Financing A Vehicle And Protection Package/Extended Warranty Questions

[iggyntangs]

Hey everyone,

So I took the plunge and bought an Acura over the weekend and have some questions regarding financing a vehicle.

The posted rates I kept seeing online were 4.99%, when I called CIBC last weekend before I'd purchased the vehicle was the ability for me to take out a secured loan for 4%.

After purchasing the vehicle over the weekend the Financing department at Acura told me that they way their dealership works is they'll look into rates for myself (through multiple banks and Honda Financing as well)...without looking at my credit history and everything he was thinking obtaining something like 5.99% would be easy.

However, honestly I'm looking at obtaining something like 4.99% or lower, so I'm just wondering what my options are if anyone knows of any rates or any places where I can look to obtain a rate like this.

I have great credit history and very little debt (a mortgage and that's it, no other vehicles or debts).

I may continue to pursue CIBC however from everything I've read a secured loan can take quite a bit of time.

Anyway any help or steering in the right direction would help, thanks!

[Deegee]

Secured loan at 4% seems to suggest Mortgage security or a floating term. I'd be very surprised if it's fixed.

Dealerships want you to finance through them because they get what is called a reserve for going through places (like $700 for a $25,000 car loan) and another $100 for first look bonuses through many financial institutions.

You should ask the finance manager how much of a reserve they will make off your vehicle and that you want half of that applied on your price or you will finance elsewhere.

[iggyntangs]

Thanks for the tips Deegee.

One other thing, I'm starting to get buyer's remorse on a couple of items I added at the end.

A) Protection Package
B) Extended Warranty

Is there anyway that I can remove any/either of this items from my total purchase from the Acura dealership even though I already have a bill of sale and $5,000 deposit on the vehicle?

Thanks in advance!

[Canehdianman]

Tell them you don't want them anymore.

[iggyntangs]

Can I legitimately do that even though it's on the signed bill of sale? First time buying a new vehicle (as I'm sure you can tell).

[Canehdianman]

I don't know the exact law in this area, but I would start by telling them that you have reconsidered and no longer was those items.

If they say no, then I suppose you will need to know what to do next. In that case, I would look into not accepting delivery of the vehicle and getting your deposit back.

[oilyfan]

Originally Posted by iggyntangs

Can I legitimately do that even though it's on the signed bill of sale? First time buying a new vehicle (as I'm sure you can tell).

If you haven't signed any finance documents then the bill of sale doesn't mean much. What is at stake maybe is any deposit you put down while negotiating. I would call them back and say you changed your mind and don't need the extras. Now whether they have actually gone ahead and put the protection package on, that's up in the air.

On the point about the interest rate, is this a new or used car. if it is new then there should be no discussion, whatever Acura has on its website for rates should be applicable. If it used you can go to your bank and ask for an unsecured or secured line of credit. Or get a secured loan against the car, but interest rates are probably going to be in the 5-7% range. I would suggest you tell them that you want a 4% interest rate or there is no deal.

[GP_Matt]

Another option is to take their financing and then go to your bank or shop around for a lower rate. Then borrow the money and use it to pay off the original loan.
When I bought my truck they knocked off $1000 for financing through them at their crappy rates but had no penalty for early payment so I paid the first month and then brought in a check to clear the loan.

Also, if you have a chunk of your house paid off you can look into a home equity line of credit which floats but should be around 3.5% right now.

[pylon]

Lots of sketchy advice in this thread.

I will negotiate all sorts of things on a deal with my clients. Warranty, protection options, accessories etc, but no finance manager at a dealership who values his relationships with the banks or his job, will EVER negotiate on reserve.

This is the problem:

Most banks will charge back the reserve to the dealer if the loan is paid out in the first 60 to 120 days, depending on the lender. So the dealer ends up eating the reserve, and is put in the hole. Then you have a lender that doesn't trust his dealer in the fear they were coached into a transaction that's designed to rip off the bank. In fact, 5 or 6 years ago, there was some dealers that were putting through loans at high rates for maximum reserves, and coaching the customer to ride the loan for the first 6 months, splitting the reserve with the customer, then telling them to pay it out after 120 days. Voila a free 1500 rebate or whatever it was, at the expense of the bank. Unfortunately, not everyone waited the 120 days, and when the banks caught wind of what was going on, they weren't happy. It is a kinky, dishonest way to do business.

It should not matter if the dealer is making 10 bucks, or the entire value of the interest, if they are getting you a better rate than the bank, what does it matter? I know everyone is mortified that a car dealer might make a few bucks on your transaction, but at the end of the day, they are businesses, not non-profit charities.

edit: If I am ever in a scenario where the client can obtain a better rate from his bank on a fixed term loan, I let them take their business there with no resistance. Because 9/10, the better rate they are getting is almost always a floating rate or line of credit, which is not smart to use on a depreciating commodity like a car. And in most cases the reserve is so small, it isn't worth arguing over. FYI, the best fixed rates available from the banks right now is 4.9%. There are a few banks marginally lower if you take a floating rate, and if you go over 25 or 35k, which isn't smart IMO.

[pylon]

Without knowing the dealerships policies, I cannot say.

[pylon]

I cannot speak for how another dealer operates, so no, I cannot.

[guzzy]

Originally Posted by iggyntangs

Thanks for the tips Deegee.

One other thing, I'm starting to get buyer's remorse on a couple of items I added at the end.

A) Protection Package
B) Extended Warranty

Is there anyway that I can remove any/either of this items from my total purchase from the Acura dealership even though I already have a bill of sale and $5,000 deposit on the vehicle?

Thanks in advance!

A) Offer them $500 for the full protection and walk away from negotiations. You can take a brand new car from a dealer and get full package from many detail shops for $500. If dealer won't do it walk. I got a quote on my Titan for $550. WHen i bought my Armada i told them that and they gave it to me for $650.

B) this it buyer preference. If you plan on keeping it, the warranty isn't a bad thing. If one thing goes wrong post-factory warranty the extended warranty would pay for itself.

[Deegee]

There is no claw-back option for our dealer plan loans, and I can't tell you how many get paid out on day 61, 91, or 121. It's a little ridiculous, but it also means it's obvious that the dealerships are telling people to finance elsewhere after a certain day to keep their reserve as they perceive a claw-back. Or dealerships that circumvent government regulations on physical addresses with PO BOX clients by typing 1 1 ST in their origination software and create headaches for the financial institutions trying to be compliant with new and stingier regulations.

So personally I don't see anything wrong with consumers looking for a better deal and trying to negotiate, as dealerships themselves have created some of the mess.

[Deegee]

Originally Posted by iggyntangs

Thanks for the tips Deegee.

One other thing, I'm starting to get buyer's remorse on a couple of items I added at the end.

A) Protection Package
B) Extended Warranty

Is there anyway that I can remove any/either of this items from my total purchase from the Acura dealership even though I already have a bill of sale and $5,000 deposit on the vehicle?

Thanks in advance!

I don't want to be the only posting in this thread, and I don't work at a dealership, but I think you should read what these items cover.

If you do not have the means to cover repairs on your new purchase outside of the warranty period, those may be beneficial items to have financed for peace of mind.

Otherwise you could be relying on a line of credit or refinancing your vehicle loan to pay for repairs.

If you have the cash savings for a big repair this may not be an issue. For several people it can be financially stressing. Most people aren't as well off as the CP crowd.

[iggyntangs]

Well like most in the CP crowd I make about 250,000/year so none of this is any issue .

In all honesty, here's what happened after reading's people's advice on this thread.

I negotiated the fixed rate with my dealer down to 4.5% fixed.

I opted to keep my extended warranty.

After making the additional savings on the interest rate, I didn't mind paying the mark-up on the car protection package...especially since I got such a great deal on the new car.

Again, thanks for everyone's two cents it really did help!