Thanks to the excellent feedback from earlier post: https://carkiller.com/scottykilmer/qa/how-do-i-buy-a-new-car/#post-227068
This thread focus on the financial portion of the buying process. Let’s assume I found a Lexus dealer with allocation, we agree to MSRP (and get it in writing), and I order the vehicle on June 1, 2023. Then the vehicle arrives and I pick up on December 1, 2023.
Questions:
1.) Since I will finance part of the purchase through my Credit Union, where in the time frame above do I need to start applying for. a loan?
2.) At what point do I disclose to the dealer I will be getting part of my financing through my own bank?
3.) How does the dealer get paid? And when does he get paid?
4.) Does the dealer contact my bank for the transfer or do I do that?
5.) When do I start making monthly payments to the bank?
Any other details you can provide is appreciated.
Adding @FJCruiser2014
Another topic which is a FAQ candidate! So far we only have a used car buying guide.
I am sure your credit union or bank carries lots of car loans and they have tons of experience in this area. I would make an appointment with your banker or loan specialist and get these specific questions answered to your satisfaction. After all, you are the customer and the bank is making bank (pun) off your checking and savings deposits.
Go get pre approved by your credit union before going to the dealer. They will give you a rate.
The dealer is going to try to entice you to use their finanancing. You are not obligated to. You may have to be adamant about using your own financing.
When going to the dealer. Talk overall price first then financing. They are going to try to trick you with lower payments. But it actually adds up to more in the long run.
1.) Since I will finance part of the purchase through my Credit Union, where in the time frame above do I need to start applying for. a loan?
It's up to your bank. They should be able to make a decision within a week.
2.) At what point do I disclose to the dealer I will be getting part of my financing through my own bank?
It's none of their stinkin business! 😆 You're paying outright. They will eventually ask if you're applying for financing or not (through them). You will say cash, or combination credit/cash. (remember that some companies, eg. GM, make close to, or more money on financing than they do on the vehicle profit).
3.) How does the dealer get paid? And when does he get paid?
Well a bank loan means the bank lends you money. So you are paying the dealer yourself, via certified cheque usually. You need to talk to your loan manager.
4.) Does the dealer contact my bank for the transfer or do I do that?
Not that I know of.
5.) When do I start making monthly payments to the bank?
Again, ask your bank. Your agreement is with them.
Any other details you can provide is appreciated.
Try to put as much as you can on your credit card to earn some points.
1.) Since I will finance part of the purchase through my Credit Union, where in the time frame above do I need to start applying for. a loan?
Apply for a loan before you plan on purchasing-February/March 2023. You want to make sure that the bank says it's ok to buy the car.
2.) At what point do I disclose to the dealer I will be getting part of my financing through my own bank?
Right when you are purchasing the car.
3.) How does the dealer get paid? And when does he get paid?
The dealer will get paid when the sale is complete.
4.) Does the dealer contact my bank for the transfer or do I do that?
I recommend you doing that yourself. The dealer might do that but they would tell you how it would go through the purchase process.
1.) Since I will finance part of the purchase through my Credit Union, where in the time frame above do I need to start applying for. a loan?
You can get pre-approved for a loan so you have an idea of what rate your CU will offer you etc. How far in advance they will do it depends on your CU, but for example if you'll be getting your car after a 6 month wait then there is no rush to have the loan approval before you go in to reserve a unit and put down a deposit. But if it were like before that you buy from on the lot unit then you would want to have that approval before you go to the dealership.
2.) At what point do I disclose to the dealer I will be getting part of my financing through my own bank?
Don't say anything until you have negotiated the OTD price and have everything in writing from them. If it's a putting a deposit and waiting for car to be built and come then get that part done first and get the signed sales order. Don't talk about financing or paying in cash or anything until the car arrives and you go to do the paperwork and take delivery of the car. Some dealerships will play games if they know you want to pay in cash or bring your own financing. So actually tell them you'll consider their financing if they can beat the rate you have from your CU; this can lead to you getting a better rate or the very least makes the dealership think they can make some profit on a loan too which gives you more leverage.
3.) How does the dealer get paid? And when does he get paid?
If you end up with loan from your CU the dealership will get paid when you take them the check from your CU. It's basically like if you were paying them with a regular check; the only difference is you are borrowing the money for the check from your CU.
4.) Does the dealer contact my bank for the transfer or do I do that?
It depends on the CU/bank. Sometimes they dealership would contact them to make sure about the loan and check being cleared. But normally the bank will issue a check in the name of the dealership you are purchasing from and you take the check to them.
5.) When do I start making monthly payments to the bank?
This depends on your bank and they can answer it best. But from my experience it starts from when you get the loan check; you'll be making payments monthly on the given date because when you get the check and take it to the dealership it means the loan is official.
Any other details you can provide is appreciated.
I agree with @mmj. If you have a credit card with enough credit line then definitely use it. Then pay off the credit card with the loan check. I bought cars from a credit card that would give mile points and I got my car but also free tickets for traveling using those mile points.
Another thing is try to keep the transaction as clean cut as possible. The dealership will try to bring up financing when you initially go in, but don't talk about that at all. First focus on the car and getting the OTD price and signing the sales order. Also, if you have a trade-in treat that as a separate transaction and don't bring that up either before having the OTD price of the car you are purchasing.
Btw, sorry for the late reply as I was traveling. Hopefully the above information is helpful.
Wow, this is very detailed and precisely what I was looking for.
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I should definitely be able to add more nuances to it once I go through the process.
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This is worth making into a separate thread under FAQ. The nitty gritties or nuances are hard to find online and in videos, and of course what we’d discussed here is not a hard guideline but it’s a pretty good outline.
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Thanks for all this. I will ask the forum
more questions as I go through this process. Luckily, I will probably wait till later 2023 before ordering so I have time to get my ducks lined up.
- Thank you for your help on my post! I really appreciate it.
I'm not the most knowledgeable, but a channel on YouTube named
"Your Advocate Alliance (YAA)"
is pretty good. Maybe this will help you out, God speed.
