at 5%.

Unfortunately, I am using my secured line of credit (sitting at 3%!) to fund investments. I'm trying to sort out the tax consequences of switching my investments to the unsecured line at a higher interest rate since that is tax deductible so that I can pay only 3% on the car purchase. I'm not sure I want to deal with the pain in the rear of selling my investments to pay of the secured LOC, and then re-purchasing them with money borrowed from my unsecured LOC.

That said, 5.49% or 5% isn't terrible when taken in addition to the whopping $12k I saved off sticker on the deal.

What I have found in the past with the American companies is that it is usually low rate financing in lieu of a cash back of some sort and often it works out to 4% or so anyway when you consider the cash back.

There is still a chance, the sales manager tells me that Ford might come up with a low rate financing deal before I get my truck, in which case I will be able to choose.

[londotx]

TD seems to be having a deal with a number of dealers so you can take the FULL cash discount and a good finance number.

I'd take the discount /the 5.49% TD financing or your own line of credit over the used price rates. The used rate is just too high.

[AGR-1]

The MSRP of a vehicle. The Cash Discount or Lower Finance/Lease Rate are all part of the deal.

The ridiculously low rates offered on new vehicles are there to move iron.

The ridiculously low rates offered on CPO vehicles are there to move "lease returns" at a good price.

There is no free lunch if the average subsidy on a vehicle is 3,000 (as an example) you can get it as a cash discount, a lower rate, a blend of both cash and rate. At the end it will ad up to 3,000.

Using your personal line of credit to buy a vehicle that depreciates is counter productive, especially when many manufacturers still offer leasing at low rates, and the manufacturer assumes the risk of the value of the vehicle, not you or your line of credit.

Most manufacturers are very interested in giving a customer 0% financing for 60 or even 72 months and get the vehicle off their books, and have the customer assume the risk of value of the vehicle.

Yes you can write off a leased or an owned vehicle if you can prove to the CRA that its used for business, and the CRA will tell you up to what value you can write off.

Low rates on a purchase are to get a customer "into a vehicle" to move iron, a shrewd customer will also develop and "exit strategy" out of the vehicle after 36 or 48 months when the warranty runs out. A low rate up front and being upside down half way down the finance term is not an interesting way to own any vehicle.

Vehicles have to be easy to "get into" and easy to "get out" a 72 month 0% finance perhaps does not provide an easy "get out" (especially when a good portion of the taxes were financed) while there is still reasonable value in the vehicle.

[canoetrpr]

Assuming the risk of the resale value of a vehicle is only relevant if you are interested in reselling the vehicle in 36 or 48 months - i.e. a standard lease term.

Not everybody goes out and looks at their vehicle and 'Marks it to Market'. There is no need to unless you need to sell it.

In my book, it makes little sense to buy a new vehicle unless I am keeping it for pretty much its useful life - which lasts a lot longer than just when the warranty runs out. So using the lowest interest rate loan - whether it is from the manufacturer or from a personal line of credit makes sense.

Sure, if you are someone who looks to buy new every 36-48 months and drives less than 20000 km per year, a lease makes sense.

OTOH, if you are happy with keeping your vehicle for 10 years, knowing the full service history on it, maintaining it properly, a 5 year loan at the lowest interest rate you can get for something that depreciates effectively to 0 at the end of 10 years, is not a terrible deal.

The depreciation is massive over the first 3-4 years but you don't have to 'Mark it to market' just because. The depreciation over a 10 year ownership period, given fewer transaction costs, is not really that far off from buying used and a lot less than what it would cost you to lease a new vehicle every 3-4 years.

[AGR-1]

Gen Y and Gen X will keep a vehicle its entire useful life, these folks get bored after 24 months, and are not interested in paying for repairs.

If you show a vehicle as a personal (depreciating) asset you should have an idea of its market value and what you owe and your equity or deficiency position in the vehicle. The same as a house, usually a vehicle is the second most expensive purchase.

Not marking a vehicle to market creates the situation of 72 or 84 month finance at 0% and when I get bored after 24-36-48 months I'll deal with the deficiency situation at that time, and someone will "roll over" the deficiency into the new deal so that I keep on going.

How much of the cash discounts are used to deal with deficiencies on the trade?

Does a manufacturer want a customer out for 72 months?

How many deals are done on the premise "get me out of my trade / lease and I'll take your new vehicle"...this is where blends (cash back/lower rates) work very well. Shrewd manufacturers give dealers additional cash incentives if the trade / lease is from a competing manufacturer.

Will the mp3, blue tooth, navigation, CD drive , flat screen, last 10 years in the vehicle? In 10 years there could be 5 versions of the latest and greatest gizmos that will be offered.

On a 10 year basis a vehicle will accumulate 200 to 250,000 klms most vehicles in the 150,000 klms range start to require extensive and expensive maintenance to keep them running correctly as per factory specs that most folks have no interest in paying. Its cheaper to get a new vehicle.

The simpler vehicles are easier and less expensive to maintain, the more sophisticated the vehicle the more expensive it gets.

[T-Man]

I went to Ford looking at a 09 Mustang and they wouldn't go below 7.9%. Walked out.

Talked to Dodge about a new Challenger and they were only offering 8%. Walked away from there too.

My line of credit is 5.5%. How can these guys justify their high rates?

Now I'm looking at Lancers, Jettas and Civics. At least they have competitive financing rates.

I had a husband and wife in with me last week of March. They were looking at the Jeep Compass, and Jeep Patriot, and Dodge Caliber in the showroom, weren't really sure what they really wanted. They had a Toronto Sun Flyer in their hand for a Hyundai Santa Fe, they pointed out the big colourful 0% Finacing rate to me. Asked me, "what rate are you offering?". I replied "If you have excellent credit, on these vehicles here, we'd probably be looking at 5.49%". They just looked at me like why would they buy from me at 5.49% when they can buy another totally different vehicle somewhere else for 0%. I told them when a customer chooses to finance at 0%, the banks make between $3000-$6000 or more, (2nd look of shock on their face) So I explained to them, that there is no true 0% anywhere, if you and I walk into a bank, RBC, BMO, TDCanada, Scotia, HSBC etc and we ask to borrow money from the banks and want it at 0%, what would the bank's reaction be to us, they'd politely laugh at us right?, so how do Auto manufacturers advertise 0%? Simple, they either give you little or no rebates on the price.

So for example: Dodge Grand Caravan has a Consumer cash of $6000 and you can finance that at the going rate (5.49%) or take only $2000 off the MSRP and I give the other 4K to the banks so now you're getting your attractive "0%" on paper. 90% of the time, I find its better for a customer to take the huge consumer cash discount as the payment works out to be lower then the smaller discount with 0%.

So regardless of rates, its all open loan, meaning say you bought a vehicle from me and your amount finace was $25,000 at 5.49% and a month later, your own banks turns around and offers you 3% then by all means, transfer everything over, theres no penalties, no restrictions. On the other hand, say you chose 0% and now the amount financed is $31,000, if say your bank gives you an extremely attractive 3%, you just boxed yourself in.

I then pointed out the Viper in the show room (we had at the time), I can give you 0% on that vehicle but its not the right vehicle for you so the end of the day I explained to them, you're not buying "a rate" you're buying a vehicle.

About 3hrs later, I signed my name right below theirs on the bill of sale for a 2009 Jeep Compass 4x2 North Edition :cheesygri

Mr. Warwick- The rates are offered to the dealers by the banks, now I don't know anything about your credit rating, or your background and its none of my business but a lot of my customers lately had been getting 5.49-5.99%, so come see me if you're still considering the Dodge Challenger, I have about 6 in stock right now.

[HP_John]

wow that's pretty high...maybe ive been looking at mortgage rates too long.

Mortgage rates & lines of credit for car purchases are vastly different. It's quite hard to go to the bank for a line of credit to buy a car for a interest rate lower than 8%. Certified used vehicles from new vehicle dealers usually have subsidized finance rates that are much more attractive than that offered by used vehicle dealers.

[ES_Revenge]

Too bad the Germans, aren't doing too much
:confused:

VeeDub has 0% financing for 36 months, on all 09s.

http://www.vw.ca/vwcms/master_public/virtualmaster/en_ca_on/shop___price/specials___offers.html

[canoetrpr]

Without a doubt, if you are looking to get a new vehicle every 24-36-48 months and have no appetite for repairs, a lease is perhaps a good option for you. My parents are in this camp. The lease new every 4 years and never have to deal with any real repairs.

That said, the above is not about saving money when all things are considered. It is about being in a new vehicle every 2-4 years and not having the hassle of repairs.

The bit about vehicles with over 150000 km requiring extensive maintenance to keep them running and this being more expensive than getting a new vehicle really does not hold water in my book. It is vast generalization. My 99 Honda Accord has 300000 km and has required < $1000 in repairs excluding wear and tear items. In fact even the $1000 in repairs were things like bearings and tie-rods which will wear over time.

Again, it really boils down to how long you want to keep a vehicle. If you NEED to change every 24-36-48 months AND can deal with the mileage limitations of leasing, then leasing is a good option for you. It is not however about saving money. The most cost efficient way to own a vehicle is to purchase (2-3 years old) and to keep for the long term. In general repairs to a reliable older vehicle do not add up nearly close to the cost of depreciation of a new vehicle - which is what you pay when you lease.

That said, I don't do the most cost efficient thing either - i.e.. purchasing a 2-3 year old vehicle. I'd like to however I tend to value getting exactly what I want, saving time looking for a good deal on a used vehicle and knowing the exact service history of my vehicles, more than the overall savings in depreciation over the life time of the vehicle.

[tdott]

just wondering if u finance a car can u write off the whole value or only the interest part for being self employed/business.

Speak to a tax accountant, mine says it is actually better to buy and write off as a capital expense. (in my scenerio everyone is different)

People just want to lease so they can drive a new car. But they are paying more for it.

[U4IA]

I understand that and the salesman seemed honestly frustrated. But they have to do something about those rates, whether it's changing financing companies or browbeating the manufacturers. Right now they aren't even close to be being competitive with other brands. Ford lost a guaranteed sale from me simply because of their rates.

Did you call your own bank?

We bought our Ford Fusion last week and got 5.49 through TD from the Ford dealership. (Though its variable so not exactly perfect)

CIBC quoted us 5.75 but im not sure if that was fixed or variable.

Otherwise, 8% is pretty normal - the domestics have larger rebates and bank rates for financing. The imports have almost no rebates, and low financing. (Other than Hyundai)

They get you one way or another :)

[Warwick]

Mr. Warwick- The rates are offered to the dealers by the banks, now I don't know anything about your credit rating, or your background and its none of my business but a lot of my customers lately had been getting 5.49-5.99%, so come see me if you're still considering the Dodge Challenger, I have about 6 in stock right now.


Wish I could. You seem like a straight forward guy to deal with. But I'm in Alberta so it's a little too long of a drive. :lol:

Are your financing rates the same across country or just for Ontario? Curious as to why the rates I'm being offered are higher at Dodge dealerships here.

[Warwick]

Did you call your own bank?

We bought our Ford Fusion last week and got 5.49 through TD from the Ford dealership. (Though its variable so not exactly perfect)

CIBC quoted us 5.75 but im not sure if that was fixed or variable.

Otherwise, 8% is pretty normal - the domestics have larger rebates and bank rates for financing. The imports have almost no rebates, and low financing. (Other than Hyundai)

They get you one way or another :)

I've gotten a couple of quotes from banks and it's 5 to 5.5%. Not bad but Mitsubishi will give me 1.8% and I believe Toyota was about 3.9%. With those rates similar priced cars end up about 3-4000 dollars cheaper over the 5 year term compared to Ford.