I can get a decent loan rate through one of our credit unions. But I recently talked with someone who went through our dealer and the dealer came back with an interest rate that is lower than the credit union advertises. The thing is they got this rate through my credit union which is lower than the lowest rate advertised from my same credit union. Does the dealer get better deals than I would even though it's from the same credit union? Expecting to take delivery next week and want to get all this done (loan details, final price, etc.) before the car arrives so trying to find the lowest rate I can get.

 

Mini/BMW is not offering great rates for the CM because it's new and in demand. My dealer found a 3rd party lender who beat Mini's rate by 2.9%! Shop around, and don't pay that rate Mini is asking, you can do a lot better.

 

I had talk to three different lending institutions prior to picking up my CM last Friday. They were USBank, my Credit Union and the mini dealer. USBank and Mini told me the best interest rate they could offer was in the high 3% range (3.7%, 3.8% or something like that). In addition, from USBank, they wanted me to open a checking account, do direct deposit, get a credit or debit card and do automatic payments - all of those, not just 1 or 2.

I decided that I would go through my credit union who offered me 2.99%. Nealry a point difference and no hassle was enough for me to choose them.

When I asked my MA to send me the documents the credit union needed to process the loan he told me that he talked to the finance department and they would match the 2.99% even if they had to buy down the loan. All other parts of the loan were equal (term, no payoff penalty or balloon). Fine with me, even less hassle because I wouldn't have to make a special trip to the credit union to sign the loan papers.

When I went into sign for the loan with Mini the final rate was 2.89%, and it was with USBank. I about died since it was coming from a bank whose lowest rate was high and came with a lot of baggage. The finance manager just said they throw a lot of money at USBank and they can leverage interest rates more. Is that true? I don't know. I know there are a lot of funny things that go on that I don't know about, but I got a great rate with minimal hassle.

A lot of people in these forums know a lot more about buying cars and Minis than I do, but I do know that posts here are full of examples where Mini is doing things to sell the CM that we wouldn't expect them to do - like negotiating on price, etc. It seems the dealers can manage to do whatever they want to do.

 

It is true that if a dealer is sending a lot of business to a particular financial institution they can often get a significantly reduced rate, and they can pass that along to the buyer, if the customer's credit rating will support it.

Once you know the best rate you can get on your own, then just let the dealer's finance manager know what you can do and tell him/her you will finance it with them if they can offer you better terms. You have nothing to lose if they do or don't. It's not like home financing tho, there are no points to worry about paying, but you do have to pay attention to the terms, length of the loan, how much down, prepayment penalties, and so on....

Chances are the dealer can match or beat your terms if your credit's exemplary....

 

The way it was explained to me is, banks give dealerships a pool of preset auto loans at "usually" lower than normal interest rates, usually below the public set interest rates. The dealership will usually try and sell those loans at the public "going" rates, to make a profit. When they are desperate to get some of their loans purchased, they will lower the rate to meet or beat the potential customers pre-approved loan so they don't lose the financing aspect of the purchase and that way they keep the bank satisfied at the same time.

Also, loan rates can reflect what your credit score dictates but again, the dealership can modify the % to the lowest possible % that they were given from the bank, as long as the dealership doesn't give a low interest rate to a high risk customer.

 

Under 4% ?

Now I understand why Americans get their car on a payment-plan.
My mortgage is crazy-cheap at 3.65% for the country I live in. If I'd go for a car loan, percentages would start in the low sevens... 7,2-7,9% to be exact.

 

So our CM is supposed to hit the docks in Baltimore this Friday so I'm guessing we will take delivery mid to late next week. Should I go in now and work on getting the best interest rate and tell them I'm not paying any crazy "prep fees"? Could I lock in my rate now even though we probably won't take delivery until next week?

 

There's a simple answer to this. Financial institutions offer a "buy" rate on financing to the dealer. It is usually going to be less than what they would offer directly to a consumer, you might want to call it wholesale.
The dealer can then pass it on to you directly, or add whatever the market will bear and that is additional profit for them.
I've bought lots of cars, it's a weakness , and most of the time, I've gotten very competitive dealer arranged financing without having to threaten to take it elsewhere. A couple of times they have flat out told me they couldn't match what someone else was offering and I've gone outside.
Probably the weirdest one I remember was on my 2006 Porsche Cayman S (which I really, really regret selling in 2008). The lowest available rate was from a Credit Union I'd never even heard of, but it was arranged and set up by the finance director at the dealership. A week or so later I got a thank you letter from the CU for joining along with my statement which included the $1 savings account the dealer funded for me.

 

Don't tell them what you won't pay, rather ask them for a detailed list of all inceptions due at delivery (costs related to closing the deal). Review the list and see what is reasonable (state tax, tag fees, title etc) and what may not seem to be reasonable (doc fees in excess of $250 or whatever). This way you have something specific to negotiate and your expectations are set for delivery day.

If I were the dealer and you said you weren't going to pay any crazy prep fees, I would say" no problem". Crazy is in the eye of the beholder, you see.

Just ask for the detailed list. Don't let them lump it together, you want a detailed breakdown. If a description doesn't make sense, ask for an explanation. If they can't explain adequately, ask for it to be removed. All they can say is no. But be reasonable and stay calm. Most dealers are good business people and deserve the benefit of the doubt until proven otherwise.