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Comment by avs733 | Hacker News Reader

and the auto loan business is shady a.f.

We ended up invovled with the state A.G.'s office investigating our dealer. They 'accidentally' put a typo in my wife's SSN when pulling the credit report. That justified a higher interest rate - which they offered us without explaining why.

We weren't super worried because we were going to pay the car off in a couple months anyways, we just wanted the financing to shift some cap gains taxes to a different year. Then we got a letter in the mail from the lender explaining why our interest rate was so high.

We called the dealer - and almost no questions asked they offered to send us a check for the difference. Red flag raised we filed a complaint with the state A.G., and it turns out it was a common practice at that dealership.

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NEVER finance through a dealership. They will never give you the best rates. Often they will get a rate and add their own points on top or include additional fees. Even promotional interest rates don't make sense because they're always offered with an alternative discount. The discount + a traditional loan works out cheaper than 0% interest.

> NEVER finance through a dealership

Never is a strong word. Dealerships make their money on financing. Refinancing afterwards is straightforward. Negotiating poorly on the dealership's financing, using that to win points on other fronts (e.g. price, maintenance commitments, trade-in value, et cetera) and then repaying the loan a month later, once you've lined up your preferred financing, is perfectly acceptable and often worth the time and trouble.

Agreed. And here credit unions are your friend.

>> NEVER finance through a dealership.

They have this awesome thing called negative equity financing. It might have a better name now, but they will pay you X for your old car which is less than you owe and then finance the difference with your new loan. In other words, your loan balance on the new vehicle may be higher than its value but this is glossed over by focusing strictly on monthly payments and "what you can afford". Re-read that, this is not a practice they'd use on people with bad credit because to repo the car will not get them their money back. It's a rip-off for people with good credit and more dollars than sense.

Get a quote. Get multiple quotes. Several times in my life the dealer had APRs of < 1% APR, which was better then available elsewhere.

Never say never. If you have great credit, you can get some awesome manufacturer incentives.

- I got a 0% APR loan on a new Ford via Ford Motor Finance in 2016 and didn't even have to put much cash down.

- I got a 0% APR loan on a new Hyundai Palisade in 2021 (yes, even after COVID!) by paying for almost half the car in cash as a down payment.

No other finance channel would have ever offered me 0% APR.

You paid half the car off on the lot? That’s not a great use of cash. I mean in most markets. In most markets cars depreciate not appreciate like they have and the stock market rises not falls like it has. So I guess good move!

True but consider cars aren't a significant purchase for many people. At least to justify the maneuvering to maximize gains. Is it really opportunity cost if you didn't have another use for the cash and could replenish it fairly quick?

The point being made is that if you have 10-20k sitting around that you "have no use for," you should probably invest it in an asset that appreciates in value.

Exactly

My point is that it's not always worthy of an investment at all. It's just a purchase. It's coming from operating funds. The maneuvering to take out the loan, choose which investments, tax consequences, when might you need that liquidity available again (do you really want to lock it up until retirement?), establishing investment accounts that may not already be established, and all these decisions are, or can be, such an over optimization. Especially if this is a rather immaterial amount of money to you personally. And even if that is a material amount of money for you, you're probably actually better off with the non-ROI producing peace of mind of having your transportation ownership be secured and out of reach of creditors. So, it's hard to make a blanket statement like that.

I got 1.9% on my Golf 4 years ago with absolutely $0 down. Even the plates and registration got rolled into the loan.

Re-read what I said. They always offer 0% or a discount. The discount + standard rates works out to cost less.

That isn't always the case. After getting up to leave several times when they said they couldn't sell it to me for my offer, they got within $40. I was prepared to pay cash for it. Then they offered 0.9% financing which I took on the assumption that inflation would be greater than 0.9%. Turned out to be a reasonable assumption.

We got a 0% 5-year loan on a minivan. Was pretty much a no brainer even though I could have paid cash.

I’ve always gotten better rates from the dealer. That’s after checking with the credit union and Capital One. Thads both with CarMax (multiple times) and a new car dealer.

Yep. I bought a car within the last year. I went to the dealership with a capital one financing quote and the dealership offered me a better one.

One time I went to buy a car with a guaranteed loan in hand from my bank. The dealer made us wait for over two hours as they tried to find a better deal that they could do, and then finally failed and grudgingly sold us the car with our financing. That was Nissan (my car).

The next time we went to buy a car with a loan in hand from our bank, it was for my wife. We showed the guy the loan we had, he took one glance at it, and said he couldn't do anything better. He didn't waste any of our time. That was Lexus.

Suffice it to say that I'm willing to pay a higher price for a better quality vehicle with better quality service. I really don't want to buy from anyone else.

Toyota/Lexus is definitely of better quality than Nissan(and better dealer service) Back in the day I would have said that the Nissan would have been just as reliable despite but that is not true now. It feels like cars made now are just so forgettable and also disposable and Nissan is leading the field here.

Very well researched, and enjoyable investigative journalism on this topic by John Oliver: https://www.youtube.com/watch?v=4U2eDJnwz_s

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