My New Car Buying Tips

Questions on how we spend our money and our time - consumer goods and services, home and vehicle, leisure and recreational activities
Leesbro63
Posts: 6093
Joined: Mon Nov 08, 2010 4:36 pm

Re: My New Car Buying Tips

Post by Leesbro63 » Thu Jan 02, 2020 8:43 am

LadyGeek wrote:
Thu Jan 02, 2020 7:46 am
Leesbro63 wrote:
Thu Jan 02, 2020 6:57 am
LadyGeek wrote:
Wed Jan 01, 2020 9:49 pm
...Mentioned earlier, I got a $1,000 price drop by financing part of the payment with Toyota Financial Services. (I split between cash and financing to get the $1,000).

I'm impressed with Toyota's online loan servicing, as the loan just showed up in my online account. It was very easy to setup a bank account and complete the payoff transaction. The payoff amount was calculated for the middle of the month.

I expect a check for the daily interest difference between now and then ($0.82 / day) and the title to be mailed to my house.

So, my price drop was actually $990 = $1,000 - $10 interest.
I did the same thing (also Toyota Financial) for a $500 saving three years ago. But I was told that I had to keep the loan for 90 days to avoid a clawback. Come to think of it, I never saw that in writing and I didn’t test it because the interest rate was close to zero...not enough dollars involved to get worked up about. But I’m curious if you’re sure it’s OK to payoff so soon (that you’re not risking your $1000 savings).
Interesting, as the finance manager told me to "make a few payments" before paying it off. My retail installment sale contract says "No prepayment penalty". Period. If there's a clawback, they'll have to show me where, exactly, it's stated in my contract.

The contract includes the $1,000 as a rebate. "Rebate" only appears in the contract as "rebate of finance charge", which has no relation to the promotional rebate incentive to finance the vehicle.

The contract is on Form "LAW® 553 Retail Installment Contract". Specifically, "553-PA-ARB-ea" for PA.
It will be useful if you post what happens. I'm guessing you'll never hear anything about the $1000, but if it does happen they'll apply your payoff then you'll still be showing $1000 due in your loan account online. But again, probably the right hand doesn't know what the left hand is doing and the $1000 rebate is applied at purchase, once the loan is approved, and that's the end of it.

User avatar
LadyGeek
Site Admin
Posts: 58830
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: My New Car Buying Tips

Post by LadyGeek » Thu Jan 02, 2020 8:58 am

The $1,000 was applied as a factory incentive / rebate at the time of purchase. That's a done deal. I'll post back here if anything unexpected happens (and when I get my title).
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

Leesbro63
Posts: 6093
Joined: Mon Nov 08, 2010 4:36 pm

Re: My New Car Buying Tips

Post by Leesbro63 » Thu Jan 02, 2020 10:55 am

LadyGeek wrote:
Thu Jan 02, 2020 8:58 am
The $1,000 was applied as a factory incentive / rebate at the time of purchase. That's a done deal. I'll post back here if anything unexpected happens (and when I get my title).
Thank you for doing that. I'm interested as I might be doing this again sometime soon.

Helo80
Posts: 1173
Joined: Sat Apr 29, 2017 8:47 pm

Re: My New Car Buying Tips

Post by Helo80 » Thu Jan 02, 2020 11:37 am

LadyGeek wrote:
Thu Jan 02, 2020 7:46 am
Leesbro63 wrote:
Thu Jan 02, 2020 6:57 am
I did the same thing (also Toyota Financial) for a $500 saving three years ago. But I was told that I had to keep the loan for 90 days to avoid a clawback. Come to think of it, I never saw that in writing and I didn’t test it because the interest rate was close to zero...not enough dollars involved to get worked up about. But I’m curious if you’re sure it’s OK to payoff so soon (that you’re not risking your $1000 savings).
Interesting, as the finance manager told me to "make a few payments" before paying it off. My retail installment sale contract says "No prepayment penalty". Period. If there's a clawback, they'll have to show me where, exactly, it's stated in my contract.

The contract includes the $1,000 as a rebate. "Rebate" only appears in the contract as "rebate of finance charge", which has no relation to the promotional rebate incentive to finance the vehicle.

The contract is on Form "LAW® 553 Retail Installment Contract". Specifically, "553-PA-ARB-ea" for PA.
There is generally no prepayment penalty as that would upset the vehicle financing market. Any financed car (loan/lease) can be totaled at any time, and therefore, there needs to be some level of liquidity in the loan asset. The same goes for mortgage loans.

In terms of the loan, yes, it's generally good to keep the loan for at least 90-120 days as dealers will be chargedback the incentives they are given for getting the car financed by a lender. That's why the whole PF thing of "Cash is king!" and "I'm paying cash so I have the most leverage" is about as real as a $3 dollar bill. The interest you pay on holding a loan for a few months is not that much.

The chargeback that is what the lending institution pays the dealer to be a preferential lender in the car deals. If Toyota is giving you $1,000 extra cash for financing, they're also likely giving a backend commission to the dealer --- however, if the buyer simply pays off the entire loan <90 days, the dealer loses their commission.

The stuff above is sometimes good to know/ask about when working a deal, because you don't know if you're leaving money on the table by simply paying cash. When you're dealing with the dealerships, viewing it as a 100% adversarial relationship that your number one goal is to extract as much from them as possible and leave as little money on the table as possible for them --- probably the wrong way to approach things. It's going to change the way you deal with them.


edit: revised comment --- I said something that I think is incorrect.
Last edited by Helo80 on Thu Jan 02, 2020 6:20 pm, edited 1 time in total.

Helo80
Posts: 1173
Joined: Sat Apr 29, 2017 8:47 pm

Re: My New Car Buying Tips

Post by Helo80 » Thu Jan 02, 2020 11:39 am

hudson wrote:
Thu Jan 02, 2020 8:19 am
Helo80 wrote:
Wed Jan 01, 2020 4:03 pm
PF types
What are PF types? many thanks!

Personal Finance people.

If you ever want to throw a digital grenade on this forum, start talking cars. You'll find every school of thought in the world on car ownership here. Traditionally, PF types are very adversarial to car ownership as cars can be detrimental to long term wealth creation.

Leesbro63
Posts: 6093
Joined: Mon Nov 08, 2010 4:36 pm

Re: My New Car Buying Tips

Post by Leesbro63 » Thu Jan 02, 2020 2:16 pm

Helo80 wrote:
Thu Jan 02, 2020 11:37 am
LadyGeek wrote:
Thu Jan 02, 2020 7:46 am
Leesbro63 wrote:
Thu Jan 02, 2020 6:57 am
I did the same thing (also Toyota Financial) for a $500 saving three years ago. But I was told that I had to keep the loan for 90 days to avoid a clawback. Come to think of it, I never saw that in writing and I didn’t test it because the interest rate was close to zero...not enough dollars involved to get worked up about. But I’m curious if you’re sure it’s OK to payoff so soon (that you’re not risking your $1000 savings).
Interesting, as the finance manager told me to "make a few payments" before paying it off. My retail installment sale contract says "No prepayment penalty". Period. If there's a clawback, they'll have to show me where, exactly, it's stated in my contract.

The contract includes the $1,000 as a rebate. "Rebate" only appears in the contract as "rebate of finance charge", which has no relation to the promotional rebate incentive to finance the vehicle.

The contract is on Form "LAW® 553 Retail Installment Contract". Specifically, "553-PA-ARB-ea" for PA.
There is generally no prepayment penalty as that would upset the vehicle financing market. Any financed car (loan/lease) can be totaled at any time, and therefore, there needs to be some level of liquidity in the loan asset. The same goes for mortgage loans.

In terms of the loan, yes, it's generally good to keep the loan for at least 90-120 days as dealers will be chargedback the incentives they are given for getting the car financed by a lender. That's why the whole PF thing of "Cash is king!" and "I'm paying cash so I have the most leverage" is about as real as a $3 dollar bill. The interest you pay on holding a loan for a few months is not that much.

The chargeback that is what the lending institution pays the dealer to be a preferential lender in the car deals. If Toyota is giving you $1,000 extra cash for financing, they're also likely giving a backend commission to the dealer --- however, if the buyer simply pays off the entire loan <90 days, the dealer loses their commission.

The stuff above is sometimes good to know/ask about when working a deal, because you don't know if you're leaving money on the table by simply paying cash. When you're dealing with the dealerships, viewing it as a 100% adversarial relationship that your number one goal is to extract as much from them as possible and leave as little money on the table as possible for them --- probably the wrong way to approach things. It's going to change the way you deal with them.
Interesting. So when the dealer says "make a few payments", he's really saying "PLEASE make a few payments. You can pay the loan off tomorrow and it won't affect you at all. But if you don't let the loan last for 90 days, we, the dealership, will get nicked for that $1000". If it were me and I knew that...and I now know it...I probably would let the loan last 90 days and not nick the dealer. Not that I have any love for the dealer, but it just seems wrong to nick them for $1000 if it costs me under $100 and was an understanding in my deal (that I'd get $1000 and the dealer wouldn't get nicked for it). I MIGHT say to the dealer, if I knew what I just learned ahead of time, that I'll promise not to pay off the loan if you throw in an extra set of mats or whatever $100 "gimme" I can get..to offset my interest cost for 90 days. But by the time you get to the financing desk another $100 either way probably isn't worth the hassle.

It will be interesting to see what happens once the dust settles on Ladygeeks loan payoff. I'm guessing nothing will happen, but as a Toyota product buyer, this is useful to learn about.

hudson
Posts: 2122
Joined: Fri Apr 06, 2007 9:15 am

Re: My New Car Buying Tips

Post by hudson » Thu Jan 02, 2020 2:51 pm

Helo80 wrote:
Thu Jan 02, 2020 11:39 am
hudson wrote:
Thu Jan 02, 2020 8:19 am
Helo80 wrote:
Wed Jan 01, 2020 4:03 pm
PF types
What are PF types? many thanks!

Personal Finance people.

If you ever want to throw a digital grenade on this forum, start talking cars. You'll find every school of thought in the world on car ownership here. Traditionally, PF types are very adversarial to car ownership as cars can be detrimental to long term wealth creation.
Thanks Helo80! I prefer digital trial balloons.
Last edited by hudson on Thu Jan 02, 2020 4:45 pm, edited 1 time in total.

stilltrying
Posts: 8
Joined: Tue Feb 19, 2019 1:30 pm

Re: My New Car Buying Tips

Post by stilltrying » Thu Jan 02, 2020 4:41 pm

Leesbro63 wrote:
Thu Jan 02, 2020 2:16 pm
Helo80 wrote:
Thu Jan 02, 2020 11:37 am
LadyGeek wrote:
Thu Jan 02, 2020 7:46 am
Leesbro63 wrote:
Thu Jan 02, 2020 6:57 am
I did the same thing (also Toyota Financial) for a $500 saving three years ago. But I was told that I had to keep the loan for 90 days to avoid a clawback. Come to think of it, I never saw that in writing and I didn’t test it because the interest rate was close to zero...not enough dollars involved to get worked up about. But I’m curious if you’re sure it’s OK to payoff so soon (that you’re not risking your $1000 savings).
Interesting, as the finance manager told me to "make a few payments" before paying it off. My retail installment sale contract says "No prepayment penalty". Period. If there's a clawback, they'll have to show me where, exactly, it's stated in my contract.

The contract includes the $1,000 as a rebate. "Rebate" only appears in the contract as "rebate of finance charge", which has no relation to the promotional rebate incentive to finance the vehicle.

The contract is on Form "LAW® 553 Retail Installment Contract". Specifically, "553-PA-ARB-ea" for PA.
There is generally no prepayment penalty as that would upset the vehicle financing market. Any financed car (loan/lease) can be totaled at any time, and therefore, there needs to be some level of liquidity in the loan asset. The same goes for mortgage loans.

In terms of the loan, yes, it's generally good to keep the loan for at least 90-120 days as dealers will be chargedback the incentives they are given for getting the car financed by a lender. That's why the whole PF thing of "Cash is king!" and "I'm paying cash so I have the most leverage" is about as real as a $3 dollar bill. The interest you pay on holding a loan for a few months is not that much.

The chargeback that is what the lending institution pays the dealer to be a preferential lender in the car deals. If Toyota is giving you $1,000 extra cash for financing, they're also likely giving a backend commission to the dealer --- however, if the buyer simply pays off the entire loan <90 days, the dealer loses their commission.

The stuff above is sometimes good to know/ask about when working a deal, because you don't know if you're leaving money on the table by simply paying cash. When you're dealing with the dealerships, viewing it as a 100% adversarial relationship that your number one goal is to extract as much from them as possible and leave as little money on the table as possible for them --- probably the wrong way to approach things. It's going to change the way you deal with them.
Interesting. So when the dealer says "make a few payments", he's really saying "PLEASE make a few payments. You can pay the loan off tomorrow and it won't affect you at all. But if you don't let the loan last for 90 days, we, the dealership, will get nicked for that $1000". If it were me and I knew that...and I now know it...I probably would let the loan last 90 days and not nick the dealer. Not that I have any love for the dealer, but it just seems wrong to nick them for $1000 if it costs me under $100 and was an understanding in my deal (that I'd get $1000 and the dealer wouldn't get nicked for it). I MIGHT say to the dealer, if I knew what I just learned ahead of time, that I'll promise not to pay off the loan if you throw in an extra set of mats or whatever $100 "gimme" I can get..to offset my interest cost for 90 days. But by the time you get to the financing desk another $100 either way probably isn't worth the hassle.

It will be interesting to see what happens once the dust settles on Ladygeeks loan payoff. I'm guessing nothing will happen, but as a Toyota product buyer, this is useful to learn about.
I just purchased a new car, and was offered $1500 incentive to finance. The finance manager requested I keep the line open 6 months as I had expressed that I wanted to pay the loan off next month. She stressed that the loan charged basic interest, so I can pay a large lump sum in the first month, leaving almost no principal against which to charge interest. I’m amenable to that.

User avatar
LadyGeek
Site Admin
Posts: 58830
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: My New Car Buying Tips

Post by LadyGeek » Thu Jan 02, 2020 5:12 pm

Helo80 wrote:
Thu Jan 02, 2020 11:37 am
...There is generally no prepayment penalty as that would upset the vehicle financing market. Any financed car (loan/lease) can be totaled at any time, and therefore, there needs to be some level of liquidity in the loan asset. The same goes for mortgage loans.
Sorry, I don't quite follow. Are you saying there's no prepayment penalty because the asset (house or car) can be lost at any time before the loan is paid off, therefore the borrower should not be penalized to fulfill the loan terms early? An example with an explanation would be helpful.

============
Regarding dealer chargeback, I'm finding a lot of info via google "auto loan chargeback dealer". It's a view of the industry I never knew about.

Acronym decoder: "F & I" refers to Finance and Insurance products.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

Helo80
Posts: 1173
Joined: Sat Apr 29, 2017 8:47 pm

Re: My New Car Buying Tips

Post by Helo80 » Thu Jan 02, 2020 5:58 pm

Leesbro63 wrote:
Thu Jan 02, 2020 2:16 pm
Interesting. So when the dealer says "make a few payments", he's really saying "PLEASE make a few payments. You can pay the loan off tomorrow and it won't affect you at all. But if you don't let the loan last for 90 days, we, the dealership, will get nicked for that $1000". If it were me and I knew that...and I now know it...I probably would let the loan last 90 days and not nick the dealer.

Correct --- and it's a moral/ethical decision you have to make and less of a legal one.

I don't appreciate all of the sales pressure of the Finance Manager's office, but once it's over, it's over and I usually am comfortable with letting the dealer make their money on the backend via financing if I go that route.

(note: For mortgage brokers, it is very similar. I asked about how aggressively I could pay down the mortgage in regards to pre-payment penalties. There were no pre-payment penalties, but I was asked to kindly not do that as otherwise the lender will reverse the commission the broker gets on the transaction)

Helo80
Posts: 1173
Joined: Sat Apr 29, 2017 8:47 pm

Re: My New Car Buying Tips

Post by Helo80 » Thu Jan 02, 2020 6:20 pm

LadyGeek wrote:
Thu Jan 02, 2020 5:12 pm
Helo80 wrote:
Thu Jan 02, 2020 11:37 am
...There is generally no prepayment penalty as that would upset the vehicle financing market. Any financed car (loan/lease) can be totaled at any time, and therefore, there needs to be some level of liquidity in the loan asset. The same goes for mortgage loans.
Sorry, I don't quite follow. Are you saying there's no prepayment penalty because the asset (house or car) can be lost at any time before the loan is paid off, therefore the borrower should not be penalized to fulfill the loan terms early? An example with an explanation would be helpful.

I think it's more of a courtesy thing now in order to keep financees happy. Though, I think this starts going into the weeds on financing and lending theory, and I am not well-versed on it, though I've heard a compelling argument at work from somebody who knows more on the issue.

Now that I think of it, I think that I may have gotten the wording wrong up there which is why you're not following --- I think that there is reason why pre-payment penalties do exist within financing. I believe that sometime in the housing bubble burst, legislation was passed such that pre-payment penalties in mortgages was made illegal and while it superficially sounds good, it upsets the backend for the following example:

Imagine the BH community decides to go out and take 15 year fixed interest home loans at say 4% and it's packaged into a bond that is then sold to an investor at 3%. The good little BHs pay their mortgage loans off over a 15 year period, and said investor receives his/her 3% return over a 15 year period. However, imagine the entire BH community decides to pay off their loans within 2 years --- suddenly, the investor accepted a financial product at a 3% ROI over 15 years and is now left with nothing. Or, at least 3% over a 2 year period.
Last edited by Helo80 on Thu Jan 02, 2020 6:28 pm, edited 1 time in total.

rich126
Posts: 1060
Joined: Thu Mar 01, 2018 4:56 pm

Re: My New Car Buying Tips

Post by rich126 » Thu Jan 02, 2020 6:20 pm

I don't know how it works with new cars but I used to talk with a used car salesman (about 10 years ago) and he would get various bonuses. Bonuses were based on reaching a sales milestone (I think 8 in a month), extended warranties and financing.

Helo80
Posts: 1173
Joined: Sat Apr 29, 2017 8:47 pm

Re: My New Car Buying Tips

Post by Helo80 » Thu Jan 02, 2020 6:27 pm

rich126 wrote:
Thu Jan 02, 2020 6:20 pm
I don't know how it works with new cars but I used to talk with a used car salesman (about 10 years ago) and he would get various bonuses. Bonuses were based on reaching a sales milestone (I think 8 in a month), extended warranties and financing.

Payment plans at dealerships and autogroups is 100% variable and dependent upon said dealership or autogroup.

Generally speaking, at most branded use car lots (e.g. Ford of Boglehead), the Finance Manager is the one that handle EWs and financing. The salesmen simply are responsible for showing the customer the car, and representing the customer to the Sales Manager who okays or nicks the deal.

Finance Managers tend to being doing well for themselves as they've gone through the ropes of car sales and have a proven sales record, and hence are rewarded for said effort by a more predictable work schedule and the opportunity to sell stuff like EWs, tire/paint/wear and tear/etc protections/prepaid maintenance, etc. In new car sales, this is where most of the money is made now --- on the backend. On the front end, it's minimal as competition is mighty with the internet, invoice pricing, cross-shopping etc.

User avatar
LadyGeek
Site Admin
Posts: 58830
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: My New Car Buying Tips

Post by LadyGeek » Sat Jan 04, 2020 3:31 pm

I had earlier decided to purchase the tire and wheel replacement package:
LadyGeek wrote:
Sun Dec 22, 2019 9:19 pm
...He then pitched a tire and wheel protection package. Those RAV4 wheels are made from aluminum, they're fragile and could cost you $1600 to replace (I had to keep from laughing). For only $1495, you'll save the cost of the package the first time around. This got my attention, as it was unlimited replacement, no pro-rating, for tire and wheel damage. I've ruined wheels on potholes, and was thinking I might go for it. He also pitched that 92% of customers buy this package (the "herd mentality" pitch - go with the crowd).

So, I declined both packages. An instant "I'll give you the tire package for 5 years at $995." Can you go lower? No. OK, I'll take it.
Now that the dust has settled, I did some research on 2020 RAV4 wheel replacement. The 17" wheels are less than $300 at TireRack. Tires run around $200. I'm thinking $600 to replace a tire and wheel. My thoughts are to cancel the tire and wheel package and get my money back.

The tire and wheel service agreement says I can cancel within 30 days for a 100% refund. However... there's a catch. Lienholders (it's financed) have a say on this agreement. Unless the owner has a "Release of Lien", I can't get my money back. Toyota is certainly not going to cancel the agreement unless the vehicle has been totaled or repossessed.

Revision 1/14/20: You can get a refund, but it will be pro-rated after 30 days with a $25 processing fee. Unless you have a "Release of Lien" (loan is paid off), the refund will be paid to Toyota Financial Services (or split between you and Toyota).

The balance due on my Toyota loan is now zero. I'm hoping I get my title before the 30 days is up.

Revision 1/14/20: The Release of Lien will arrive before the title. That's all you need to cancel the agreement.

Tip: Financing your vehicle has an impact on the ability to cancel the add-on packages. Read the complete paperwork in full before signing. I didn't and was lucky to find the 30-day cancellation procedure.

Revision 1/14/20: You can cancel the package, but you will not get the full purchase price after 30 days.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

UpperNwGuy
Posts: 2937
Joined: Sun Oct 08, 2017 7:16 pm

Re: My New Car Buying Tips

Post by UpperNwGuy » Sat Jan 04, 2020 3:37 pm

I am planning to buy at RAV4 in a few months, so reading LadyGeek's story has been quite informative.

User avatar
JAZZISCOOL
Posts: 522
Joined: Sat May 18, 2019 11:49 am
Location: Colorado - 5,700 ft.

Re: My New Car Buying Tips

Post by JAZZISCOOL » Sat Jan 04, 2020 3:40 pm

LadyGeek wrote:
Sat Jan 04, 2020 3:31 pm
I had earlier decided to purchase the tire and wheel replacement package:
LadyGeek wrote:
Sun Dec 22, 2019 9:19 pm
...He then pitched a tire and wheel protection package. Those RAV4 wheels are made from aluminum, they're fragile and could cost you $1600 to replace (I had to keep from laughing). For only $1495, you'll save the cost of the package the first time around. This got my attention, as it was unlimited replacement, no pro-rating, for tire and wheel damage. I've ruined wheels on potholes, and was thinking I might go for it. He also pitched that 92% of customers buy this package (the "herd mentality" pitch - go with the crowd).

So, I declined both packages. An instant "I'll give you the tire package for 5 years at $995." Can you go lower? No. OK, I'll take it.
Now that the dust has settled, I did some research on 2020 RAV4 wheel replacement. The 17" wheels are less than $300 at TireRack. Tires run around $200. I'm thinking $600 to replace a tire and wheel. My thoughts are to cancel the tire and wheel package and get my money back.

The tire and wheel service agreement says I can cancel within 30 days for a 100% refund. However... there's a catch. Lienholders (it's financed) have a say on this agreement. Unless the owner has a "Release of Lien", I can't get my money back. Toyota is certainly not going to cancel the agreement unless the vehicle has been totaled or repossessed.

The balance due on my Toyota loan is now zero. I'm hoping I get my title before the 30 days is up.

Tip: Financing your vehicle has an impact on the ability to cancel the add-on packages. Read the complete paperwork in full before signing. I didn't and was lucky to find the 30-day cancellation procedure.
Thanks. Good tip to remember. :happy

User avatar
tc101
Posts: 3257
Joined: Tue Feb 20, 2007 3:18 pm
Location: Atlanta - Retired in 2004 at age 54

Re: My New Car Buying Tips

Post by tc101 » Sat Jan 04, 2020 4:19 pm

A few days ago, I wrote:
I tried the technique in the original post of this thread. I contacted the 5 dealers closest to me. Only 1 responded with a price. After repeated requests from the others for a phone call or visit to their show room, and repeated insistence by me that they email me an OTD price, one other dealer sent me a price, but it was absurdly high.

So now I have two prices. One is high and the other is absurdly high. The other 3 dealers have totally refused to give me an OTD price with email, just insisting that they will give me a great price if I just talk to them on the phone or visit their showroom.

So I am wondering if the technique given in the original post really works?

Maybe this is the busiest time of the year for car dealers and I should wait a few weeks and try again.
So now that the Christmas and year end rush is over, I have suddenly gotten some reasonable prices from some dealers. Maybe the technique does work when business is slow.
. | The most important thing you should know about me is that I am not an expert.

A440
Posts: 479
Joined: Mon Sep 02, 2013 7:46 am
Location: NJ

Re: My New Car Buying Tips

Post by A440 » Sun Jan 05, 2020 5:00 pm

For forum members who purchased a vehicle in December. Anyone ask for one of those big Christmas bows they put on the cars in the showroom?

I asked for one in jest and I was told by my sales rep that they cost $400. :shock:
I didn't push for one to be included with my purchase, but found that price a little incredible. 😁
I don't know what the future holds, but I know who holds my future.

smackboy1
Posts: 1140
Joined: Wed Mar 14, 2007 9:41 pm

Re: My New Car Buying Tips

Post by smackboy1 » Mon Jan 06, 2020 6:05 pm

I just bought an Acura. I could have paid all cash, but there was a $1500 credit if financed through Acura. I talked to the finance person and found out the minimum loan required to get the incentive. Then I told him I was only financing to get the incentive and I was going to prepay the entire loan ASAP. He told me that I should keep the loan for not less than 91 days to avoid Acura clawing back the $1500 credit. He did say that the dealership would have to pay it, not me, the customer, but if people did that, the dealerships would stop passing through the savings to customers. He recommended I pay the loan over 3 payments like this to minimize the amount of interest:

1st payment - normal payment
2nd payment - pay off everything except $4-500
3rd payment (at least 91 days after purchase) - pay off the remaining balance and retire the loan

Don't ask the saleperson about how to take advantage of the financing, they are clueless. I got different answers from different salespeople. Ask the financing person.
Disclaimer: nothing written here should be taken as legal advice, but I did stay at a Holiday Inn Express last night.

Leesbro63
Posts: 6093
Joined: Mon Nov 08, 2010 4:36 pm

Re: My New Car Buying Tips

Post by Leesbro63 » Mon Jan 06, 2020 6:21 pm

smackboy1 wrote:
Mon Jan 06, 2020 6:05 pm
I just bought an Acura. I could have paid all cash, but there was a $1500 credit if financed through Acura. I talked to the finance person and found out the minimum loan required to get the incentive. Then I told him I was only financing to get the incentive and I was going to prepay the entire loan ASAP. He told me that I should keep the loan for not less than 91 days to avoid Acura clawing back the $1500 credit. He did say that the dealership would have to pay it, not me, the customer, but if people did that, the dealerships would stop passing through the savings to customers. He recommended I pay the loan over 3 payments like this to minimize the amount of interest:

1st payment - normal payment
2nd payment - pay off everything except $4-500
3rd payment (at least 91 days after purchase) - pay off the remaining balance and retire the loan

Don't ask the saleperson about how to take advantage of the financing, they are clueless. I got different answers from different salespeople. Ask the financing person.
He was honest with you. If it were me, I’d do what he suggested. I see no reason to hurt the dealer just to hurt the dealer and/or to save a very small amount of money
Last edited by Leesbro63 on Mon Jan 06, 2020 6:50 pm, edited 1 time in total.

hudson
Posts: 2122
Joined: Fri Apr 06, 2007 9:15 am

Re: My New Car Buying Tips

Post by hudson » Mon Jan 06, 2020 6:33 pm

Leesbro63 wrote:
Mon Jan 06, 2020 6:21 pm
smackboy1 wrote:
Mon Jan 06, 2020 6:05 pm
He recommended I pay the loan over 3 payments like this to minimize the amount of interest:
I’d do what he suggested. I see no reason to hurt the dealer just to hurt the dealer and/or to save a very small amount of money
I agree. If I took the incentive, I would keep the loan long enough.

I hope that I am always honest and straightforward with dealers...no playing games; I expect the same of the dealers, manufacturers, and everyone in between.

User avatar
JAZZISCOOL
Posts: 522
Joined: Sat May 18, 2019 11:49 am
Location: Colorado - 5,700 ft.

Re: My New Car Buying Tips

Post by JAZZISCOOL » Mon Jan 06, 2020 7:06 pm

hudson wrote:
Mon Jan 06, 2020 6:33 pm
Leesbro63 wrote:
Mon Jan 06, 2020 6:21 pm
smackboy1 wrote:
Mon Jan 06, 2020 6:05 pm
He recommended I pay the loan over 3 payments like this to minimize the amount of interest:
I’d do what he suggested. I see no reason to hurt the dealer just to hurt the dealer and/or to save a very small amount of money
I agree. If I took the incentive, I would keep the loan long enough.

I hope that I am always honest and straightforward with dealers...no playing games; I expect the same of the dealers, manufacturers, and everyone in between.
+1

stilltrying
Posts: 8
Joined: Tue Feb 19, 2019 1:30 pm

Re: My New Car Buying Tips

Post by stilltrying » Mon Jan 06, 2020 7:55 pm

smackboy1 wrote:
Mon Jan 06, 2020 6:05 pm
I just bought an Acura. I could have paid all cash, but there was a $1500 credit if financed through Acura. I talked to the finance person and found out the minimum loan required to get the incentive. Then I told him I was only financing to get the incentive and I was going to prepay the entire loan ASAP. He told me that I should keep the loan for not less than 91 days to avoid Acura clawing back the $1500 credit. He did say that the dealership would have to pay it, not me, the customer, but if people did that, the dealerships would stop passing through the savings to customers. He recommended I pay the loan over 3 payments like this to minimize the amount of interest:

1st payment - normal payment
2nd payment - pay off everything except $4-500
3rd payment (at least 91 days after purchase) - pay off the remaining balance and retire the loan

Don't ask the saleperson about how to take advantage of the financing, they are clueless. I got different answers from different salespeople. Ask the financing person.
Mine was an Acura too. I was told six months to avoid the dealer clawback. A regional variance perhaps? I’m in the NE.

User avatar
LadyGeek
Site Admin
Posts: 58830
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: My New Car Buying Tips

Post by LadyGeek » Tue Jan 14, 2020 6:02 pm

I have corrected my previous post regarding the Tire and Wheel Protection package agreement terms:
LadyGeek wrote:
Sat Jan 04, 2020 3:31 pm
I had earlier decided to purchase the tire and wheel replacement package:
LadyGeek wrote:
Sun Dec 22, 2019 9:19 pm
...He then pitched a tire and wheel protection package. Those RAV4 wheels are made from aluminum, they're fragile and could cost you $1600 to replace (I had to keep from laughing). For only $1495, you'll save the cost of the package the first time around. This got my attention, as it was unlimited replacement, no pro-rating, for tire and wheel damage. I've ruined wheels on potholes, and was thinking I might go for it. He also pitched that 92% of customers buy this package (the "herd mentality" pitch - go with the crowd).

So, I declined both packages. An instant "I'll give you the tire package for 5 years at $995." Can you go lower? No. OK, I'll take it.
Now that the dust has settled, I did some research on 2020 RAV4 wheel replacement. The 17" wheels are less than $300 at TireRack. Tires run around $200. I'm thinking $600 to replace a tire and wheel. My thoughts are to cancel the tire and wheel package and get my money back.

The tire and wheel service agreement says I can cancel within 30 days for a 100% refund. However... there's a catch. Lienholders (it's financed) have a say on this agreement. Unless the owner has a "Release of Lien", I can't get my money back. Toyota is certainly not going to cancel the agreement unless the vehicle has been totaled or repossessed.

Revision 1/14/20: You can get a refund, but it will be pro-rated after 30 days with a $25 processing fee. Unless you have a "Release of Lien" (loan is paid off), the refund will be paid to Toyota Financial Services (or split between you and Toyota).

The balance due on my Toyota loan is now zero. I'm hoping I get my title before the 30 days is up.

Revision 1/14/20: The Release of Lien will arrive before the title. That's all you need to cancel the agreement.

Tip: Financing your vehicle has an impact on the ability to cancel the add-on packages. Read the complete paperwork in full before signing. I didn't and was lucky to find the 30-day cancellation procedure.

Revision 1/14/20: You can cancel the package, but you will not get the full purchase price after 30 days.
The "Release of Lien", an original notarized letter, arrived a few days ago. I went to the dealer today with the letter in hand, not to mention a printout of the contract (first page and the page containing the cancellation procedure).

The finance manager briefly asked why I had paid the loan off before making 3 payments. I stated that I didn't remember that part of the conversation (honestly, I didn't remember). She then proceeded blame the sales department for not making that point clear. It can't be put in writing. I was told "Don't worry about it". OK, I'm not worried about their chargeback.

She then explained that I should reconsider the cancellation. After all, she used it 3 times in the last several years - for multiple cars. No, let's cancel. After I clarified that the refund is not pro-rated (showing her the contract), we completed an "Agreement Cancellation Request Form". I'll be getting a refund check within 60 - 90 days. This means I'll get the refund check on Day 90.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

User avatar
LadyGeek
Site Admin
Posts: 58830
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: My New Car Buying Tips

Post by LadyGeek » Tue Jan 14, 2020 6:02 pm

On the same day I received my "Release of Lien", I also received an unexpected check for close to $500. Why? They accidentally charged me 8% sales tax instead of 6% (PA is 6%). :shock:

I asked the finance manger how could that possibly happen, since everything is done by software? Nope, it's a manual process, they just check it.

So, I have a 2020 refund for a 2019 itemized deduction. That's 2020 income on my tax return, a.k.a. recovery. Publication 525 (2018), Taxable and Nontaxable Income
Recoveries

A recovery is a return of an amount you deducted or took a credit for in an earlier year. The most common recoveries are refunds, reimbursements, and rebates of itemized deductions. You also may have recoveries of nonitemized deductions (such as payments on previously deducted bad debts) and recoveries of items for which you previously claimed a tax credit.
I'll start a separate thread if I need tax help.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

A440
Posts: 479
Joined: Mon Sep 02, 2013 7:46 am
Location: NJ

Re: My New Car Buying Tips

Post by A440 » Sun Jan 26, 2020 12:16 pm

Edited: Thank you Grabiner for the correction :happy That's why it is great having knowledgeable people on this forum.

For folks who purchased a vehicle in 2019, see if the tax you paid on your sales tax is greater than the amount of income tax paid to the state. If you itemize, it might help.
Last edited by A440 on Sun Jan 26, 2020 1:49 pm, edited 1 time in total.
I don't know what the future holds, but I know who holds my future.

User avatar
grabiner
Advisory Board
Posts: 25662
Joined: Tue Feb 20, 2007 11:58 pm
Location: Columbia, MD

Re: My New Car Buying Tips

Post by grabiner » Sun Jan 26, 2020 12:44 pm

A440 wrote:
Sun Jan 26, 2020 12:16 pm
I'm not a tax pro, but for folks who purchased a new car in 2019, you might do better itemizing this year vs. taking the standard deduction because of the tax you paid on your vehicle.
This is not likely to be useful. You can deduct either income tax or sales tax, but not both. If the $3K tax on a car, plus other sales taxes, is more than your state income tax (which could happen in a state without income tax), you would need to donate a lot to charity to exceed the standard deduction.
Wiki David Grabiner

User avatar
LadyGeek
Site Admin
Posts: 58830
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: My New Car Buying Tips

Post by LadyGeek » Sun Jan 26, 2020 1:32 pm

grabiner is correct. I just checked my H&R Block Schedule A itemized deductions worksheet. Line 5a says "You may include either income taxes or general sales taxes on line 5a, but not both". The software does indeed pick the highest of the two.

Regarding my earlier post for a 2020 refund for a 2019 itemized deduction, I'll reduce my 2019 sales tax by the reimbursed amount instead of claiming it as income on my 2020 return. Since I haven't filed my 2019 return yet, I can do this. (If I'm wrong, someone please let me know.)

On a minor point, charities are not the only area which can be used to increase your itemized deductions. Qualified medical expenses over 10% 7.5% AGI are another.

Update: Corrected medical expense AGI (Adjusted Gross Income) threshold. It's 7.5% in 2019, 10% in 2020.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

User avatar
JAZZISCOOL
Posts: 522
Joined: Sat May 18, 2019 11:49 am
Location: Colorado - 5,700 ft.

Re: My New Car Buying Tips

Post by JAZZISCOOL » Sun Jan 26, 2020 4:43 pm

LadyGeek wrote:
Sun Jan 26, 2020 1:32 pm
grabiner is correct.
On a minor point, charities are not the only area which can be used to increase your itemized deductions. Qualified medical expenses over 10% AGI are another.
Thanks, LadyGeek, but I wanted to confirm the medical deduction % as I thought it was changed with the Dec. 2020 legislation:

"Re: Tax Law Changes for 2020
Post by changingtimes » Sat Dec 21, 2019 7:27 am

Yay, they cut the medical deduction mark back down to 7.5%! I wasn't going to hit 10%, but I did hit 7.5%. That'll show Uncle Sam! 😁"

Thanks! :happy

User avatar
LadyGeek
Site Admin
Posts: 58830
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: My New Car Buying Tips

Post by LadyGeek » Sun Jan 26, 2020 5:56 pm

^^^ Yes, it did. Thanks, I have revised my post. (7.5% in 2019, 10% in 2020)
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

Post Reply