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tips for financing new allocated Tacoma?

Discussion in '3rd Gen. Tacomas (2016-2023)' started by withfilm, Apr 28, 2022.

  1. Apr 29, 2022 at 3:33 AM
    #41
    85GT 79FJ40

    85GT 79FJ40 Well-Known Member

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    If you're a member of a credit union chances are they will beat Toyotas rate. I financed my previous 4Runner through Toyota as it was a CPO and it was a 2011 I bought in 2019. So it was considered older. My credit union wouldn't touch it. But the Tacoma I went through my credit union. 5 year old truck 1.7% loan. This was 3 months ago. But I also have excellent credit and have been a member for a few years.

    And I wouldn't buy accessories at the dealer. SO many other places to get them. I actually bought a tri fold soft cover on Amazon that was like $229 or something. It's a brand I have never heard of but it works great. Bought a factory bed mat there too. And got the factory bed light kit off ebay. And a lot of other stuff. This site will make you discover there are things out there for your truck that you never even knew about. But boy do you want them! I'll be amazed if mine isn't lifted within the next six months.... Trying to resist the temptation as I have a few thousand left to spend on my other car project and I'm remodeling my house.
     
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  2. Apr 29, 2022 at 4:39 AM
    #42
    FL_TRD Sport

    FL_TRD Sport Suffering from Severe Wallet Drain

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    Yes, there will be separate lines for each inquiry on your credit report but as long as they are run within the specified time frame for the model they only count against your score as one inquiry. You can expect your score to drop about 5 points from a hard inquiry, but the more time goes by the less it affects your score. They stay on for 2 years.
     
  3. Apr 29, 2022 at 4:47 AM
    #43
    mykrowyre

    mykrowyre Well-Known Member

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    Always use your credit union first because you can finance for a longer term (84 months) if you need to.

    Then, at the dealership, give them a chance to see if they can beat the interest rate (they probably cant).

    The credit union emailed me a blank check for 50k that I just hand over to the dealer.

    it's only good for 30 days so make sure you have an ETA and give yourself some wiggle room in timing.
     
  4. Apr 29, 2022 at 5:06 AM
    #44
    TacoTime55

    TacoTime55 TT59

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    I was pre-approved for $50K for up to 60 months...fixed rate...no penalty for early payoff.

    I had a trade-in and put money down.

    I had a threshold of $40K MSRP and I found an Inbound Midnight Black TRD Sport for $38,803 which I'm glad I reserved almost a year ago!

    I waited two weeks and took possession of my Sport on Friday May 14, 2021!

    I'm happy with my 60 month loan at 1.8% APR that I can pay off early without penalty.
     
  5. Apr 29, 2022 at 5:27 AM
    #45
    TacoTime55

    TacoTime55 TT59

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    That scenario happened almost a year ago...but I still remember it vividly.

    We're credit card debt-free since last Jan so now I'm finding out paying off credit cards and keeping a zero balance works against you.

    So, activity/usage/carrying balance is all calculated. (Obvious Credit Process)

    It's interesting to watch how my credit score fluctuates even when I don't carry large balances or have a card with no activity.

    The whole process of calculating credit scores seems like a complex system.
     
  6. Apr 29, 2022 at 5:50 AM
    #46
    Cudgel

    Cudgel “Tonka”

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    Keys are rate vs cash flow and investment potential.

    If dealer gives you 0% than you finance the most you can at 0. This provides all three. Cash flow, no excess wasted interest and you preserve savings for investment.

    If you can’t get zero, find the best rate/fee (total cost of financing). Credit unions can be competitive and offer flex options like borrowing against yourself.

    Cash is king if you are not otherwise losing its investment potential. One strategy for cash is to pay ahead to an investment account until it has the capital you need, and then buy. This only takes a few years to accumulate and then you never have to pay interest again. (Remember cars are not investments).

    Net net, if you have to finance at all it is very important to look at retirement goals and budgets first and perhaps delay or downgrade the purchase.
     
  7. Apr 29, 2022 at 7:41 AM
    #47
    FL_TRD Sport

    FL_TRD Sport Suffering from Severe Wallet Drain

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    Yes sir, it is. The fun part is that your score will vary depending on the industry (a credit card score will be different from an auto loan score and will be be different from a mortgage score) and will even vary from lender to lender depending on the score calculation model they are using. To make things even more confusing, the credit score you most likely see on your credit monitoring service (VantageScore 3.0) is most likely not the score your lender is looking at (FICO 8 is the most popular) to make their decision on your application.
     
  8. Apr 29, 2022 at 8:30 AM
    #48
    TacoTime55

    TacoTime55 TT59

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    I have noticed major credit cards differ from say, Lowe's & Kohl's. Obviously, a mortgage is also treated differently.

    Toyota said I had a FICO score of 830 at the time and still THEY could not get below 3% APR with Toyota Financing.

    Maybe that's why they couldn't honor the $1K Toyota discount when they found out I was financing with someone else. They were only gonna honor $500 and wanted me to make up the difference. I ended up talking to the manager and they added the $500 to my trade-in.

    I bank with USAA and have been with them for 20+ years and of course have bundled coverage + credit card with them so that's probably why I got a 1.8% APR. (Plus my credit history with them)
     
  9. Apr 29, 2022 at 8:36 AM
    #49
    avn

    avn Well-Known Member

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    That’s a pretty good rate, if you let the dealer check your credit it’s gonna hit your credit score again. If you’re not buying anything that requires credit soon then it doesn’t matter but if you think you’ll need credit again I doubt Toyota financial services could do better. I could be wrong though and only you’d know if you are going to need your credit again soon.

    I had just refinanced my home and got a loan through my credit union so I don’t need my credit for quite a while, so I let Toyota check. They came back with an outrageous 6.5% when I already had been approved for a loan through my credit union at 2.69%.

    Good luck with your purchase man I hope it goes smoothly.
     
  10. Apr 29, 2022 at 8:43 AM
    #50
    TacoTime55

    TacoTime55 TT59

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    That's interesting.

    We refinanced our mortgage in Mar/Apr 2021 at 2.875% for 15 years. Did the Refi/Cash-out and remodeled our kitchen.

    I bought my TRD Sport the following month and still had a great FICO score.
     
  11. Apr 29, 2022 at 8:51 AM
    #51
    avn

    avn Well-Known Member

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    Yea we’re remodeling the entire place. My credit took an initial small hit, I doubt the amount it went down would matter enough unless you’re doing something like a refinance after you buy your vehicle. It was something to consider though especially since the guy got a pretty good rate through his credit union.
     
  12. Apr 29, 2022 at 8:53 AM
    #52
    Spare Parts

    Spare Parts Well-Known Member

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    I don't have time to read what everyone said, so if this a repeat sorry.

    First and foremost, do NOT do contact anyone or apply until you know the vehicle is at the dealership, you have a limited number of days to have multiple hard inquiries on your credit.
    Then, apply at your local credit union, bank and search online for places like lightstream (Check bankrate dot com). I am sure you could do the Toyota financing as well, just never tried to before. I have gotten rates on my last 2 financed deals that the dealership couldn't touch.

    But the most important advice I can give, apply for all the possible loans in the same couple of days.
     
  13. Apr 29, 2022 at 9:37 AM
    #53
    TacoTime55

    TacoTime55 TT59

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    Always start with the big purchase first.

    The mortgage was top priority!

    During the interim, I called my future vehicle purchase "Tacoma Time" to which my wife was annoyed by it.

    I ended up using that term (albeit abv. Taco) + my age as my username...boring I know but I'm not bothered.
     
    Last edited: Apr 29, 2022
  14. Apr 29, 2022 at 9:50 AM
    #54
    Winch

    Winch Well-Known Member

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    The dealer should give you the OTD cost and have you bank cut a check for that amount. It shouldn’t be a mystery.
     
  15. Apr 29, 2022 at 11:20 AM
    #55
    TacoTime55

    TacoTime55 TT59

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    In my situation, I walked in with my bank's loan document...it did not have the limit ($50K) the dealership finance department had to contact my bank to coordinate the OTD cost.

    Of course, I did not go over the limit as my threshold was $40K so it was an open check with $50K limit.

    EDIT: My wife says she doesn't even know how much I paid for my Taco. Maybe that's why she gets annoyed when I buy stuff for it.
     
    Last edited: Apr 29, 2022
  16. Apr 29, 2022 at 11:43 AM
    #56
    forana

    forana Well-Known Member

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    No money, all went to truck...
    1. Take the 2.9% loan.
    2. Purchase US treasury bond at 8% with money you would have put down or wanted to pay in cash.
    3. Enjoy the 5.1% you earned that you would not have if you paid cash or large down payment.

    I could have paid most of my truck in cash but I took a 2% loan and increased my retirement contributions.
     
  17. Apr 29, 2022 at 3:33 PM
    #57
    FL_TRD Sport

    FL_TRD Sport Suffering from Severe Wallet Drain

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    Let me know where I can get one of those at par and I'll be right there :)
     
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  18. Apr 29, 2022 at 3:51 PM
    #58
    forana

    forana Well-Known Member

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    No money, all went to truck...
  19. Apr 30, 2022 at 4:56 AM
    #59
    FL_TRD Sport

    FL_TRD Sport Suffering from Severe Wallet Drain

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    That's a great rate right now of course, but that rate is only good for 6 months, as the composite rate of return on an I-bond is based on the combination of the fixed rate and the annual inflation rate. That rate changes every 6 months, and the only reason the rate is so good is because inflation is high. Here is the current interest rate calculation from TreasuryDirect:

    The composite rate for I bonds issued from November 2021 through April 2022 is 7.12%
    Here's how we set that composite rate:
    Fixed rate
    0.00%
    Semiannual inflation rate
    3.56%
    Composite rate = [fixed rate + (2 x semiannual inflation rate) + (fixed rate x semiannual inflation rate)]
    [0.0000 + (2 x 0.0356) + (0.0000 x 0.0356)]
    Composite rate
    [0.0000 + 0.0712 + 0.0000000]
    Composite rate
    7.12%

    Note the fixed rate on these bonds is currently 0%, so the only reason you earn any interest at all is because of the inflation rate. Rates are due to change on Monday and will be set for another 6 months. The only thing that Treasury guarantees is that your rate will never fall below 0%, and the face value of the bond will never lose value. A year ago in May of 2021 the composite rate was 3.54% (0% fixed rate + 1.77% semi-annual inflation rate, annualized). Still not a bad rate at all when banks were paying below 1% on the average CD.

    I point this out only because people need to understand that there is a risk in the example you gave (take out a 2.9% auto loan instead of paying cash or large down payment). Taking out long term debt and using that money to buy a variable rate investment means you have a cost of funds fixed for 3-7 years against a rate of return that fluctuates every 6 months. Right now today, yes, that's a good deal given the interest rate spread of 4.22% (7.12% I bond composite rate - 2.9% cost of funds on auto loan), but if down the road they get a handle on inflation and inflation rates go back or close to where they were a year ago, your return will be cut dramatically because your cost of funds is fixed at 2.9%. The other thing people need to remember is that I-bonds are meant to be a long term investment, so it shouldn't be used for cash you need to access in the short term. You cannot cash in an I-bond until it's a least 1 year old, and if you cash it before it's 5 years old there is a penalty of 3 months' interest. If I had cash sitting in a savings account earning 0.1% or something similar I'd buy these without hesitation because you can't really do much worse and there is virtually no risk of loss of principal. I would not, however, take money at just under 3% for somewhere between 3 and 7 years to do this.
     
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  20. Apr 30, 2022 at 9:13 AM
    #60
    2021SR5V64WD

    2021SR5V64WD Well-Known Member

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    It's a grind. A long grind but anybody can do it. Wish someone had told me how to do this when I was in my 20's.
    As stated by someone else above: Roth 401K.

    Can't part ways with 10% of your pay?.... that's the big lie... yes you can.

    I'll prove it.
    On Monday morning count out $1.00 in change and put it in your pocket.
    Now take out a dime and toss it into back into a drawer.
    Monday night think back, did not having that dime wreck your day?

    So if your employer offers a Roth 401k get in NOW, at 10%.
    If you are in your 20's or 30's or 40's or 50's doesn't matter.
    Do it and don't look back.

    Standard 401k's are nice but remember, you'll pay taxes on that money when you take it out.
    No tax liability on the Roth ( or the earnings of the roth ).
     

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