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New Car Purchase - Bank Loc Or Car Dealer Financing


anxious_101

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I need a new car as I start residency soon. After a lot of issues with my used car that I got during medical school, I definitely want to buy a new car to last me through 5 years of residency with minimal headaches.

 

I'm wondering what you guys thought about buying the car using my 2.85% medical student LOC vs financing the vehicle through the dealer. The dealer financing options go for anywhere from 1.9%-3.9% depending on the length of the term. Is there more than just the interest rate number I should be thinking about?

 

Thanks in advance!

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Ask the car salesperson how much they will knock off the price of the car if you pay "cash" (which is the money you'll take from your LOC). Sometimes they won't budge on the car price if you are financing through them. However, if you aren't financing through them, they'll knock off a few thousand. You can then figure out which method allows you to pay less for the car overall. I hope that makes sense.

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Ask the car salesperson how much they will knock off the price of the car if you pay "cash" (which is the money you'll take from your LOC). Sometimes they won't budge on the car price if you are financing through them. However, if you aren't financing through them, they'll knock off a few thousand. You can then figure out which method allows you to pay less for the car overall. I hope that makes sense.

 

This sometimes works in reverse as well - you could pay less overall if you finance from them, as opposed to paying cash. The reason is that many dealerships get a kickback from the banks that they work with if they have x amount of sales financed through them, so they're eager to meet that quota and may offer a better deal to get you to choose financing. It's a bit tricky to play it this way though.

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This sometimes works in reverse as well - you could pay less overall if you finance from them, as opposed to paying cash. The reason is that many dealerships get a kickback from the banks that they work with if they have x amount of sales financed through them, so they're eager to meet that quota and may offer a better deal to get you to choose financing. It's a bit tricky to play it this way though.

 

you need the numbers. Bottom line - then it is just math time :)

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This is my least favorite time of the day.  :(

 

ha :) Nobody is bad at math so much as unpractised - and our school system does a really bad job of teaching it as well (by not focusing on anything important for most people, and instead dumping on things no one uses. This is coming from some that is really into math as well).

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ha :) Nobody is bad at math so much as unpractised - and our school system does a really bad job of teaching it as well (by not focusing on anything important for most people, and instead dumping on things no one uses. This is coming from some that is really into math as well).

Actually, I liked school math and physics, and I was good at it! That was fun.

 

I don't like real life math though. Excel spreadsheets about who owes who how much, fricking shoot me. But the worst is my arch nemesis: book-keeping. 

 

If you ask me, we should teach this sort of thing in school, over and above all the calculus and algebra, etc. I was good at that stuff and it was fun, but it sure didn't make real world math any easier. 

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Actually, I liked school math and physics, and I was good at it! That was fun.

 

I don't like real life math though. Excel spreadsheets about who owes who how much, fricking shoot me. But the worst is my arch nemesis: book-keeping. 

 

If you ask me, we should teach this sort of thing in school, over and above all the calculus and algebra, etc. I was good at that stuff and it was fun, but it sure didn't make real world math any easier. 

 

there is real power in knowing the "real world math" - one of the keys to understanding how money works, and how do to use it :)

 

I agree with the real world math needing a more important role. There should be a course in high schools called "Stuff you just gotta know 101", and it would include personal finance, mortgages, retirement, taxes, politics about things going on right now as opposed to who won what battle where 200 years ago, personal health, how to make a resume, cover letter, do a job search......

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Are you set on a particular vehicle? If you can wait, it could be well worth spending some time looking around for 0% interest deals. While you might not get as much movement on the price, it could work out to you saving more that wat than whatever cash price deal you can work out with them.

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there is real power in knowing the "real world math" - one of the keys to understanding how money works, and how do to use it :)

 

I agree with the real world math needing a more important role. There should be a course in high schools called "Stuff you just gotta know 101", and it would include personal finance, mortgages, retirement, taxes, politics about things going on right now as opposed to who won what battle where 200 years ago, personal health, how to make a resume, cover letter, do a job search......

I totally agree with this (it's hard not to). Also, book keeping and office management. These things are so easy to take for granted, until the day that you are in charge of it all. If we taught these things it would be much easier to start/run a business.

 

If we taught the personal finance etc., it could actually change the economy. 

 

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Anybody have any thoughts on what to do if you're still in medical school? I feel like the obvious answer is pay "cash" with loc because then you aren't paying dealer interest and line of credit interest. But if you pay cash with loc you are paying interest on the whole thing right from the start.

 

My finals week brain is having trouble with the math.

 

Also I'm not hugely worried about the impact on student loans because I'm not even eligible till next year, and then they'd only be interest free for 1 year before I'd pay them off with my loc anyways. And bc doesn't give grants.

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Anybody have any thoughts on what to do if you're still in medical school? I feel like the obvious answer is pay "cash" with loc because then you aren't paying dealer interest and line of credit interest. But if you pay cash with loc you are paying interest on the whole thing right from the start.

 

Isn't this the question the OP is asking? To use his 2.85% interest LOC or finance through the dealer for potentially lower?

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ha :) Nobody is bad at math so much as unpractised - and our school system does a really bad job of teaching it as well (by not focusing on anything important for most people, and instead dumping on things no one uses. This is coming from some that is really into math as well).

a patient in the clinic told me yesterday she was born in 1977, it took me a whole minute to figure out how old she was...

 

my first guess was 42 -.- 

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a patient in the clinic told me yesterday she was born in 1977, it took me a whole minute to figure out how old she was...

 

my first guess was 42 -.-

 

Bahaha. I would have gotten that right because that's my bf's year of birth, but everyone between the birth years of my parents and my close friends, I get lost.

 

It's funny, you need mental tricks to do this stuff in your head. Some are personal. I used to figure out what year something was by continuing to count years by grade level after high school. Like, "okay, I was in grade 10 when that happened, and now I'm in grade 17, so it was 7 years ago".

 

It would be good if people were encouraged to learn, invent, and practice mental math tricks during school. It's not always convenient to whip out a piece of paper. However, I've also l learned that people aren't going to judge you for taking a moment to even do the mental math out loud. Like how are you meant to immediately know that 1977 equals 37? You could say, "okay so that's 23 years to 2000 plus 15, so you turn 38 this year? ". I used to think everyone expected me to be Rain Man, but I don't think so anymore.

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Thanks for the advice guys. It looks like there's no incentive to buying cash vs. financing through them. So I'll just buy with little down and over a 60 month term so that it goes through residency. I know I pay more interest this way in the long run, but hopefully it lessens the dent on my finances during the residency years.

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