Financing: does this sound right to you?

Hi there, my husband and I are planning to purchase a new vehicle in November and I have a few questions about financing that maybe some of you can advise us on.
First off my husband and I are planning on having around $20,000-$25,000 saved to put down on a vehicle, and we were hoping that would make any remaining balance payments super low. The Sales person we talked to explained that its better to put a smaller amount down and negotiate a better lending rate, and then put the remainder we have saved up on the principle and just bite the bullet for the remaining payments. The sales person explained that banks don't like to give small loans and would prefer bigger long term loans.
We were originally hoping to be able to walk in with our lump sum and be able to use that as a bargaining chip to lower the initial cost of what we were purchasing, but it sounds like that isn't how purchasing a car works anymore, it's like the dealership and banks have pretty much eliminated the buyers power to negotiate, either that or we are getting taken for a ride?
Does this sound kosher to you guys?
I'd like some advice on how to negotiate and really get our money's worth without feeling like a naive kid in a showroom full of slick smooth talkers. Thanks in advance!

 

That's all really good advice, my father in law is embarrassingly ruthless when it comes to buying vehicles but he doesn't mind sitting there all day like a demanding lump pushing the sales people to do better, but that's not our style unfortunately. We went car shopping with him a few years ago and it felt like an eternity of back and forth, and in the end I don't think he even got much of a deal.

 

The thing is that most dealers make money from selling you the loan so of course they don't want you to put down all that cash when they can get a percentage of the interest you are paying on the loan over the next few years.

 

First, try to get your loan from your bank or credit union. They will usually give you a better deal. Then, walk into a dealership with a check in hand, if they give you problems, let them see the check and tell them what you want or you will walk. NOBODY is going to let $25,000 walk out the door, so that should fix all of your negotiating issues.

 

Yep. OP, I also forgot to add, walk in there at the end of the month. That should help you get a better deal also.

 

I won't claim expertise here on this question but to my mind,
if you can afford to, put down a fair bit and have lower payments
and/or a shorter time period to pay. Having a paid for, paid off
vehicle and not having a monthly hanging over your head, well
I think that is a plus. That is my take on it. I might suggest
talk to someone other than the sales guy. He might have his own
agenda and it ain't necessarily looking out for your best interests.
Just me and my somewhat cynical view of life and business.
Ryder13

 

OP, I know it's nice to have things on your credit report and it will help with other things down the line, but if you've taken the time to save up $25,000 for a vehicle, even with 0% financing, you should pay off the vehicle as quickly as possible. You never know what life will bring, so get that out of the way.

I do have to ask though, what kind of vehicle are you looking at where you can find a suitable one for $25,000? Even a gently used version of it should be covered by that much.

 

So more good tips added since my last post. Definitly dont be afraid to walk out the dealership door in the middle of a deal. They will lose their shit and do whatever it takes to sell you the car. I did this with a friend when buying a motorcycle. Right when he was about to sign his life away I said "Hey lets go to the other dealership since they will give you this and that". The dealer freaked on me and told me I was an a-hole. The minute our hands touched the exit door boy did things change.

 

Yep. They deal solely in numbers. For the car, the financing, their paycheck. The buyer has more power than they even realize.