Dealing with auto financing for the first time...

Gaine

So I'm buying a new car, and the Toyota Yaris is in my price range, it's pretty fun to drive, and the payments are definitely affordable. So far I've just been working with the sales guy, but in about a week (when the car I want will be delivered, they don't have any of the silver/greys in right now) I'll have to deal with their finance department.

What do I need to watch out for? I am pretty convinced GAP insurance is a good idea, but beyond that I'm not sure what kind of warranties and add-ons they're going to try. I've heard LoJack as a possibility, but I have no idea what else. General advice on this is definitely welcome, but specific experience in the Fort Worth/Hurst areas of Texas (or just Texas in general) with Toyota dealers would be especially useful.

Thanks!

Beazle

Go into the financing with a max monthly payment and interest rate you are willing to pay and don't go over it. Often they will reduce the sale price of the car to get you to buy the extra warranties and stuff. As long as you are not adding extar cost to the loan amount get the extra junk. Also if you have a bank or credit union go get a pre-approved loan from them and use it as a negotiating tool.

firewaterword

Congrats on buying a new car! I recently picked up a pre-owned ("used" is such a dirty word!) car, and this forum was instrumental in helping me figure out what I wanted. Anyway, I'm somewhat pressed for time, but I'll try to help in the meantime.

Regarding Gap Insurance, it's only a good idea if you're unable/unwilling to put down %20-25 of the purchase price of the vehicle. If you're able to put $ down for %25 or so, you'll be good.

Be sure to decline any and all insurance offers from the FI person. He/She will try to sell you on credit life/disability insurance - get ready to say "No thanks." A lot.

Also, be sure to check out this site - http://www.carbuyingtips.com/

If you can devote an afternoon to browsing this site, you'll learn more than you'll ever need to know in order to properly buy a car.

I'll try to stop buy this thread tomorrow while at work, but I hope this helps in the meantime!

EDIT - Whatever you do, don't be a "payment buyer." Dealers are pros at messing around with the numbers to get you into a loan that's disadvantageous to you. Be firm about negotiating the sale price of the car FIRST, before even touching on monthly payments. As in, get an out-the-door price on the car (+taxes, +reasonable fees, -dealer incentives, -consumer incentives, -holdback, et cetera) before you agree to talk financing.

The FI person is pretty much trained to sell you what you really don't need. Be strong. And before you meet with him/her, tell your salesperson that you made a deal with them and you'll be walking if the FI person changes that deal.

The FI will do as much as they possibly can to upsell you, but they're generally never "ruin" a sale (and the spiff) for your salesperson.

BlochWave

Indeed, remember that just because the payments are affordable on a monthly basis, disgusting interest rates hurt you deep

A friend of mine did like an above poster suggested and got a pre approved loan from his bank with an interest rate better than what they offered. They did the whole O_O song and dance and came back with a lower one, and he proceeded to get a lower one yet from his bank

These guys would cut you up and eat your mother for breakfast, don't be shy about lying to them.

zilo

Be sure your auto insurance doesn't have gap coverage. Many do, and the policy offered by the FI guy isn't always a good deal. For my girlfriend's Corolla they wanted something like $1500 which is highway robbery. Also bear in mind the extended warranties they like to sell you aren't as great a deal as they seem since they double-cover for the car manufacturer's warranty- so a 4 year "extended" warranty kind of sucks if Toyota's covering everything for the first 2 years anyway. The maintenance coverage can be nice (oil changes, etc for some period of time) but again, make them spell out the numbers for you and don't let them charge you more for the coverage than the total cost of the maintenance.

Lo-jack is nice since most insurance companies will cut you a deal if you have it, but check prices on the internet before you go in. They like to charge a big premium for the FI guy to make one phone call to get the installation set up.

Congrats! Yarises (Yarii?) are neat.

edit: yeah, as the above poster suggested, negotiate on the price of the car, not the payment. If you go in thinking "I don't want to pay more than X per month" they'll dazzle you with numbers and you'll end up in an eight year loan or something crazy like that.

Gaine

Thanks for all the tips. I will definitely be checking that site out on my lunch break tomorrow. I do have a loan on the ready with my bank, but the interest on it is 7.19%, whereas the promotional interest rate which I should qualify for (will know for sure tomorrow) is 4.9%.

We (the sales person and I) have already agreed on a price + TT&L (invoice cost of the car +$100), which I am pretty comfortable with, but I know I don't want to pay much more. Lo-jack was the only thing I was really considering (other than gap insurance), but it sounds like that would be a better idea to get on my own later.

Ganluan

It's pretty simple, I wouldn't buy anything (warranty, insurance, extras) from the finance department. Anything they offer you you'll be able to get somewhere else for cheaper. Decide on your payment plan ahead of time (how many months, etc.) and stick to it. If you've already agreed on a price, don't let them try to re-negotiate you into lower payments over a longer time.

The one thing they may be able to do for you, as mentioned, is get you a better loan deal. Just make sure that the loan deal they give you is the SAME as the one you have from your bank. Many times they'll give you a lower interest rate but will have changed the financial structure without making it very clear to you.