SE Toyota Financing

I financed my 2020 with Toyota Financial Services Canada. The loan is open ended and can be repaid in full at any time, we make accelerated payments all the time. On our 2nd vehicle (2021 Rav4) purchased and financed through TFSC, as a return customer we got 1.49% off the advertised rate which was a nice bonus.

 

‘Odds’…


you’re funny.

 

Ok, how about I can just about guarantee you based on personal experience that your price will be higher on a cash deal vs a dealer financed deal.

 

just some spitballing:

$40k x 2% = $800

$800 / 12 months = $67/mo

$67/mo x 5 years = ‘bout $4k


If anyone is stoopid enough to pay 10% over MSRP, that doesn’t need to, they deserve what they get.

 

When I picked up my Tacoma Sport 4x4 Monday the dealer had 1 tacoma on the lot, it might have been used? No sticker on bed so I do not know what package it was..They were the only dealer I talked to that did not have the market value up charge. It is a terrible time to buy a truck. When I bought my Rav4 Adventure from them in June of 2019 their lot was full of trucks and cars.. Traded the Adventure in on new Tacoma..it went right onto the lot the next morning. I financed with SETF 2.23 %. I used SETF on the Adventure back in 2019. No problems with them, I had auto pay. But also made extra payments to pay loan off in 31 months.

 

Your math is off... it would be half that in interest (2K). The average stock market return over the last 100 years has been 10% per year. You'd be better off taking the loan and investing in the market.

 

Ok sure, whatever, I don’t agree, but fine so anyone who pays 5% over MSRP is a tool.

Also you’ve changed the argument to the false equivalency of investment value - completely different argument than that originally posited, which was that a loan gets you a better price.

 

The math is off because the balance/principle of the loan does not stay at $40k the entire time. As the balance goes down, the amount of interest you pay goes down. Sure, you start at $40k, but in 2 yrs you could be down to $30k, or less. In 4yrs it could be $15k, or less.

The total amount of interest paid, if he did pay on time, every time for 60 months would be around $2200-2300.

 

Your logic is right it's just your numbers are a bit off, because as your balance goes down so does the amount of monthly interest, so it's not quite as bad as $4k. But you are right, there is a cost to financing a vehicle, and that cost goes up the longer you finance for.

That said, when I bought my truck last May I got a $2,500 better deal on the price by letting the dealer place my loan which I then refinanced a couple of months later for a better rate. Also remember that not everyone has $40k to plunk down on a car, myself included.

 

That math is not off for true simple interest, if the buyer only pay the exact amount for 60 months. That is why most people suggest to take dealer finance and paid it off early or refi.
Also the same reason that dealer want buyer to finance vs cash. Cash was king when they want the money now, but now they want more money over a longer period of time.

 

Sooooo…..


You saved the interest. woohoo.

 

Yes, but the dealer also know that he is not getting a portion of that interest and so he is less likely to give buyer a big mark down from MSRP.

 

The dealer doesn't get the interest. The lender does. The dealer originates the contract then sells the contract to the lender, for which they get a fee, the amount of which depends on the interest rate on the contract.

 

yes, I meant to say they get an incentive or kickback, either way they make more money pushing loans.
So, dealer want more money out of us, and we want to paid less money.
We are just basically talking how to pay less to dealer/loan service.

 

I was in and out in 15minutes and they added the tinted glass pass through I wanted….

still running just fine, 80K miles, no payment going on 7years now.

 

I didn't change anything. There's two main reasons paying cash doesn't make sense with low rates. You can typically get a better price on the car if you take out a loan. If you have the money to pay cash you can invest it instead and beat the interest rate you're paying on the loan. I don't care what you do with your money but taking a loan (from the dealer) typically can net you a lower price.

 

That is certainly true, 7 years ago. I have gone thru 3 cars (1 for my wife) purchase since then.
Things have change since ...

 

Cool, as long as you're happy that's what matters. You do you

 

Again, you’re conflating interest with price, two completely different things, and speculating about a better deal on price, with nothing but your opinion about ‘typically’…

 

Maybe you miss my point:

•cash SAVED me about 3% of MSRP
•for the life of a 5yr loan, one would be paying 5-10% OVER MSRP

that is an 8-13% SWING…


just about in-line with the magic of the S&P that I’m supposed to be chasing instead.