Buying a New Car - Financing Rate Questions

Submitted by thegreatsarah t3_127ny0a in personalfinance

Hi all, first time posting here and I have some questions that I thought this sub might be able to help give some advice on!

Some relevant info is that I’m 100% set on buying a car and buying new, I’ve been prequalified through a couple banks, I’ve checked my credit score, and prepped as best I know how for the actual buying. My question is more on timing, I guess.

I’ve narrowed it down to the models/trims that I’m going to test drive, but there are some financing specials going on right now that make me question whether I should buy a little earlier than planned. My original plan was to purchase in June, but I’m not sure if these interest rates will be offered again at that time. I’m also not even sure I’d qualify for the better rates seeing as my credit score is only around 720. I’m looking at some Mazda and Subaru models.

What it really boils down to (and I did try my due diligence with googling) is do these rates (0.9% APR and 3.9% respectively) return pretty frequently for these car companies? Or should I really pull the trigger early seeing as I might get a better rate deal today and I’m prepared to purchase?

Thank you for any help, I hope this has mostly made sense.

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nkyguy1988 t1_jeeyf5y wrote

The only car companies offer 0.9% are the ones nobody wants, hence the incentive. Toyota is advertising special financing at 3.9% for contrast. Promo rates can change at any time to account for market demand or supply, or their ability to move the cars they have.

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alexm2816 t1_jef1gms wrote

Dealers/Automakers spend gajillions of dollars creating a sense of urgency with promotional rates and specials and discounts.

Certainly reducing financial costs of borrowing is a good goal but so too is delaying the purchase for as long as possible considering you hold on to your money longer, avoid depreciation/insurance for as long as possible and otherwise extend the amortization period of your current car.

720 likely won't get you the teaser rates but it's worth inquiring. If you're auto shopping make sure you've got loan terms from an unaffiliated bank in hand before you test drive. Dealers try to get you on the lot for a reason and it's because they and their environment are tailor built to get you to buy a car. Going in without knowing your financing terms and letting an expert at selling cars lead you down their donkey trail is going to result in more money spent. Full stop.

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thegreatsarah OP t1_jef41af wrote

Yeah I’m prepared to not have the rates they’re advertising, and I do have financing from my own bank already lined up! I’m worried about the dings to my credit if I get to the dealer and get to the point of them going ‘we’ll offer you xyz% if you finance through us’, am I just misunderstanding that? Because if I really can’t get a better rate now, then I’d just wait until June, but would these financing checks later affect my credit when I want to purchase then? Thanks again for your help!

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alexm2816 t1_jef54jy wrote

Straw break camels' backs all the time but it's unlikely that you're going to see a drastic swing in financing if you start/stop and start in June vs just going with the flow. Obviously there's changes to prime rates that can have an impact if you delay but this is so speculative and assumptions built in that no one knows what will happen even though everyone guesses.

The smartest play almost always remains to take your time shopping and buy when your need is high but without being rushed. Look for a deal you can't refuse to hit you in the face but don't go rushing out.

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Laraujo31 t1_jefd4mn wrote

Generally the best time to buy a car is during the holidays. That is when you see most of the commercials and promotions going on. There is a pretty good chance that you will see those rates again during the holidays.

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