stockae92

My friend told me about this car buying strategy? But I don't think this will work.

He is assuming you have the money to paid off the car anyway.

He said:

(1) to go in the dealership, get as low of a purchase price and down payment as possible,
(2) and take the high APR on the loan (since the dealer would want to "get you back" in the loan interest),
(3) then paid off the next day (so you are paying minium interest on the loan).

I don't think this would work since the the sales and finance are different department. Would this work?

Mr.E.G.

That's the dumbest goddamn thing I've ever heard. It's not a credit card; you pay simple interest.

Second, why not just get both. Arrange for financing through your bank or credit union and then buy the car through the internet sales department and negotiate the price of the car between several dealerships before you ever set foot in the dealership.

dombey

Ever wonder why they ask you if you're paying cash, or if you're trading something in? Because then they know where they're going to be able to screw you. If I'm a dealer and I get paid to write loans at high interest rates, then I'd be perfectly willing to sell you a car at zero profit and make money on the financing (if I had to).

Chris S

Not really. Dealers typically get origination fees on loans and the higher the spread (APR less cost of fund), the more they make. It may or may not work depending on the dealer, but it would be very rational for them to accept a lower price if it's attached to a high interest loan. I always laugh when I see people talking about paying cash as if that's going to get them a better deal; if anything, the opposite is true. BUT...the discount by financing may not be enough to warrant the credit inquiry and hassle.

S2K-DJ

I agree completely. You better not have very good credit, or be purchasing any type of car that has a special apr rate going on. I don't see how someone like me, who has very good credit, car really gain much if anything from this. I can't ask them for a high interest rate, if they offer me 6%. IN my 5 new car purchases since 2001, I wasn't gonna gain anything whether I paid cash, or financed, because I wasn't gonna have to pay 15-20% interest, like a friend of mine did on a new car purchase a few years back. Just not worth the hassle.

PanteraKitty

Put it on your credit card and pay off the balance next billing cycle.

s2kpdx01

Our system does a lot of this for you, but some dealers will still only give you the lowest possible prices if you finance through them. In that case it might work out. But, this sounds like a lot of people that say, "i finance a car so i can invest the money...blah blah blah." Most people that say that are full of crap! Just like most of the time this is a pretty dumb idea.

If you are going to do this make sure there aren't any penalties for early pay off.

S2K-DJ

I tried buying my RX8 in full with my credit card, so I can earn my 2% cash back or flyer mileage, and the dealership denied me. They wouldn't let me put more then $5k down using it. I tried putting $10k down on my S2000 via credit card instead of cash and they said no, before they knew I even had that much cash to put down. I guess the dealerships don't wanna lose out on paying their fees to credit card company. Failed for me, but worth a shot.

beanseff

actually paying it off asap will ruin your credit rating...why? because the loan company isn't making any money off of you

PanteraKitty

We have been "deadbeats" for years. Just last year Bank of Obama took our credit card away from us. It had a $35,000 credit limit. That was the one that I put the F150 on. That's OK. We have other credit cards that we do not pay any interest on.

The week following the cancellation of the $35,000 credit card I called Bank of Obama and cancelled our home equity line. If we did not make enough to have that credit card, we damn sure did not make enough to have a $75,000 line of credit.

PAY IN FULL EVERY BILLING CYCLE. YOU WILL NOT PAY ANY INTEREST!