REVscene - Vancouver Automotive Forum

mr_chin · 10-31-2009, 03:58 PM

I'm thinking about buying a used car from a dealership. What kind of fees do they charge you? And which ones are the non-legitimate ones?

And if I see fees that are non-legitimate, should I just walk out?

ajax · 10-31-2009, 04:31 PM

Can you find a similar one private sale? You'll save alot on taxes that way.

mr_chin · 10-31-2009, 05:01 PM

Quote:

Originally Posted by ajax

Can you find a similar one private sale? You'll save alot on taxes that way.

If I go private sale, I have to get a loan from my bank.
If I go dealership sale, I have to get them to finance me.

This would be totally off topic, but which one would be easier?

mickz · 10-31-2009, 06:12 PM

It's not worth it to finance a used car from the dealer, the interest rates are too high.

fliptuner · 10-31-2009, 06:58 PM

Used car lots just rape you on financing.

If you can get approved by your bank and buy private, you'll save on taxes, admin fees and interest.

mr_chin · 10-31-2009, 06:59 PM

Quote:

Originally Posted by mickz

It's not worth it to finance a used car from the dealer, the interest rates are too high.

What are some other options then? I was thinking of getting a 06 acura TL. I'm done with buying old ass beaters from private sellers. The things I go through with these beaters is never ending.

mr_chin · 10-31-2009, 07:00 PM

Quote:

Originally Posted by fliptuner

Used car lots just rape you on financing.

If you can get approved by your bank and buy private, you'll save on taxes, admin fees and interest.

Even the reputable dealerships? Like carter honda, burrard acura?

Qmx323 · 11-01-2009, 12:18 AM

Quote:

Originally Posted by aznlangjai

Even the reputable dealerships? Like carter honda, burrard acura?

mmmhmmm, interest rates on used cars are always a bit higher than new cars, some are WAY higher (insert "NO SHIT SHERLOCK" PIC). not worth financing through dealership.

falcon · 11-01-2009, 07:07 PM

Used car lots use roach financing. Stay away. I would ONLY get financing from a dealership if they are a new car dealer selling used cars (usually trade-ins) as well. They have much better finance institution options, usually manufacturer backed financing instead of bank financing.

Your other option is to go to your bank and get either a credit line or have them finance you a "personal loan." Don't apply for a car loan, as you will have a better chance they will give it to you and your loan will not be linked to your car incase anything goes south.

As for fees, I sell motorcycles and the only fee we have on used bikes is labeled as "doc" but it merely covers our dec/lean searches and the F&I managers time if you're financing.

But the bike industry is a lot different than cars, so that's all I can say on the subject.

falcon · 11-01-2009, 07:08 PM

Quote:

Originally Posted by aznlangjai

Even the reputable dealerships? Like carter honda, burrard acura?

Read my above post.

kluk · 11-01-2009, 08:32 PM

i'm in the same boat as OP. At first i was thinking of getting a car at a used car dealership but when i found out they charge a 9% interest rate i shat myself. So now im just looking through the forum/craigslist etc to find a better deal. I'm looking for a g35 coupe btw.

oldsnail · 11-01-2009, 09:55 PM

dealers will charge you full tax and DOCUMENT fees (~500) + your basic insurance
private is just one tax + your basic insurance

Rich Sandor · 11-01-2009, 10:13 PM

Okay I work at a dealer (a Ford store) so I'll try to set the record straight:

Interest rates:
"New" cars often have 'subvented' interest rates offered by the manufacturer. It could be anywhere from 0% to 8%.

"Used" cars are always 'bank rate', which means a 3rd party bank (TD, BMO, CIBC, Scotia, Credit Union, etc,) will offer rates BASED ON YOUR CREDIT HISTORY.

(Some used cars are 'certified pre-owned' by the manufacturer, in which case they may have 'subvented' rates on them. However, you usually over-pay for 'certified' cars, so it's a wash)

Now, some people have shitty credit, and even at the bank they cannot get better than 8%. So let's say Ford is offering 6.99% on an Escape. If you have no credit or bad credit and the banks won't loan you money for less than 8.99%, then suddenly that 6.99% is a better deal.

The other thing is that if you walk into a bank, you only deal with THAT BANK, and there is no competition. For most dealers, they do the credit app online and ALL the banks come back with their offers based on your credit instantly if you have good credit, or if you have credit issues, within a few hours. The best I've seen is 6.5% on a used car through one of the banks, and I think 25% is the legal limit.

If you have exceedingly good credit and good income, you can probably get a line of credit or special interest rate from your bank between 2% and 4% - however you must be careful of the term, and whether or not the rate is fixed. Sometimes it's only 4% for the first few months then it increases to 8% after that, etc etc, until you pay it off.

Fees and Taxes:
Fees are only illegal if they are not disclosed to the buyer until the final bill of sale is being signed. In BC, all dealerships are supposed to list their doc fee or admin fee in their advertisements. (usually in the small print) Most dealerships have all fees listed on their 'rough' write-up deal sheets.

(for example, our dealership has a $495 doc/admin fee which we disclose as soon as we start talking about price, fees & taxes, and it applies to new and used cars. That is 100% legal. These fees may vary from $0 to $900+)

In BC, only 'new' cars get hit with the $100 a/c tax, $5 battery levy, and $5 per tire levies. These are 'MANDATORY' fees that all dealers must charge.

However, whenever you buy a car from a dealership, you must pay both GST and PST, regardless of whether it's a new or used car.

I hope that helps.

bcrdukes · 11-01-2009, 10:55 PM

I bought my very first car (1988 Toyota MR2 Supercharged) by taking a small loan out from the bank ($2500) and at the time I did this, it was a good way to build some credit and have never regret it. The process was fairly simple and no different from I would assume with the dealership.

I can't say that I have experience in buying a car from a dealership unfortunately.

tofu1413 · 11-01-2009, 11:32 PM

hmm.. so it is recommended to loan it as a personal loan to buy an used car rather than loaning as a "car loan"..?

im having a similar situation on my mind right now too.. the car isnt to expensive ($6000 or so )

so fees (500), taxes (600+) so i should lend out about 7k as a personal loan..?

Gt-R R34 · 11-01-2009, 11:33 PM

Legal limit is 23% - the rates is based on credit, but hopefully the people that are purchasing are fully aware that your BUSINESS RELATIONSHIP with your bank will always get you a better rate then the rate dealerships send out and ask for from banks. There isn't any relationship between each other.

Hence why people here are telling the OP to go to your own bank, borrow. THEN buy a car.

if you think about it 8% is steep in a market which is Prime @ 2.25. Even with awful credit most banks only go up around P+5, anything higher. OP getting hosed.

mgarba · 11-02-2009, 03:31 PM

OP I'm in the same boat as you.

I make good money, but since I'm only 24, my credit history isn't long enough (only one $5000 loan which is paid off when I was younger, and I own a $5000 credit card).

I'm in the market to buy a new car, but my bank turned me down, so I'm saving up a little extra to put a down payment and apply for a loan once again.

I was looking at a car @ Pan Pacific Nissan, for a 2005 Maxima, guess what rate I was offered? Car = $17,000 the rate I was offered was 18.5%. My jaw dropped, on the term that would equate to about $10K in interest.

One top of that they had added an extra $1700 in MISC Fees that had nothing to do with paperwork or anything else.

I walked away from the deal, they subsequently continued to email and call me with an offer to bump the rate down to 14.5%, give me a damn break. The rate is way too high, and second $1,700 in fees is highway robbery.

Always read everything these dealerships put in front of you.

I would suggest saving up $2000 and having that as a downpayment on your car when applying for a loan, let the bank know you have that down payment as well in order to get a better rate.

shenmecar · 11-02-2009, 04:00 PM

Quote:

Originally Posted by tofu1413

hmm.. so it is recommended to loan it as a personal loan to buy an used car rather than loaning as a "car loan"..?

im having a similar situation on my mind right now too.. the car isnt to expensive ($6000 or so )

so fees (500), taxes (600+) so i should lend out about 7k as a personal loan..?

you should "borrow" not "lend"

bcrdukes · 11-02-2009, 04:17 PM

Quote:

Originally Posted by tofu1413

hmm.. so it is recommended to loan it as a personal loan to buy an used car rather than loaning as a "car loan"..?

im having a similar situation on my mind right now too.. the car isnt to expensive ($6000 or so )

so fees (500), taxes (600+) so i should lend out about 7k as a personal loan..?

Certain banks offer a "car loan" and what they do is put a lein on the vehicle, meaning if something happens, for example, job loss or you decided to just take off one day, the bank will reposes the vehicle. They will ask for registration papers to make sure they have the VIN anad also, prior to the loan being approved, there is a team of analysts who will do market and risk research on the vehicle prior to approving the loan.

If for example, the OP changes his mind and wants to buy a 1989 Civic DX for $24,000 (this is a very unrealistic and exaggerated example) the bank is likely going to say no to you. However in the OP's case, they will see that he wants an 06 Acura TL and the market rate is about $26K, they will also factor in the term of your loan and consider things like repairs/maintenance and depreciation. Banks like to protect themselves too.

Edit: Don't forget that there's interest too.

TheSalesman11 · 11-03-2009, 01:26 AM

where do you guys get the 500 for a fee?
my dealership charges 300 doc fee on used cars.
financing rate depends on how much you finance. It also depends on your credit. The shittier your credit, the higher the interest rate.

kluk · 11-03-2009, 08:59 AM

im planning to get a used g35 through a private sale and i'm able to put out $9000 as the partial payment and borrow the rest. (so im going to borrow about $8000 from my bank.) Now i'm just a student and pretty much have no credit history. But since i'm forking out $9000 will the bank be able to approve me on the loan or will i have to get someone aka my parents or brother to co-sign for me? I'm a uni student, work 20-25hours a week and that's pretty much where my income is coming from. Since its not a full time job will they just say no on the 8k loan?

Any help would be much appreciated

Rich Sandor · 11-03-2009, 09:04 AM

Putting big money down helps a lot. They will look at your debt:service ratio. (meaning, if your income is $100 per month and your loan payment is $250 per month - you AIN'T getting the loan.)

kluk · 11-03-2009, 09:12 AM

^ in that case i think i'm fine? With the PT job i probs make 1200$ a month. Seeing that the loan payment would be between 200-300 a month + insurance etc. Does it matter if its a part time job ( if i get fired or something since part times are usually not stabilized)

but yeah i guess i should just set up an appointment with someone at my branch

mr_chin · 11-04-2009, 06:43 PM

Quote:

Originally Posted by Rich Sandor

Okay I work at a dealer (a Ford store) so I'll try to set the record straight:

Interest rates:
"New" cars often have 'subvented' interest rates offered by the manufacturer. It could be anywhere from 0% to 8%.

"Used" cars are always 'bank rate', which means a 3rd party bank (TD, BMO, CIBC, Scotia, Credit Union, etc,) will offer rates BASED ON YOUR CREDIT HISTORY.

(Some used cars are 'certified pre-owned' by the manufacturer, in which case they may have 'subvented' rates on them. However, you usually over-pay for 'certified' cars, so it's a wash)

Now, some people have shitty credit, and even at the bank they cannot get better than 8%. So let's say Ford is offering 6.99% on an Escape. If you have no credit or bad credit and the banks won't loan you money for less than 8.99%, then suddenly that 6.99% is a better deal.

The other thing is that if you walk into a bank, you only deal with THAT BANK, and there is no competition. For most dealers, they do the credit app online and ALL the banks come back with their offers based on your credit instantly if you have good credit, or if you have credit issues, within a few hours. The best I've seen is 6.5% on a used car through one of the banks, and I think 25% is the legal limit.

If you have exceedingly good credit and good income, you can probably get a line of credit or special interest rate from your bank between 2% and 4% - however you must be careful of the term, and whether or not the rate is fixed. Sometimes it's only 4% for the first few months then it increases to 8% after that, etc etc, until you pay it off.

Fees and Taxes:
Fees are only illegal if they are not disclosed to the buyer until the final bill of sale is being signed. In BC, all dealerships are supposed to list their doc fee or admin fee in their advertisements. (usually in the small print) Most dealerships have all fees listed on their 'rough' write-up deal sheets.

(for example, our dealership has a $495 doc/admin fee which we disclose as soon as we start talking about price, fees & taxes, and it applies to new and used cars. That is 100% legal. These fees may vary from $0 to $900+)

In BC, only 'new' cars get hit with the $100 a/c tax, $5 battery levy, and $5 per tire levies. These are 'MANDATORY' fees that all dealers must charge.

However, whenever you buy a car from a dealership, you must pay both GST and PST, regardless of whether it's a new or used car.

I hope that helps.

Wow, that is some good info.

I will assume I have pretty bad credit right now, maybe below the 500 rating.

How likely will my bank loan me money for a car without down payment? Do they look at my credit history? Or my bank account history. Over the course of the past 6 months, I've made over $10k and have been direct depositing it in my account by my employer.

And on a side note, wouldn't a car loan be easier to get approved than a personal loan since the bank is able to repo your car if anything goes wrong?