Originally Posted by NormanBuntz
Two pointers. Run away from any dealer arranged financing. Make your best deal without it. Second, if not already a credit union member, seek one out that you're eligible to join. Best rates around, most of the time.
This.
Originally Posted by CKN
Sometimes you have to finance through the dealer to get some of the (manufacturer) rebates. Then you just refinance 30 to 60 days afterwards.....
And this if you're buying new.
What's the smartest decision? Always pay cash on something you can afford. If that's not possible, feasible, or you feel the need to buy something more than you can afford, get a loan with the lowest interest rate possible, combined with the shortest number of months financed that you can *reasonably* afford. This will ensure you pay the least amount of interest possible. The longer the term and/or the higher the interest rate, the more you'll pay in interest. Just don't make the payment so high that in a pinch you can't afford it (this is how repos happen).
I went against [some of] these rules when I bought my Elantra, but I had reasons. This particular car was the nicest one within 100 miles. It gets 5 more mpg than the car I was about to buy. It had a few extra details that I valued over the other car (read: the Elantra
didn't have problematic/costly tech that the other did, such as DI, turbos, lane assist, etc.). It was more than I wanted to spend, however the deal I ended up making gave me instant equity in the car, because I bought it for less than it was actually worth. The extra 5 mpg earned a lower interest rate through my CU for a "green car" rate. That made it worth it to add an extra year or two to the term (including the interest that would be charged in that timeframe), and lower the payment to what I wanted to be at with the less expensive car. The extra fuel savings was the icing on the cake. That put me in the green. Add that up over the life of the loan and I came out way ahead. Not to mention if I'm paying extra (I am) to further reduce the interest assessed. Bottom line, you always have to look at the big picture and weigh the pros and cons. I don't regret my purchase.
Also, my personal advice (if buying from a dealer regardless of size) is to always make
them fight to earn your money. When any of my family or friends want a car, they enlist me because they've seen the results. If you know what car you're looking for, find 3-5 very similar ones and negotiate to their bottom dollar (be a tough, yet serious negotiator. Remember, YOU hold the cards ($$$) not them). After the first one, you can say "dealer B is going to sell me theirs for X amount less. Beat their deal or I walk (and walk anyway, WITH their best offer still on the table). Continue the process with all of the dealers until they bow out of the race and you are down to 2. Once you have it down to 2 they'll usually go toe-to-toe until one gets either annoyed or exhausted. Then you have your best price. Dealers take advantage of you, it's what they live for. Turn the tables and take advantage of them by making them fight against their own kind, and they don't know how to act. It's amusing every time.