0.00% Loan Interest Rate

[mickeyd]

I'm in the process of buying a new Toyota product and was planning on paying cash as I always do. During my chat with the fleet sales mgr he mentioned that if I had a FICO score of 650 or greater I could qualify for a 36 month 0% loan. He threw in ~"It's a no brainer."

I prefer having a paid off car, but can't help being tempted in accepting the loan as I doubt that I will ever get a better rate. Toyota just wants to sell cars and they are being aggressive on this issue (or so my logic says.)

If you had the money in savings and getting about 0.50% yield in that account, would you be tempted to accept the 0% offer if you could pay off the balance at any time if you just did not like the deal for some reason?

 

[REWahoo]

Take the free [-]money[/-] loan!

 

[FIREd]

I would take the 0% loan. If down the road you change your mind, you can just pay it off and be done with it.

 

[Gone4Good]

I'm always skeptical of 'free.'

I'd go through the process. Make sure they wouldn't give me a better deal on the car for a cash transaction (free financing is sometimes paid for with higher up-front product prices). Make sure there were no 'documentation' fees or any other nonsense that pops up in the loan process. And if 0% is really 0%, I'd take the loan and plop the cash I would have used to buy the car in a CapitalOne savings account to earn 1%.

 

[dgoldenz]

The 0% loan is usually instead of a rebate you could receive for paying cash. You can look at Edmunds.com to see what the current rebates and offers are for the particular model you're interested in.

 

[Coolius]

Why not present a counter offer - if you refuse the loan and pay cash, can they knock off another 3-5% off the price of the car?

They must have a cost of money, and a cash offer is usually very attractive compared to a zero interest loan.

However, you have to watch out in case they jack up the price of the car to "compensate" for the loss in financing revenue.

If they refuse the reduced cash offer, you can always revert back to the loan.

I figure it's worth a try - economy sucks nowadays and car buyers are not plentiful around ( especially folks who can offer cash up front ).

 

[dgoldenz]

Why not present a counter offer - if you refuse the loan and pay cash, can they knock off another 3-5% off the price of the car?

They must have a cost of money, and a cash offer is usually very attractive compared to a zero interest loan.

However, you have to watch out in case they jack up the price of the car to "compensate" for the loss in financing revenue.

If they refuse the reduced cash offer, you can always revert back to the loan.

I figure it's worth a try - economy sucks nowadays and car buyers are not plentiful around ( especially folks who can offer cash up front ).

Walking into a car dealership without an agreement in place these days is a sucker's bet. Doing a couple hours of research on Edmunds and some car forums, then negotiating by e-mail with the dealer will always yield the lowest price and best terms. Knowing exactly how much they are making on the car and presenting a fair offer is the best bet. They will know you're an internet buyer who knows the ins and outs of pricing and won't beat around the bush, making you sit and argue about price for 8 hours while the managers are laughing at how much of a sucker you are from the other room.

 

[LOL!]

We did take a 0% loan for the last car we bought. We also got the rebate. Just because of that, I think we paid too much for the car.

You may not get anywhere trying to trade the 0% loan for a lower price. This is because the 0% loan comes from the finance wing of the car manufacturer and not from the dealership. The dealer may not care if the finance folks make their quota of loans or not.

 

[REWahoo]

You may not get anywhere trying to trade the 0% loan for a lower price. This is because the 0% loan comes from the finance wing of the car manufacturer and not from the dealership. The dealer may not care if the finance folks make their quota of loans or not.

+1

No reason you shouldn't give it a shot but I doubt you'll see any positive results.

 

[dgoldenz]

We did take a 0% loan for the last car we bought. We also got the rebate. Just because of that, I think we paid too much for the car.

You may not get anywhere trying to trade the 0% loan for a lower price. This is because the 0% loan comes from the finance wing of the car manufacturer and not from the dealership. The dealer may not care if the finance folks make their quota of loans or not.

A 0% finance rate will be a factory incentive, not a finance-wing incentive. There is almost always a cash rebate available instead of the 0% financing.

 

[VaCollector]

MickeyD ~ the BIG question is....

Whatcha buyin'

Sienna? Venza?? Avalon??

 

[Pajaro]

Have you taken a look at USAA's car buying service? Several of my friends are very happy with it. USAA does all the research/negotiation and you just walk into the dealership and pay. I guess if the price they've negotiated is higher than what you found, you can just walk away. I think it's worth a look.

 

[REWahoo]

I used USAA's buying service earlier this year to buy my truck and was very happy with the deal. I paid less than the price Edmund's said was the going rate and enjoyed not having to spend hours engaging in tag-team negotiations with the salesman and his manager.

 

[FIREd]

I used USAA's buying service to buy 2 cars last year. I was very happy with it. No surprises.

 

[mickeyd]

Have you taken a look at USAA's car buying service? Several of my friends are very happy with it. USAA does all the research/negotiation and you just walk into the dealership and pay. I guess if the price they've negotiated is higher than what you found, you can just walk away. I think it's worth a look.

Yes I went thru AutoCircle @ USAA (going directly to the fleet mgr is much easier), but that does not stop me from trying to negotiate a bit if I can.

 

[73ss454]

A 0% finance rate will be a factory incentive, not a finance-wing incentive. There is almost always a cash rebate available instead of the 0% financing.

Last year Toyota was running the O% program on Camrys. There is no games with this program and it's from Toyota direct and not from the dealer.

Many times it's the rebate or the low rate but not in this case.

 

[mickeyd]

Many times it's the rebate or the low rate but not in this case.

That's what the fleet mgr told me too, but I tend to not believe what those guys say. I guess I now have to believe it if its from a fellow ERer.

 

[73ss454]

That's what the fleet mgr told me too, but I tend to not believe what those guys say. I guess I now have to believe it if its from a fellow ERer.

Don't be so sure, I spent 35 years in the car biz.

 

[thefinancebuff]

There is almost always a cash rebate available instead of the 0% financing.

Almost, not always. When I bought my car, there was 0% financing but no rebate if I didn't take financing. So I took the loan.

 

[Free To Canoe]

Once I was given a $500 rebate for taking out a loan. Promptly paid it off a month later.

 

[ERD50]

I used USAA's buying service to buy 2 cars last year. I was very happy with it. No surprises.

Yes I went thru AutoCircle @ USAA (going directly to the fleet mgr is much easier), but that does not stop me from trying to negotiate a bit if I can.

Question: When you go this route, do you also avoid arguing over all the add-on gimmicks the dealers try to load you up on (rust proofing, clear-coat, trim do-hickeys, etc)?

Once I was given a $500 rebate for taking out a loan. Promptly paid it off a month later.

Yep, DD just bought a new car. $400 discount for new grads, but ONLY if you took out a loan. The $400 was after all other negotiations, and it is paid by the finance company to the dealer, so the dealer does not care - in fact they love it as it helps them make a sale.

In the TANSTAAFL category - they also consider 'new grads' to be 'higher risk', so you get a higher % rate. Guess what - it would come out to more than $400 over the life of the loan. Imagine that


I explained to DD - we pay off the loan in full, pay maybe one month of interest, and you got your $400 off. So maybe sometimes, there IS a 'free lunch', if you are suitably capitalized

STTIAFLIYASC? Not so catchy.

-ERD50

 

[REWahoo]

Question: When you go this route, do you also avoid arguing over all the add-on gimmicks the dealers try to load you up on (rust proofing, clear-coat, trim do-hickeys, etc)?

The only upsell attempt I got using the USAA service was from the finance guy for the extended warranty.

 

[FIREd]

The only upsell attempt I got using the USAA service was from the finance guy for the extended warranty.

Same here.

 

[ERD50]

The only upsell attempt I got using the USAA service was from the finance guy for the extended warranty.

Same here.

Thanks, I might have to look into how to connect with USAA. My last two car buying experiences were....experiences.

Does anyone know, are other car buying plans similar, Credit Union, Costco. other?


-ERD50

 

[REWahoo]

Does anyone know, are other car buying plans similar, Credit Union, Costco. other?

I'm not sure, but it appears PenFed CU has the same service. I say that because 1) they have some sort of reciprocal agreement with USAA on insurance and 2) they came out with their service shortly after USAA introduced theirs.

EDIT: I checked out the Penfed program and it is definitely the same as USAA's program.