Financing a used car- dealer or bank financing?

[woodywoodford]

I'm thinking about a used car but would need 10-15k financing- can we usually get better rates through an RBC/TD line of credit than the dealer? Generally speaking of course, and I'd probably be looking to tack a remote start onto the package as well...

[Mitsu3000gt]

Totally depends on the dealer's rate, which varies a lot.

A secured LoC is usually prime (3%). Unsecured is usually prime + 2-3 points.

Assuming you can get a secured LoC, the rate to beat will be 3% for most people. If you can get 1.9% or whatever from the dealer, it'll likely be better than anything you can get at a bank.

[roopi]

Ask the dealer the rate they will give you. Then ask the bank. Once you have both rates if you are not sure which is lower post here and we will advise.

FYI: Banks and dealers offer different rates based on your credit so there is no way in answering this.

[CapnCrunch]

Originally posted by roopi
Once you have both rates if you are not sure which is lower post here and we will advise.

[Phihalo]

Another thing to consider is I think you can get out of a bank loan if you were able to pay the full amount let say 6 months down the raod. However, you are obligated to carry the full term if you borrow from the dealer.

[Xtrema]

Bank rate is usually pretty high unless you are talking about LoC which floats as prime changes.

Anything 3% or lower (fixed) is great for used cars.

Then you have check the pay off early options. LoC, you can pay off at any time. So can most manufacturer special rates. But a lot of loans are locked in for a period and you have to pay penalty if you pay off early.

[woodywoodford]

Originally posted by Xtrema
Bank rate is usually pretty high unless you are talking about LoC which floats as prime changes.

Anything 3% or lower (fixed) is great for used cars.

Then you have check the pay off early options. LoC, you can pay off at any time. So can most manufacturer special rates. But a lot of loans are locked in for a period and you have to pay penalty if you pay off early.

I had no idea these things had lockout periods...my last one didn't. Definitely good to know, that'd be a dealbreaker since I plan to pay it off ASAP.

[avishal26]

Originally posted by Phihalo
Another thing to consider is I think you can get out of a bank loan if you were able to pay the full amount let say 6 months down the raod. However, you are obligated to carry the full term if you borrow from the dealer.

Not true, most dealers now also offer open ended loans as standard.

[ExtraSlow]

HELOC that shit.

[Team_Mclaren]

Originally posted by Xtrema
Bank rate is usually pretty high unless you are talking about LoC which floats as prime changes.

Anything 3% or lower (fixed) is great for used cars.

Then you have check the pay off early options. LoC, you can pay off at any time. So can most manufacturer special rates. But a lot of loans are locked in for a period and you have to pay penalty if you pay off early.

Where have you seem a dealership loan with payout penalty?

[max_boost]

Originally posted by ExtraSlow
HELOC that shit.

But doesn't sound like OP has one lol

[Xtrema]

Originally posted by Team_Mclaren


Where have you seem a dealership loan with payout penalty?

Sorry, I meant private/3rd party.

Dealer/Manufacturers don't care if you pay off early because they usually give you discount rate to move their products.

[ExtraSlow]

With interest rates where they are these days, not having a HELOC is a strange choice for anyone who carries any consumer debt.

[Xtrema]

Originally posted by ExtraSlow
With interest rates where they are these days, not having a HELOC is a strange choice for anyone who carries any consumer debt.

Unless you bought at the right time (pre 2006 or 2009-2012), the HE part is tough to get for anyone starting out.

[duaner]

Originally posted by Team_Mclaren


Where have you seem a dealership loan with payout penalty?

We purchased a Flex from Woodridge last year and when I asked about a penalty for paying off early, I was clearly told that dealerships aren't allowed to charge a penalty for paying the loan off early. Something to do with vehicles being a depreciating asset.

[max_boost]

Originally posted by ExtraSlow
With interest rates where they are these days, not having a HELOC is a strange choice for anyone who carries any consumer debt.

Beyonders only pay cash....except for their house!

[Sugarphreak]

...

[woodywoodford]

Originally posted by duaner

We purchased a Flex from Woodridge last year and when I asked about a penalty for paying off early, I was clearly told that dealerships aren't allowed to charge a penalty for paying the loan off early. Something to do with vehicles being a depreciating asset.

That makes more sense - there's no (ethical) way they can penalize us for trying to at least maintain asset-liability matches.

[Env-Consultant]

Originally posted by duaner

We purchased a Flex from Woodridge last year and when I asked about a penalty for paying off early, I was clearly told that dealerships aren't allowed to charge a penalty for paying the loan off early. Something to do with vehicles being a depreciating asset.

I second that - I put a downpayment on my truck back in 2010 and financed the rest right after I finished university. Started out in the field doing oil/gas work and paid it off in 6 months - made sure I would be able to do that without penalty first, as the 6% interest rate was not okay with me, especially over a 5 year period. Dealer told me they are 100% not allowed to charge any type of early payoff penalty, regardless of how you finance it.

[pheoxs]

Originally posted by ExtraSlow
With interest rates where they are these days, not having a HELOC is a strange choice for anyone who carries any consumer debt.

Most likely doesn't own a house or recently bought and doesn't have the equity yet