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Discussion Starter #1
The dealer I'm getting the car from tells me that I have to finance the whole amount of the car in order for them to be able to offer the car to me at the price I'm getting. I was initially planning to put about 12k down for the car and take out a loan with MAC for the remaining amount for a 2 year loan. However, he's putting me on a 5 year loan for the entire amount of the car so that he can make some of the money back. He told me I can just take the money I was planning on putting down and sending that in for my first payment, and I would only have to pay interest on the $20k+ loan for the period before my first bill.

1. After the first payment, my interest will accrue as if I had originally put 12k down in the first place, correct?

2. I can pay off the rest of the loan over 2 years (instead of 5) and I would only pay extra interest before the first payment, correct?

3. I can refinance after 3 months to get a better interest rate (10.69%!), correct?


I'm not very happy with the interest rate, considering my near-perfect credit, but as long as I can refinance and I will only be paying high interest for the first 3 months, I think I can live with it. I think the extra I pay will probably be ~$150 or so.
 

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You are correct on all 3 points. It's common for dealers to do this since they get kickbacks from MAC for having people finance through them. They get their bonus quarterly, so if you stay on for 3 months they're sure to get it. They get their bonus and all you've got to pay is perhaps a couple extra dollars in interest (interest on the full amount for 1 month, rather than full - $12K).

It's one of the give and take things you've got to do. You probably could have fought him over it and got what you wanted, but this way he gets all his bonuses and you're only out a few bucks.
 

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10+% :nono: I just got a loan from my bank for just over 5% for my 6 (granted, it was only for about 10K, but still) ..... screw the dealer and get a loan through your bank - they can usually get you a better deal than the dealership. just my $0.02
 

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Discussion Starter #4
Thanks for the super fast response!

10+% :nono: I just got a loan from my bank for just over 5% for my 6 (granted, it was only for about 10K, but still) ..... screw the dealer and get a loan through your bank - they can usually get you a better deal than the dealership. just my $0.02
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Yes, but if I don't finance through MAC, I don't get the $1k rebate. I was shocked at the interest rate too considering I have excellent credit. I was expecting 8-9%.
 

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10+% :nono: I just got a loan from my bank for just over 5% for my 6 (granted, it was only for about 10K, but still) ..... screw the dealer and get a loan through your bank - they can usually get you a better deal than the dealership. just my $0.02
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And, you might be able to beat that at a credit union. Get on the phone and call various lending institutions. The last time I borrowed money to buy a car (about twenty years ago) I called two credit unions and had them give me the lowest interest rate on the car I wanted to buy. When I told the first one what the second one would do for me they said: "let me call you back in five minutes". They beat the second credit union's rate and that's who I went with.

Elicious-
If this dealer won't do what you want, walk.

He who so ever can walketh away, controls the deal -From the Gospel According to Biff[:D]
 

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Discussion Starter #6
And, you might be able to beat that at a credit union. Get on the phone and call various lending institutions. The last time I borrowed money to buy a car (about twenty years ago) I called two credit unions and had them give me the lowest interest rate on the car I wanted to buy. When I told the first one what the second one would do for me they said: "let me call you back in five minutes". They beat the second credit union's rate and that's who I went with.

Elicious-
If this dealer won't do what you want, walk.

He who so ever can walketh away, controls the deal -From the Gospel According to Biff[:D]
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Yes, that has crossed my mind. But they have the exact car I want (Titanium gray sport model with no options besides wheel locks). They are giving me a great price, competitive with the best offers in that area. And it will only cost me $100-$150 more than I originally wanted due to the funky financing. I see that as paying for my color choice.

One other dealer has the car I want, but they have it in red (my 2nd choice). They will give me the same price, but they may have other fees associated with that deal that I don't know about. I never actually started talking with the 2nd dealer.
 

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Do you guys get it? Who gives a crap what rate he is paying, he is just going to pay early or refinance. Take the easy road, with the rebate, and after three months call your CU. It is all well and good to think taking a walk is the best way, but a smarter person figures out a way to beat them at there own game. :)
 

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Do you guys get it? Who gives a crap what rate he is paying, he is just going to pay early or refinance.
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True but when it's my money I give a crap what rate I'm paying. I save money every time I buy a car by not financing. Paying interest is for suckers.
 

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Discussion Starter #9
Trust me, if I had the money to pay it off immediately, I'd be buying this car cash (or almost cash, it's just stupid to pass up the $1000 MAC financing bonus if you are planning to pay off the car right away). But I only have so much to spend right now. And I'm getting a great car, at a great price. I will only end up paying around $1k in interest if I pay it off in 1-2 years. So the MAC financing bonus will pay for interest.
 

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True but when it's my money I give a crap what rate I'm paying. I save money every time I buy a car by not financing. Paying interest is for suckers.
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Pfft.

Why pay cash on a 2-5% loan? That's for suckers.

Take all that cash and throw it in a mutual fund earning a relatively safe 5-10% and you'll end up thousands ahead of paying cash for a car. Hell, even T-Bills will earn you a guaranteed 5.2% thesedays; that's higher than my credit union's rate on new auto loans.

If I had paid cash for my Mazda6, I would have avoided $1,400 in interest in the past 3 years. But I would have lost the $19,194 that same $24,000 has earned me by leaving it in my portfolio. I earn more in interest than I spend on the car payment every month -- for all intents and purposes, owning my car is completely free. Actually better than free, because that's not taking into account earned equity.

Spending $20,000 to avoid losing $1,500 -- doesn't seem very smart to me. In the past 8 years, with numerous cars, thanks to the greatness of compounding interest, I've earned well over $100,000 because I financed -- at the cost of maybe a total of $4,000 in loan interest.

Remember, every dollar you spend to avoid paying interest, is a dollar that can't earn you interest.
 

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Discussion Starter #11
Well I'm a bit annoyed now. I'm buying this car from out of state. I agreed to the deal for $8000 off MSRP yesterday, and he filled out the paperwork and sent it out to me today. Well I had my brother go into the dealership to check out the car and make sure everything is in shape. Well he sees their ad stating $8500 off all speed6s. I try to get them to redo the paperwork so that I get that same deal. They said they can't do it because we finalized the agreement yesterday, before the sale.

So now it looks like my brother is going to have to buy the car, and he will transfer the title to me as a gift. I just hope that the title transfer will be tax free here in MN. Anyone from MN know for sure? The DMVs are closed now.
 

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Well I'm a bit annoyed now. I'm buying this car from out of state. I agreed to the deal for $8000 off MSRP yesterday, and he filled out the paperwork and sent it out to me today. Well I had my brother go into the dealership to check out the car and make sure everything is in shape. Well he sees their ad stating $8500 off all speed6s. I try to get them to redo the paperwork so that I get that same deal. They said they can't do it because we finalized the agreement yesterday, before the sale.

So now it looks like my brother is going to have to buy the car, and he will transfer the title to me as a gift. I just hope that the title transfer will be tax free here in MN. Anyone from MN know for sure? The DMVs are closed now.
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Well, here is where maybe you should walk away. Not giving you that deal is just stupid. Try standing your ground by walking in and speaking directly with the new car sales manager.There is no reason why they would not honor an ad, afterall yopu haven't taken delivery yet.
 

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Yeah, if they only filled it out and you haven't signed it yet, just tell them you won't sign it unless they honor the agreement. Simple as that.

And if it comes down to your brother buying, according to the State of Minnesota, sales tax can be waived on title transfers if both parties sign a gift affidavit (Form PS2080 and it must be notarized). Other than that it'll just be a bunch of small fees -- $10 here and there for plating, filing, title transfer, etc
 

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Pfft.

Why pay cash on a 2-5% loan? That's for suckers.

Take all that cash and throw it in a mutual fund earning a relatively safe 5-10% and you'll end up thousands ahead of paying cash for a car. Hell, even T-Bills will earn you a guaranteed 5.2% thesedays; that's higher than my credit union's rate on new auto loans.

If I had paid cash for my Mazda6, I would have avoided $1,400 in interest in the past 3 years. But I would have lost the $19,194 that same $24,000 has earned me by leaving it in my portfolio. I earn more in interest than I spend on the car payment every month -- for all intents and purposes, owning my car is completely free. Actually better than free, because that's not taking into account earned equity.

Spending $20,000 to avoid losing $1,500 -- doesn't seem very smart to me. In the past 8 years, with numerous cars, thanks to the greatness of compounding interest, I've earned well over $100,000 because I financed -- at the cost of maybe a total of $4,000 in loan interest.

Remember, every dollar you spend to avoid paying interest, is a dollar that can't earn you interest.[/b]
In a way I agree with you, but-

Eric Tyson (nationaly recognized personal finance counselor, writer and lecturer based in San Francisco) said in one of his books:

Never buy on credit anything that depreciates. New cars, clothing, shoes and so on depriciate in value. Never buy these things on credit. Borrow money only for investments - education, real estate or your own business for example.

It's worked for me (I retired at 56). :D


When I was in management I saw many of the people that worked for me who upon getting the job would run out and buy a new car, make payments for an ungodly number of months, and when it was paid off they would trade it for a new one and make payments on it. They would never have the money to save or invest. To invest money you have to have it first and that is not happening to most of the 20 to 30 year olds in this country today. Sad but true.
 

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Discussion Starter #15
Well, here is where maybe you should walk away. Not giving you that deal is just stupid. Try standing your ground by walking in and speaking directly with the new car sales manager.There is no reason why they would not honor an ad, afterall yopu haven't taken delivery yet.
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Well therein lies the problem. I live in MN. The dealership is in CA. They knew that I would be willing to pay the amount we agreed upon, and I would have too if my brother hadn't come up with the idea for him to buy the car to get $8500 off. I tried to call the other dealership in that area who had the same car but they could not match the $8500 off price, so I couldn't get the leverage there.

Oh well, it's done. My brother bought the car for $8500 off so I'm the proud new owner of a Mazdaspeed6! $20,240 before TTL! I'm incredibly happy with that price.


And thanks for the heads up Sigma. How do you know so much?
 

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Discussion Starter #16
The obligatory photos!

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Congrats! Looks real nice, though I could do without the fish eye pics, makes me dizzy. haha.

You do not need to wait 3 months before refinancing. There have been previous posts about this. I was skeptical but I looked through all my paperwork and I never signed anything that said I had to keep the MAC loan for a certain period of time.
 

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No need for you to wait three months before you pay off the loan.
There is no pre-payment to you, the borrower. However, the dealer is the one who gets penalized if you you pay-off the loan within a three month period. MAC will charge back a fee to the dealer; approx. 150 bucks.
Take the loan to get an additional $1K off the sticker and pay off the loan at anytime with cash or re-finance with another lender at a much lower rate.:cool:
 
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