Saturday, April 18, 2009

New Car Loan Detail

We bough Gameboy's new Prius late last month. This week we got a new loan from a credit union. Why change loans after 3 weeks? A little thing called the interest rate.

When we sat down to do the financing at the dealership the first rate they told us was 7.99%. I looked at them like they had lost their mind. My auto credit score was low/mid 700's, his was upper 600's. In most of the places where we shopped the loan those rates put us in the first or second tier. We hemmed and hawed a bit. The finance guy magically came up with 5.74% from a bank they partner with. Because we had the option to shop the loan in the first 45 days (and I was driving 100 miles a day to get us both to work) we told them to start processing.

The next few days I called all of the banks/credit unions where we have accounts. We bank with a big bank, I have another account with a national bank, and I have two credit union accounts that I go back and forth about closing back home. One bank couldn't beat 5.74%, the other took 8 days to call me back. Both credit unions had rates just under 5%. We gave both permission to run our credit so we could get exact answers. The first offered 4.6%, which we were ok with. The second offered 4.4%, making us happier.

As we started the long distance paperwork I went to their website a lot. I'm bad at keeping track of phone numbers. On day 2 of the process their leading banner changed from something about college loans to new car loan rates for 'green cars.' I can't remember the last time I dialed that fast.

The final verdict: 4.15% interest with payments at $506. The difference in finance charge is ~$1,5oo. Not that we plan on having the loan for the full 60 months ;). We're thinking we'll get it knocked out in around 2.5 years.

In the future I'd shop the loans and get the better rate first, but if you have a loan with a crappy rate looking into refinancing with a credit union may be a good idea.

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