School me on interest rates

[3drian]

Hi there Beyond, as I posted in another thread I am in the market for a SUV.
My wife got a call from Honda since she owns a civic, and they are offering .49% interest rate on a 2016 CRV for 72 months and .99 for 84.

At first I did no think much of this but as I started looking at other vehicles I found that hard to match. The way I am looking at it is that the total Finance charge for 84 months is around $1300, compared to around 4ks at 2.99% which is still a pretty good rate.

So I guess my question is, how can dealerships offer such low interest rates? Am I being cheap by looking at the total finance charge after the whole term? and is there other dealerships with good rates at the moment? I am not in love with the CRV but that price is hard to beat.

I was also looking at used vehicles but those rates are usually around 5%, but I do know that Mercedes usually offers good rates on their Certified preowned vehicles. Is there other dealers that offer good rates for used inventory?

Thanks in advance.

[ercchry]

They're subsidized by the dealers... that's why you usually see a cheaper cash price during low interest events

If you're willing to go used, even with a higher rate chances are that's going to give you the lowest cost of ownership... if you have the equity a HELOC is going to be hard to beat, and also the most flexible payment schedule

[asp integra]

I had been looking at some used GLKs earlier at Lone Star earlier this year and they could offer 0.9% on their used stuff. Pretty good rate for used. Lots of other used is in the 3.9-4.9% at the lowest.

[realazy]

They're tricky with those rates because there's usually a cash incentive if you pay cash.

You have to actually consider the effective interest rate, which is the cost of financing + the cash incentive you could have gotten.

I believe some manufacturer websites show the effective rate.

[3drian]

Originally posted by asp integra
I had been looking at some used GLKs earlier at Lone Star earlier this year and they could offer 0.9% on their used stuff. Pretty good rate for used. Lots of other used is in the 3.9-4.9% at the lowest.

Ya exactly, I wonder if there is any other brands or dealerships that offer such low rate on their used vehicles

[Strider]

Originally posted by 3drian
Ya exactly, I wonder if there is any other brands or dealerships that offer such low rate on their used vehicles

BMW often has 0.9 or 1.9% on CPO as well.

[Xtrema]

Originally posted by 3drian


Ya exactly, I wonder if there is any other brands or dealerships that offer such low rate on their used vehicles

Supply and demand, the more desperate the dealer/manufacturer to get it off the lot, the lower the rate goes.

When Toyota tried to purge last model year of Corolla, they were doing 0% lease which is great for new driver with a new job. $200/mth for 60 months for basic transportation and $0 down.

[mzdspd]

Originally posted by 3drian


Ya exactly, I wonder if there is any other brands or dealerships that offer such low rate on their used vehicles

VW had CPO for 0% last year.. It'll probably come up again.

[automotivat3d]

T&T Honda has 1.99% for CPO other makes is 5.99

[Redlyne_mr2]

Low rates come out of manufacturer advertising dollars, not from the dealers. If there is a surplus of inventory they take advertising dollars to buy down the rate on the respective vehicle.

Cars with higher rates are either pre-owned or more rare and in higher demand.

As mentioned above VW has really good rates on certified used models.

[soloracer]

When I was looking for a new truck I phoned a Dodge dealer asking about what they had on the lot. We came to an agreed price of $65K. Then when I asked about the 0% financing they offered I was told "that isn't the 0% financing price" and if I wanted the 0% financing the price would be over $70k. So I asked how, if the real price for the vehicle is $65k, is paying over $70k for it really considered 0%? Seems more like they are getting their interest up front instead. End of the story, all this 0% stuff is marketing fluff and at the end of the day you pay one way or another - either up front or in installments. I suspect the same is true with the special interest rates.

[HiTempguy1]

Servus will do 3.99% on new vehicles right now. So unless you HELOC, that's probably as good as it gets.

So the thing to do would be to compare their best "cash" price, versus best "dealer financed" price. Make your decision from there as to whether you are getting a good deal or not.

Always negotiate cash first, never mention financing (never mention how you'll be paying at all, if asked, say cash). Then at the end, bring it up (but only once you have an all in price).

[automotivat3d]

Originally posted by soloracer
I asked about the 0% financing they offered I was told "that isn't the 0% financing price" and if I wanted the 0% financing the price would be over $70k. So I asked how

Some dealers offer 0% interest based from their manufacture eg. Kia, Toyota

However it is possible to get 0% interest all you have to do is ask the sales manager to calculate how much is the interest borrowed and factor it into the sales cost.

Example: say you want a 2017 Civic Touring Sedan. Listing price is $29,500 + GST/Fees. Your all in price is $31,997.96 but interest rate is 2.99% over 84 months. 2.99% over 84 months is $2,996.54 add that to the listing price then negotiate from there, you'll get 0% interest and a higher all in price.

[3drian]

Thanks to everyone for all the comments, I understand it a bit better now. I am going to keep looking hopefully some good deals come up this month.

[soloracer]

Originally posted by automotivat3d

Some dealers offer 0% interest based from their manufacture eg. Kia, Toyota

However it is possible to get 0% interest all you have to do is ask the sales manager to calculate how much is the interest borrowed and factor it into the sales cost.

Example: say you want a 2017 Civic Touring Sedan. Listing price is $29,500 + GST/Fees. Your all in price is $31,997.96 but interest rate is 2.99% over 84 months. 2.99% over 84 months is $2,996.54 add that to the listing price then negotiate from there, you'll get 0% interest and a higher all in price.

Exactly what I said. They jack the price up on the vehicle to make up for the lost interest. So how is that 0% again? It's just a marketing tool because at the end of the day you still pay the same price for the vehicle or possibly even more.

What everyone assumes 0% means is that you get their best price and then pay no interest when making payments on it. What the 0% actually means is we screw you on the price of the vehicle and then make you feel better by saying we will charge you 0% on the loan - even though technically they already have the interest factored in. Pretty shady/dishonest practice and the people that fall for it are suckers

[rx7boi]

I don't get people that focus on only one aspect when buying a vehicle.

IMO I focus on the OTD vehicle price, the interest rate, and the type of loan. I am guessing that some loans incur penalties when you want to pay it off earlier?

Ideal situation would be a low OTD price, low interest, and a loan that lets you pay it off whenever you want without any fees.

[ercchry]

I focus on total cost of ownership...

Rubicon: paid $32k, drove it for two years... hard, traded it in for $28k, full warranty so no maintenance costs beyond oil

F-150: paid $26k, put on 50k kms, needed $500 worth of repairs beyond oil changes... traded it in for ~$22k 2.5 years later

Etc, etc... biggest bath was $6k for 3 years of mustang ownership, most of my other cars were old enough for break even after ownership with the odd one making me money

The Lexus is probably going to be pretty bad... it's not sold yet, but if I get around ask it will be the second most expensive to own car I've had... but I have also put over 60k kms on it so not terrible for the mileage

Hoping the e90 is near the bottom of the curve so only time will tell on that one. But probably better value than the other cars I was cross shopping considering how much e46 M's still fetch

Ps:have never been offered a closed term contract on a vehicle... I think they tend to shy away from those to promote quicker trade ins which means more sales per customer

[mo_money2supe]

I bought my current CPO'd S4 this time last year and received 0.4% financing for 5 years. I know Audi typically has a promo for certified used this time of year; again in April/May as they clear out old models of new cars.

[soloracer]

Originally posted by mo_money2supe
I bought my current CPO'd S4 this time last year and received 0.4% financing for 5 years. I know Audi typically has a promo for certified used this time of year; again in April/May as they clear out old models of new cars.

Was the cash price the same as the financed price? Probably not.

[Redlyne_mr2]

Ive been doing this a long time and I can tell you one thing with a certainty. Don't buy a car because of an interest rate, buy a car with slow depreciation. I would rather pay 4.9% on my loan and finance a car that holds its value extremely well than pay 0% and lose 30% of my value the second I drive the car off the lot. With that being said thats my opinion and quite often the cars that only marginally depreciate aren't for everyone.