Toyota Financing - Pay whole balance first month?

If there is an early payoff penalty... run the other way! Only a shyster would penalize you for being a good steward of your finances. Never heard of an early payoff penalty for a car loan before.

 

It's not a joke and odds are they will never match, but should at least be fairly close. Each credit bureau has a bit different algorithm to calculate the score, so they will always be a bit off from each other. Also, each lender will use a score geared towards the risk factors they consider important. So, your score when you apply for an auto loan won't be the same as your score when you apply for a mortgage or a credit card. Another factor to consider is that not all creditors will report to all 3 credit bureaus, although most do. Lastly, there are some lenders who use FICO 8, FICO 9, and a few that use Vantage Score from Trans-Union. Keep in mind the majority of those free credit scores you get from your credit card companies and free credit monitoring like Credit Karma are Vantage Scores, which very few lenders actually use and are calculated completely differently than your FICO score. They are basically useless except for monitoring purposes.

 

ok, so I should run because of a $75 fee and lose a $1,500 discount off MSRP the dealer is giving me in additional incentives for placing the deal with SEFT? ummmm.....no. I knew that going in.

 

Ok, so there's a rare exception to the rule. Generally speaking... early payoff penalties are bullshit.

 

Thanks for the reply!

 

Why not let your cash do something for you? Keep the note, assuming you have a good rate, and go stick your cash in some ETFs or something. I'm sure you'll get more than your interest back.
Doug Demuro posted a great video about this.

 

Different vendors use different FICO scoring methods.

But I agree with your definition.

You can have a pile 'o bucks in the bank/invested/under your mattress, pay cash or use your CC like cash and have a lower score because you aren't making payments on something.

 

No kidding. When I paid off my wife’s car in CA the DMV released the lien and then assigned me as my own lien holder, even though there was no longer a loan. I didn’t find out until we had to get a duplicate title when our house was burglarized.
It took numerous trips to the DMV and the notary along with a $20 fee to release the lien from myself to myself.
Sorry for the hijack, OP pay it whenever you want.

 

The problem is they all call it ”your FICO Score”. It makes you think there is only one FICO Score when a person can have different scores dependent on who is scoring you. They should be more clear to people about it.

 

I would finance and then pay off immediately. The dealership will give you the cold shoulder if you pay in cash or mention that you will pay in cash.

They don't make any money from selling cars.

 

Most people are unaware that there are over 39 different FICO scoring models. FICO is actually the name of the company that provides scoring to credit bureaus and those reports (even though they are all generated by FICO) will have different scores. For example: You have mortgage FICO score, an Auto Loan FICO score, and of course multiple different scores depending on if the lender pulls an Experian, Equifax, or TransUnion.

For example, your FICO Score 8 will most likely be different than your FICO Vantage Score 3.0 since each model is slightly different in calculating late payments or some other aspect of your credit profile. Usually not a huge swing, but the numbers will most always be different.

 

I second this motion. This is exactly what I do. I have two car loans active right now and have taken the money I might have used to pay cash (and yes, I could have easily paid cash) and put those into dividend producing stocks, and, at the same time as producing 5-6 percent dividend, they've also increased in value at the same time. Of course there are stocks where you can make quite a bit more - something like Iron Mountain, where I do have a small position, it's just that those are riskier than more traditional securities like Seagate or AT&T. The bottom line is that in the last two years I've come very close to doubling my portfolio, which just shocks the hell out of me. Now it's time for some rebalancing. Ha.

 

LOL AT&T!

 

Actually, it's a good strategy. I always "let them charge higher interest" My credit score is in the 800s It's easier to negotiate the price of the vehicle when you make them think they are doing the financing.....then pay it off before the first payment.
It's smart if you negotiated a great price for the vehicle.
Paying the vehicle off in F and I just sets off alarm bells on the sales managers desk

 

Exactly! I did this with my 2018 4Runner. I however have yet to pay off my 2019 Tacoma as investments are getting a better return than the low loan rate.

 

Mine too but I keep it frozen, you’ll get to a place when it’s not worth the hassle to save a few hundred. I was out the door (T, T, & L included) for 10% under MSRP on the 2021 ORP just by emailing a couple Dealerships internet sales managers and pitting them against each other. And “providing my new own financing” of course.

 

So first question, why pay it off? Depending on the interest rate I just don't see a point.

I bought a 2019 Trd offroad in July 2019 for 42k OTD at 1.9%. At the time I sold another car private party for 24k. I could have easily paid cash, instead I put 5k down from savings and put the 24k from the other car I sold into a index fund, and it returned more moeny in the first year than the 1800 in interest I'd pay over 5 years for the truck loan.

A few other people have mentioned this, and I've seen people act like "paying things off is some kind of flex", when the reality is if your credit is good and interest cheap there's no reason to ever buy things with cash. I'd also throw "paying off a mortgage" into this, at a certain point.

 

When I bought my 2020 RAV4 they were offering a $500 rebate if I financed through Toyota.
I had planned to pay cash for the RAV. The salesman told me I needed to finance at least $5000 to get the rebate. He told me just to pay it off when my first payment was due which I did. There was a small amount of interest, about $25 I think, but no other charges.

 

I did this exact came thing when I bought my wife's Camry. I had to finance something like $7,500 to get the deal, so I financed that amount exactly
and paid the rest with a cashiers check. When my first payment came due, I paid the thing off.

I pay cash for all my cars, so I would do this in a heartbeat. I say go for it OP!

 

WOW, with all the cash paying Billionaires on the forum I am surprised Toyota makes any money on financing.