Credit Union Car Loan

RedOnion

Frequent Poster
Messages
3,029
The dealers get a cut of the financing - in some case it can be more profitable than the sale of the car.
Not really any more, but it definitely used to be very profitable.
This used to be the case when banks were providing the finance; you'll still see it a bit in the finance arranged through independent dealers. But with the brands it's either white labelled at very low margin, or the car brand has set up a bank itself. It's an enabler to sell cars, with rather than commission driven.
 

24601

Frequent Poster
Messages
121
Not really any more, but it definitely used to be very profitable.
This used to be the case when banks were providing the finance; you'll still see it a bit in the finance arranged through independent dealers. But with the brands it's either white labelled at very low margin, or the car brand has set up a bank itself. It's an enabler to sell cars, with rather than commission driven.
Yep, the idea is to change the habits of people from changing their cars every c.5 - 7 years to every c.2 - 4 years.
 

peemac

Frequent Poster
Messages
622
As others have said, finance deals are built into the ticket price - whether it's a car or a suite of furniture.

Finance companies are looking for 6% apr according to a dealer next door to me. Whereas for furniture and white goods they are looking for 10%-12% (flexifi)

The dealer / retailer can make up any rate they like.

0% car finance on 12 monthly payments will cost 3.3% of ticket price.
0% car fiance on 36 payments will cost 9.5% of ticket price.

So if a garage is offering 3 years 0% finance, haggle for 10% discount if you are paying in full yourself
 

galway_blow_in

Frequent Poster
Messages
1,334
You are aware that the dealership doesn’t do the finance, so they don’t care? They want to sell the car, for whatever price makes it a good deal to them.
I have yet to see actual proof that you get a significant better price by offering to pay cash than getting a finance deal.

But going back to the OP: there is no benefit getting finance from your credit union over a bank, unless you pay less interest.
You don't get a better deal by offering cash, the only time you pay more for a car is if you are trading your old car

Finance is as intrinsic a part of the motor trade today as the engine in the car itself, the likes of VAG has it's own bank!
 

galway_blow_in

Frequent Poster
Messages
1,334
As others have said, finance deals are built into the ticket price - whether it's a car or a suite of furniture.

Finance companies are looking for 6% apr according to a dealer next door to me. Whereas for furniture and white goods they are looking for 10%-12% (flexifi)

The dealer / retailer can make up any rate they like.

0% car finance on 12 monthly payments will cost 3.3% of ticket price.
0% car fiance on 36 payments will cost 9.5% of ticket price.

So if a garage is offering 3 years 0% finance, haggle for 10% discount if you are paying in full yourself
You won't buy any cheaper by offering cash, they have a floor price either way

The comparison with kitchen appliances is bogus
 

galway_blow_in

Frequent Poster
Messages
1,334
Very true in my experience.

I was offered 0% finance on my last new car, but it was on the recommended retail price. I declined, paid by bank draft and got a €2,750 discount off the recommended retail price.

In my case 0% finance would have cost €2,750.
Which is nothing on your average 30 k new car
 

EmmDee

Registered User
Messages
74
Which is nothing on your average 30 k new car
Well it's 9.17% to be exact - the only question is going to be what the cash flow is worth to each person. One person might have cash available and 9% is a pretty decent discount. Someone else might value the utility of spreading out the payments.

But it's not nothing
 

galway_blow_in

Frequent Poster
Messages
1,334
Well it's 9.17% to be exact - the only question is going to be what the cash flow is worth to each person. One person might have cash available and 9% is a pretty decent discount. Someone else might value the utility of spreading out the payments.

But it's not nothing
Over three years, it's not much, very few have 30k in cash to spend on a single item of expenditure
 

peemac

Frequent Poster
Messages
622
You won't buy any cheaper by offering cash, they have a floor price either way

The comparison with kitchen appliances is bogus
If finance is costing them 3.5% in order to offer 0% finance, then that 3.5% is up for grabs.

The comparison to white goods was just to show that finance houses work on different rates depending on the product.

Car financing is at the lower cost level

Edit - most credit unions seem to be about 8% apr, so the car dealer deals are probably the best value.
 
Last edited:

galway_blow_in

Frequent Poster
Messages
1,334
F
If finance is costing them 3.5% in order to offer 0% finance, then that 3.5% is up for grabs.

The comparison to white goods was just to show that finance houses work on different rates depending on the product.

Car financing is at the lower cost level
Finance isn't costing volkswagen Bank 3.5 % and besides, you're hardly going to pay cash just to save a few percent
 
Top