I am at a dealership and they say they won’t take ANY outside financing. They want me to finance through them then refinance with my own bank… does that sound right? Just wondering if that would be bad for me. They say there is no prepayment penalty..

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justhereforpics1776 t1_jaf1con wrote on February 28, 2023 at 11:33 PM

#2,134,439

I would personally find a new dealer. That is wild as a policy. I’m guessing it is a small dealer and not a large one part of an auto group.

Buying a car already has enough paperwork. Let alone you buying it, waiting 2-4weeks for the new lion to be set up, and then getting a whole new loan

Pretty_Swordfish t1_jaf1eng wrote on February 28, 2023 at 11:33 PM

#2,134,479

Not the best. If you aren't willing to walk though, then you are stuck. If you can prepay the entire loan at any time and no cost, you can refinance later if you find a better rate.

nkyguy1988 t1_jaf1rl7 wrote on February 28, 2023 at 11:36 PM

#2,134,668

IANAL but I'm almost certain beyond a doubt that they legally can't force you to use any financing from them. What if you wanted to pay cash?

They can require their financing for promo rates, etc, but a blanket no outside financing is questionable at best.

fluffy_bunny22 t1_jaf23ir wrote on February 28, 2023 at 11:38 PM

#2,134,871

Unless there's a very specific car there that you can't find anywhere else I'd find somewhere else to buy a car. There are 2 of my cars dealers in my area. I don't like who took over my dealership so I don't deal with them anymore.

fawningandconning t1_jaf24mf wrote on February 28, 2023 at 11:38 PM

#2,134,891

Just leave. They're not forcing you to buy a car.

fluffy_bunny22 t1_jaf27s3 wrote on February 28, 2023 at 11:39 PM

#2,134,951

Replying to Pretty_Swordfish (#2,134,479)

Refinancing is usually not as good of a rate as buying it brand new.

gomd216 t1_jaf2er5 wrote on February 28, 2023 at 11:40 PM

#2,135,075

I'd walk, unless their interest rate is somehow lower than your outside financing.

Dfndr612 t1_jaf2ynx wrote on February 28, 2023 at 11:44 PM

#2,135,393

Most dealers want to finance the vehicle they sell you, as they make a nice commission from the bank.

Never tell the dealer upfront, that you will be financing it elsewhere, or that you are paying in cash, as they will charge you a higher price to compensate.

About the "no prepayment penalty" that’s following the law. But, car loans like mortgages are so heavily weighted towards paying off mostly interest in the beginning, before significantly paying down the principal.

If you take the dealership’s financing, and refinance it a month later, you will be paying dearly….which is why they told you to do it.

As others here have said, find another dealer!

Pretty_Swordfish t1_jaf4dnu wrote on February 28, 2023 at 11:55 PM

#2,136,218

Replying to fluffy_bunny22 (#2,134,951)

True, but some banks consider the first 30 or 60 days to be effectively new.

Puzzleheaded_Put534 t1_jaf4ewj wrote on February 28, 2023 at 11:55 PM

#2,136,237

Replying to justhereforpics1776 (#2,134,439)

And remember each financing bank is gonna have its cut in fees to process the loan.

Go elsewhere, unless they're borderline giving you the car for free

fluffy_bunny22 t1_jaf4ilq wrote on February 28, 2023 at 11:56 PM

#2,136,303

Replying to Pretty_Swordfish (#2,136,218)

Mine considers if it's been titled it is no longer new.

theoriginalharbinger t1_jaf4lsq wrote on February 28, 2023 at 11:56 PM

#2,136,345

Replying to nkyguy1988 (#2,134,668)

> 'm almost certain beyond a doubt that they legally can't force you to use any financing from them

And what would lead you to believe this?

Dealers can definitely mandate that they use their own financing, as long as the financing does not fall afoul of any kind of discrimination (IE, credit has to be extended in a way that is not discriminatory) or usury laws in the state and municipality in which they're operating.