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8.9K views 30 replies 20 participants last post by  Tom S.  
#1 ·
I'm working with a dealer for a 2022 Canyon and they are giving me a great price, but the price is contingent on my financing through GM Financial. The salesman is telling me that I need to make 7 payments and after that I can pay off the balance with no prepayment penalty. He says they sell low and make their money through the financing.

The GM Financial web sites FAQ is giving me a different story as to how extra and over payments are applied and that prepayment penalties do exist. Anyone have any experiences to share? My new truck has been produced and is expected to ship on or around 1/24/22 so I'm hoping to take delivery by the end of the month. If the salesman is not being totally truthful with me about the cost of a GM Financial loan I'd like to find out now rather than later.

He's also asking me to finance the whole amount rather than the $15,000 minimum amount we first discussed. I can't find anything that confirms the minimum to qualify for the rebate, so I have to believe him on that point.
 
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#4 ·
I haven't seen the final papers, but I believe they are going to quote me 4.99%, which apparently is the lowest rate GM Financial will give in order to qualify for their finance rebate.
 
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M
#6 ·
Everything has to be disclosed on paper. Do not believe anything spoken because it won't hold up against the contract you sign. You can BS him, handshake, make promises and so can the dealer. But it is what you sign that will stick. Read it before you sign it. It will spell out penalties, payments, interest, and everything. There can't be anything on their website or spoken by a call to GM that will overrule the contract.

Personally, I would not sign a contract with prepayment penalties nor would I agree to get a loan for more than what I can pay in a down payment. How does that save you anything and not benefit the dealer? They get a kickback on the contract.
 
#25 ·
I agree with what you’re saying but there are times when it works out better for you. My wife’s SUV was 0% for 5 years. They asked how much we wanted to put down and we said nothing. He thought that we didn’t understand that our payments would be higher. I told him that I was pretty sure that Toyota had more money than I did. So we paid exactly the number we bargained for while our cash sat in our account. I don’t know…. It sells itself.
 
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#9 ·
If they can't answer the questions or be transparent, and then expect you to quickly sign when they produce paperwork, that's a bad sign.

The best rate around here for a new car loan is 2.34%, ticking up slightly higher for a longer term, but still below 3%. The rate you get is also determined by your credit score, so maybe 4.99 is the best you're able to obtain. Definitely shop around.

I'd straight up ask how the price changes if you bring your own financing. Banks, credit unions are more than willing to let people borrow money right now because it's so cheap for them to get it. Everyone should want your business.
 
#11 ·
Xwd said:
The best rate around here for a new car loan is 2.34%, ticking up slightly higher for a longer term, but still below 3%. The rate you get is also determined by your credit score, so maybe 4.99 is the best you're able to obtain. Definitely shop around.
Click to expand...
Those low rates are from incentives. If there is a cash incentive, then you will get a standard rate.

The lowest standard rate for a new car I have seen was 3.5% from a bank on a 3 year.

A cash incentive with 5% interest is an excellent deal since you can just refinance to a lower rate orrr just pay it off. If you play your cards right its actually better than 0%.
 
D
#10 ·
If they buy at 2.5% (the rate you actually qualify for) and sell to you at 4.99%, the difference in interest over the life of the loan is retained by the dealer when your deal closes with the finance company. In order to prevent a chargeback on the loan, the borrower usually has to make a certain number of payments before they payoff the loan. The number of payments and the amount of the chargeback is a contractual agreement between the dealership and the finance company - and if there is not a pre-payment penalty in the sales agreement you are under no obligation to help them meet their contract terms.
 
#12 ·
I appreciate all the great comments. I have a great credit score so I'll work on the dealer for a better rate. If not I will tell him I can't finance the whole amount and we'll go back to the original $15K figure. If we haggle for a finance number somewhere in between I'll have to get them to cut the $900 junk dealer fee in half to compensate me for having to pay the extra interest until I can pay off the loan. There is some give and take still to be had and still have both sides feel like they win.

As for asking about a cash or private finance deal I really don't want to rock the boat that much. They are discounting the truck $5,000 so even if I have to give back $800 - $900 in interest charges I feel in today's market I'm going to be making a great deal.

Any other suggestions or comments I can get between now and my expected estimated delivery date of 1/31/2022 will be most welcome.
 
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W
#22 ·
Like others have said, you just have to run the numbers and ALL of the numbers. Giving a little in one area to get more in another makes sense in the long run.
Since the Fed has indicated that rates might be higher as soon as March I'd be sure that the new finance rate you get would still be advantageous vs. just taking the lower rate and no cash incentive.

Now for the salesman's "need" to finance the whole amount there is probably an easy workaround. I assume the payment terms state the 7 payments you stated earlier. READ the contract carefully. The workaround is simple: Finance the full amount and then after the contract is signed make the 1st payment for the amount they requested plus all the money you originally wanted as the down payment. The additional money will go directly to your principle and reduce the interest you will pay over the note's term a significant amount.

I'm sure their requirement is tied to the kickback they get. Don't feel pressured to pad their pockets. Make the minimum payments where you can.
I just try to be fair with them. Everyone needs to eat but they always have more info than you do and they do this for a living day after day...
 
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#23 ·
In our area (midwest) GM is running 750 conquest and 48 months 0% on colorados (2021 and 2022). So, since I was trading out of a ford (yeah I know...but sometimes you have to try it to find out what you're missing) I got both. But no, they're not offering both right now in general. I think if you own a Buick/GMC there's also a 500 rebate that stacks with the 0% if you buy a canyon.
 
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#26 ·
On the Canyon they gave us $500 off if we financed with them. Our only obligation is that we can’t pay it off for three months. The interest for three months is less than $500, so three payments and pay it off and put the difference in our pocket.
 
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G
#27 ·
It looks your deal should be done by now, but there's likely no reason you couldn't take a full loan and pay off ALL BUT the 7 months' worth of principal on day one. That way, you're only paying interest on that amount rather than the larger initial amount. It does not violate the agreement at all and substantially reduces your interest. If you dig into the fine print, you may even be able to pay off all but ten bucks, and pay virtually no interest as a result.

I know lenders always have more than one plan available, but I financed though GM and had no early payment clauses. I just kept the cash liquid until I took care of some other bills, then paid it off.
 
#29 ·
I too am financing through GM Financial... I like the way my salesman conducted himself all through the deal (would never believe there is such a person) and the dealership gives close to a 10% below MSRP, which gave me an out the door price lower than the original base price. I'm happy and he's happy... told him I'd keep the loan for the requested 7 payments... My plan is to pay off about 2/3 of the principle with the second payment. That will lower the interest charges on next 5, after which I'll just pay off the loan and be done with it.
 
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#28 ·
Just bought a used '19 Canyon and was able to get 2.99. I'm sure new is this or better. I went 48 months, no penalty for early pay.
 
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B
#30 ·
I was buying a used Nissan and wanted to pay cash

There were actually two prices quoteon the car. One was a “cash” price and the other was a “financed” price

The “financed” price was $500 less.

I was dumbfounded

The explanation I received from the general manager of the dealership was basically this…

“you have a good credit score and the more “good credit score” loans we make, allows us to sell financed cars to people with mediocre or bad credit scores…..due to the overall better portfolio your score gives us”

Thus the $500 cheaper price.

it allows them to sell more cars overall.

at least, that was the explanation he gave me (shrug)
 
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