Honda CR-V Owners Club Forums banner

1 - 20 of 22 Posts

·
Registered
Joined
·
28 Posts
Discussion Starter #1
Folks
Just came back from visiting a dealership and found out one of the clause for getting lower price is to accept their finance term(which seemed insanely high). I don't mind getting loan (read predatory) from them as long as I can pay off or refinance from some other institution asap (probably next week).

Question to others is are there any terms I need to be aware of when accepting dealers finance ?

Thanks
 

·
Registered
Joined
·
865 Posts
Folks
Just came back from visiting a dealership and found out one of the clause for getting lower price is to accept their finance term(which seemed insanely high). I don't mind getting loan (read predatory) from them as long as I can pay off or refinance from some other institution asap (probably next week).

Question to others is are there any terms I need to be aware of when accepting dealers finance ?

Thanks
I did the refinance thing. It can work, make sure there's no payoff penalties, real predatory loans penalize for early payoff.

Don't get a warranty from them.

And make sure you shop around. Chances are if you see the behavior in one place (loans) it isn't isolated.
 

·
Registered
2017 CRV Touring - Pearl White w Black Interior
Joined
·
4,882 Posts
Folks
Just came back from visiting a dealership and found out one of the clause for getting lower price is to accept their finance term(which seemed insanely high). I don't mind getting loan (read predatory) from them as long as I can pay off or refinance from some other institution asap (probably next week).

Question to others is are there any terms I need to be aware of when accepting dealers finance ?

Thanks
That's bush league in my view, but it is an old tactic of some dealers.

Find a different dealer if you can that does not pull that nonsense. If you cannot find another dealer.. then make sure there is no early pre-payment penalty (many states do not allow it these days) and then maybe take them up on the offer, then go to your bank or credit union and get a different loan and go back and pay the dealer financing off in full.

I always pay cash for my cars these days.. but when I was young and lacked the assets to do so.. I would take the dealer offer of financing as long as there was no prepayment penalty PLUS I made them state in the contract that I could pay the balance in full within 5 days and terminate the dealer financing at no penalty or charge backs on the final sales price. Then I would go to my bank and get a much better interest rate and go back with a cashiers check and pay it off and move on.
 

·
Registered
Joined
·
152 Posts
the terminology is "simple interest loan" for no early payoff penalty. where do you all live that the bank has better finance % than honda or toyota or nissan or gmc, etc.? it's true here in washington state that 0% interest loans are almost a thing of the past. i never paid more than 3.9% since my first new vehicle purchase in 2001. most often 1.9 or 2.9, or 0%. all 60 month. BOA couldn't touch it, and i got great credit. some credit unions are better than big banks, but still never touched what the dealer was offering. it's a bit tougher now, as my dealings helping a family member last april showed. i think that was 4.9%, which i thought stunk, but being car less they had them over a barrel a bit. also didn't break the bank or impact any long term financial plans, so huffed and puffed...and signed.
 

·
Registered
Joined
·
18 Posts
Folks
Just came back from visiting a dealership and found out one of the clause for getting lower price is to accept their finance term(which seemed insanely high). I don't mind getting loan (read predatory) from them as long as I can pay off or refinance from some other institution asap (probably next week).

Question to others is are there any terms I need to be aware of when accepting dealers finance ?

Thanks
No pre payment penalty in Texas by law. Check your state. (I always inwardly laugh when I get offered any loan in Texas and they loaner tells me they don't have any pre-payment penalties like that even had that option.
 

·
Registered
Joined
·
962 Posts
I have ALWAYS had financing in place prior to purchase.

Once I let a dealer 'try to get me a better rate' - he did beat the rate I had by .10% (1/10th of a percent) - and I went for it. My FICO was hammered I found out a few months later...

Our current finance is from PenFed and they have competitive rates - WAY better than even our local credit union or personal bank.

I cannot help but think that you have a 'dodgy' dealer there.

As others wisely have stated: look for early termination penalties.

Also you should note that refinance rates are typically higher by around one full percentage point.

Good luck!
 

·
Registered
Joined
·
195 Posts
I have ALWAYS had financing in place prior to purchase.

Once I let a dealer 'try to get me a better rate' - he did beat the rate I had by .10% (1/10th of a percent) - and I went for it. My FICO was hammered I found out a few months later...

Our current finance is from PenFed and they have competitive rates - WAY better than even our local credit union or personal bank.

I cannot help but think that you have a 'dodgy' dealer there.

As others wisely have stated: look for early termination penalties.

Also you should note that refinance rates are typically higher by around one full percentage point.

Good luck!
I've found that refinancing for new cars is often the same rate as direct purchases. Andrews FCU had no problem refinancing four months after purchase of my 2015 CR-V, and the rate was the same as if they had been the original loan.
 

·
Registered
2017 CRV Touring - Pearl White w Black Interior
Joined
·
4,882 Posts
the terminology is "simple interest loan" for no early payoff penalty. where do you all live that the bank has better finance % than honda or toyota or nissan or gmc, etc.? it's true here in washington state that 0% interest loans are almost a thing of the past. i never paid more than 3.9% since my first new vehicle purchase in 2001. most often 1.9 or 2.9, or 0%. all 60 month. BOA couldn't touch it, and i got great credit. some credit unions are better than big banks, but still never touched what the dealer was offering. it's a bit tougher now, as my dealings helping a family member last april showed. i think that was 4.9%, which i thought stunk, but being car less they had them over a barrel a bit. also didn't break the bank or impact any long term financial plans, so huffed and puffed...and signed.
1) The term "simple interest loan" does not indemnify from pre-payment penalties in some states. Which is why the buyer HAS to read all the fine print in the documents before signing. The "simple" in a simple interest loan means that interest is only calculated on the outstanding principal balance. Simple interest does not compound and increase the loan balance. The amount of interest to be paid for each monthly payment cannot increase. Penalty clauses are a different beast entirely.

2) The original poster stated it was a "predatory" offer of loan. I took him at his word.. and have seen that myself at dealers. Dealers make money by convincing customers to take these loans over other choices, which is why they will discount the sale price some as the hook to get a buyer to consider it. Smart buyers tell them to stuff it.

Just because Honda offers low interest financing sometimes (and not all buyers even qualify), does not mean the dealer is offering that in this case. ;)
 

·
Registered
2017 CRV Touring - Pearl White w Black Interior
Joined
·
4,882 Posts
Also you should note that refinance rates are typically higher by around one full percentage point.
I'm sure this varies. The few times in history I have financed a vehicle with the dealer with a 5 day pay-in-full clause.. I simply took the contract to my bank and showed it to them and they treated my financing request as a new car finance, not a refinance.
 

·
Registered
Joined
·
25 Posts
I purchased a Kia several years ago and Kia Finance was offering $1,000 additional off if financed thru them. The contract said payoffs within the first 90 days required approval. Still a good deal since even 90 days interest ($140) put you ahead $860. More paperwork though. Not sure it can be considered a pre-payment penalty if they are reducing the price in return for a 90 day interest commitment.
 

·
Registered
Joined
·
26 Posts
Folks
Just came back from visiting a dealership and found out one of the clause for getting lower price is to accept their finance term(which seemed insanely high). I don't mind getting loan (read predatory) from them as long as I can pay off or refinance from some other institution asap (probably next week).

Question to others is are there any terms I need to be aware of when accepting dealers finance ?

Thanks
I would never deal with a seller that offers "Predatory" terms. If they don't demonstrate good business ethics in one area, you are likely to suffer in other areas like service. It's a matter of principle for me. Our local dealer, Markley Motors deals ethically with all customers and has built an over $100M business this way.
 

·
Registered
Joined
·
67 Posts
I should add it is common to have a price with dealer financing and a separate price for self-finance or cash pay.
Cash is no longer king. They make their money on the financing so the price is actually lower with the dealer/manufacturer financing. Of coarse you want to pay the loan off right away.
 

·
Registered
Joined
·
43 Posts
Folks
Just came back from visiting a dealership and found out one of the clause for getting lower price is to accept their finance term(which seemed insanely high). I don't mind getting loan (read predatory) from them as long as I can pay off or refinance from some other institution asap (probably next week).

Question to others is are there any terms I need to be aware of when accepting dealers finance ?

Thanks
This means the dealer is getting a kickback from the lender. They'll make up the lower price with the kickback. This should be your #1 RED FLAG that you're working with a predatory dealer/lender combo.
Suggest you find another dealer. Get your own financing arranged beforehand so that you come in with a pre-approved loan.
 

·
Registered
Joined
·
3 Posts
the terminology is "simple interest loan" for no early payoff penalty. where do you all live that the bank has better finance % than honda or toyota or nissan or gmc, etc.? it's true here in washington state that 0% interest loans are almost a thing of the past. i never paid more than 3.9% since my first new vehicle purchase in 2001. most often 1.9 or 2.9, or 0%. all 60 month. BOA couldn't touch it, and i got great credit. some credit unions are better than big banks, but still never touched what the dealer was offering. it's a bit tougher now, as my dealings helping a family member last april showed. i think that was 4.9%, which i thought stunk, but being car less they had them over a barrel a bit. also didn't break the bank or impact any long term financial plans, so huffed and puffed...and signed.
Simple Interest Loan has absolutely nothing to do with early payoff penalties. It means that the interest is not compounded.
 

·
Registered
Joined
·
109 Posts
Back in 2016 I bought a new 16 CRV and came in with my credit union preapproval of 2.25%. I negotiated a very good deal, so when I told them I have financing already preapproved, they asked that I give the finance guy a chance to beat my rate and he offered 1.99% through Honda Finance. I took it (but did say that only if there wasn't any extra finance fees, etc., there wasn't). I ended up paying off early in about 2.5 years, no early payoff penalty. I live in CA.
 

·
Registered
Joined
·
69 Posts
the terminology is "simple interest loan" for no early payoff penalty. where do you all live that the bank has better finance % than honda or toyota or nissan or gmc, etc.? it's true here in washington state that 0% interest loans are almost a thing of the past. i never paid more than 3.9% since my first new vehicle purchase in 2001. most often 1.9 or 2.9, or 0%. all 60 month. BOA couldn't touch it, and i got great credit. some credit unions are better than big banks, but still never touched what the dealer was offering. it's a bit tougher now, as my dealings helping a family member last april showed. i think that was 4.9%, which i thought stunk, but being car less they had them over a barrel a bit. also didn't break the bank or impact any long term financial plans, so huffed and puffed...and signed.
I am confused by your post. 1/2 of what you said sounds like dealers have better loans, but then you say "never touched what the dealer was offering" I am confused by 'simple interest loan for no payoff penalty' Is this similar to back in the 70's dealers had these, and if you did pay off early you were charged the full interest for the full period on the contract. So if you did a five year loan at 5%, if you paid off in the first year you'd still be charged 5 X 5 or 25% interest, but there would be no extra 'penalty'.
 

·
Registered
Joined
·
9 Posts
I did the refinance thing. It can work, make sure there's no payoff penalties, real predatory loans penalize for early payoff.

Don't get a warranty from them.

And make sure you shop around. Chances are if you see the behavior in one place (loans) it isn't isolated.
Shop around!!!! One dealer was charging me $750 more because I was not financing. I DID find a dealer who matched the price. I ended up paying the lower price AND he let me charge $5000 too. Shop around!
 

·
Registered
Joined
·
4 Posts
Folks
Just came back from visiting a dealership and found out one of the clause for getting lower price is to accept their finance term(which seemed insanely high). I don't mind getting loan (read predatory) from them as long as I can pay off or refinance from some other institution asap (probably next week).

Question to others is are there any terms I need to be aware of when accepting dealers finance ?

Thanks
Early payoff penalty. Dealers want you to accept their financing because the dealer makes $250.from the finance company.
 
1 - 20 of 22 Posts
Top