For 2013 models, in my case a Mini Cooper Hardtop S, brand new ordered through dealership and custom built in Oxford, how is the interest rate determined? Does each 2013 get the same interest rate? What is the normal rate? Just curious since this is the first car I am buying and want to know.

I ordered the car over a month ago and they didn't have the interest rate information available for 2013 models until first week of August.

Would the interest rate change if I put more down?

 

It sounds like your interest rate shopping is confined to the dealership - but I could be misinterpreting this. It is DEFINITELY worth the time to shop interest rates with banks and credit unions.

Let's back up - you "ordered the car over a month ago"? They did not have interest rate information available? Did you sign a contract with a blank space for them to fill in a rate? It sounds a bit confusing. Do you have an "out" yet?

I am unaware that the specific model makes any difference with an external financial entity. They usually only care if it's preowned vs new. In-house financing with dealerships is a huge revenue source with a lot of potential add-ons such as payment insurance, etc; do not expect them to invite you to explore other options outside the showroom. It is up to you to be informed. I am shopping now and have two pre-approved automotive lines of credit (loans) with a bank and a credit union from which to draw. I'm "armed" to counter/compare/shop the terms of my purchase.

Consider that a Mini (or any car for that matter) that costs $25,000, financed over 60 months at 3.35% will ultimately cost $28,818, or $3818 in interest alone. Finding a rate of 1.49% over the same term for the same amount will cost $27,515, putting $1,300 back in your pocket or cover the cost of a sunroof/climate control package.

 

Thanks for the post, I have yet to sign a contract. Is interest something I can fight? or negotiate? or am I stuck with the rate they give me?

 

Then DON'T. I'm no expert - but I would never sign any agreement unless I was crystal clear on precisely what I was getting into. Interest rate can be a significant part of that equation.

Shop rates like you shop cars. Check sites like Cars.com, Edmunds or just Google around for "car loan rates". Be skeptical, and research the reputation of your lender. It has always been my method to have my financing completely locked down before I even start to discuss price at the dealership. Can you fight or negotiate the rate? I can't answer that because I think each dealership is different, but I feel quite certain that the only likely way you'll negotiate a good rate with the showroom is if you have incentive for them to beat your pre-approval. Dealership financing always looks great until you read the fine print. I've always considered dealership financing. And yet I've never done it with any car I've ever purchased. When all was said and done, my credit union or bank always had the squarest deals. Read up on this very important subject!

 

Best rates are usually found at a local credit union, but not always. Banks have good rates if you have a very high (700+) credit score. The dealer has some good interest on models that may not be selling well. 60 month loans can vary widely, which changes your monthly payment, not to mention the total amount you pay. If you've orgered the car, you have a copy of the purchase order. Bring it to the bank and credit union and see what they will do. The dealer may have a better rate, but you won't know until you shop around.

 

If you have the $$ to do a one payment lease where you pay everything up front, that can save you a bunch of coin. That is my plan when I order my Paceman this fall.

 

Good advice so far thanks.

Also I want to know if the amount I put down affects the rate they give me?

Would a higher down payment decrease the APR?

 

Very possibly yes on both counts.

Whoever lends you the money wants to be sure their investment is protected. If you put 25% down and you default on the payments they repo the car, sell it and recoup there losses (and make a little profit for their trouble.)

Let me guess, you're kind of young aren't you? Keep asking questions and do your homework. Then do some footwork -- go around to the lenders in your area. Ally is an online bank that has good rates for those who qualify. If this is your 1st ever car loan, you are likely going to pay a higher rate due to your lack of credit history. If that is the case, most credit unions will allow you to refinance at a lower rate after 2 years of on-time payments.

Don't fall for high priced Gap Insurance or credit life. Both are rip-offs. The dealer makes money on those. Again, your local credit union has much better gap ins. rates and if you are young, regular term life ins. is cheap.

Good luck!

 

I ordered my 2013 a couple of weeks ago and the MA told me that they're currently offering a 2.9% APR on 2013s. I was told that if I apply for financing now and if the interest rate goes down anytime before I take delivery of my car, then I'll get the lower rate. Currently, 2012s can be had with a 0.9% APR for 36 months. The MA said that I'd be pre-approved if my credit score was 650 or higher.

Yeah, and they have a handy "monthly payment calculator" on their website.

 

Wonderful advice from the Rev! Here's another link that may help: http://www.autofinancing101.org/lear...uite/index.cfm

 

If you've got a great credit score PenFed is offering 1.49% APR on up to $20k/60months if you apply online. They are EXTREMELY picky though.

 

All great responses thank you for the help. Tomorrow I finally have a day off so I will be sure to find out about local credit unions I may have at my disposal and also contact a bank. I will also contact the dealership to see what they can offer me in terms of good APRs. I am young (23) but I do have good credit (760) and I do have credit cards and stuff so I should get good rates despite my age...

Again, all the links and comments much appreciated.

Also would appreciate if some people shared what APR they got on their 2013 MINIs.

 

Sure - PenFed 30k at 1.49% true APR x 60 months. I could pay off early with no penalty. Similar approval for 33k from USAA Savings Bank but the rates are a bit higher. I could also pay them off early but their shorter terms have lower rates I could not then take advantage of. USAA has an impeccable reputation and I carry credit cards, auto and property insurance through them. USAA rates start at 1.79 for 36 months but ramp up to something like 3.49 for 60. But I would trust a 3.49 from them over a lower dealership offer for fear of the fine print gotchas which I don't always trust myself to find. I did research on PenFed and feel good about them - with USAA as my safety. I don't know but walking into a dealership without those pre-approvals in my pocket feels a bIt like the financial equivalent of stepping out of the green zone without a flack jacket.

Every post to this thread that I've read has been solid, sage advice! Prepare, arm, engage and eNjOy!

Lee

 

760 is a great score, no matter what your age! Something that should be protected at all cost. Your credit score can also have an effect on how much you pay for car insurance. Also something you should shop around for. A last bit of advise -- if at all possible, pay off the loan as early as you can. Either by making extra principle only payments or by paying more each month than is due. The sooner you pay it off, the sooner you can begin looking at a JCW Roadster.

 

Thanks and yeah I do plan on paying it off a little early, but I want to build credit even more to put myself in a better position to eventually get my own house (couple years). Having a car loan can help show that I am responsible and bla bla so I have to keep it for a few years at least.

Roadster! haha...Maybe if I had a 2nd car...down the road...very down the road! haha only 23

 

So, you're saying that roadsters are only for old folks?

 

Has this happened to you or someone you know? What happened?

 

since you have great credit you should qualify for the 3% interest from bmw/mini financial. i was in the same boat as you last july. i was 23 and with great credit 750-760 trying to purchase a "new model year car" and they kept saying that since it was my first car purchase that i wouldnt qualify for anything special. but once they ran my credit they offered 3% on a 2012 and even 0% for the 2011. i put down 5k for mine, which from what im hearing from friends is a lot. that might have made them feel more secure

edit: and from what ive read about bmw finance, there wasnt any sort of shady fees or anything as long as you make payments on time, and theres no penalty if you pay it off early. ive heard some companies still charge interest on the initial principal regardless. but with bmw if you pay off early, it just takes it off the principal.

 

This is what I did. Check will be here tomorrow for a 2010 R55 I am getting. 1.49% @ 60 months for 17.3k is $299 a month. Even the local credit union was 1.99%...can't beat PenFed, great deals and great people.

 

Can you negotiate your interest rate at the dealer? Yes, you can. Most of the special finance rates offer by the dealer are provided by the manufacturer and, if you read the fine print, will say that the rate advertised is based on credit rating. You surely can ask for a lower than offered rate if it is not the 'special' rate being advertised. At banks or credit unions, I expect the rate you are given is the best you can get, but a little negotiating never hurts!

A tip on financing: set first payment up for 30 days out rather than 45. This will make a few dollars difference in your payment. Secondly, if you can set your payments up for bi-monthly, you will save both money and time as the loan will pay out quicker and you will pay less interest. If you get 60 months, paying bi-monthly (twice a month) will cut the payout time to about 50 months, give or take a couple, and save you the corresponding amount of interest.

Good luck!

 

And some financial institutions give 1/4 or 1/2% discount for payment taken directly from a checking or savings account.

 

Any thoughts on GAP insurance on a loan? USAA offers it for a $299 flat one-time fee. It actually looks like a good deal the more I think of new vehicle depreciation.

 

It all depends. Now if you are putting 25% down you don't need it. MINIs hold their walue so it is unlikely you would gain anything other than a false sense of security. Think of it this way, you drive off the lot and get hit broadside by an uninsured motorist you are out ost of that 25% you just put down.

I paid cash for my car but know that it lost 10% or more of its value the moment I started the engine so I carry replacement value insurance. It only costs a couple bucks a month.

 

Excellent thread.

USAA is great. We just refied the house with them. I'm checking to see if they sell the Total Loss Protection (TLP) (gap) insurance even if you don't use them for the auto loan (for next time). USAA doesn't seem to offer replacement value insurance its either fair market value or the full loan amount with TLP. We walked in the dealership door with the preapproved USAA offer. The dealer found a slightly better interest rate with our bank (B of A).

If I had to do it over I'd get the USAA gap insurance instead of the dealer's gap coverage. It would have saved us $500. Doh!!

Mom learned the hard way by not having gap insurance when her 325 got creamed.

I also hear Navy FCU is awesome too and has similar membership requirements to USAA.

- Edit
Response from USAA on adding TLP .
We offer Total Loss Protection as a safeguard to pay off your auto if it is damaged or stolen. If you owe more on your car loan than insurance will cover, Total Loss Protection can help. Because you already have a loan with us and Total Loss Protection is not included, you would need to apply to refinance your loan to receive it.

 

Only (gigantic) issue with PenFed and USAA is that you have to be somehow affiliated with the military (I am not)

I have called my bank and local credit union and the bank so far has the better rate. The credit union has a rate in between what the dealership gave me and what Chase offered.

Going to call soon to my MA and have a discussion about best APR he can offer me. If he doesn't have a better offer, I will just go with Chase...but what would be the best way to go about that? In regards to telling dealership that I will be taking out a loan with Chase rather than them