SE Toyota Financing

Hey guys,

I ordered a 2022 Tacoma and it will get here tomorrow. I am pre approved through my credit union and called the dealership to get the purchase order bc that’s what the bank needed. The rep I talked too over the phone basically told me that if I didn’t finance through the dealership I’d have to pay 2000 dollars over the msrp due to the deal ships being one sourced through SE Toyota.. kinda weird I wasn’t ever told. Anyone know anything about this and whether it’s BS or not?

 

Exactly what I did. It's easy to refi.

 

I brought a check from my credit union after we had the price pretty close to figured out via text and email, and was going to use cash for whatever the fine details were. The dealer financing was better than my credit union so I went with them at 2% including the other incentive they had. Granted different times…

 

^^ This. Just read the SETF contract. I believe there is a prepayment fee of $75 or something similar if you pay off within 6 months. Not a big deal just make sure there is nothing else. I was able to negotiate a much better price last May when I bought my truck by letting the dealer place the financing with SETF. Refinanced with my credit union for a 1.6% lower rate, still got the price on the truck, and you get the last laugh because if you refinance right away they charge back the dealer for the $$ they made placing the deal

My wife's Prius, on the other hand, is with SETF at 0%, so they can keep that loan lol.

 

I've just used my credit union as a starting place to negotiate a rate. The last three times, the dealer actually beat it by 1/4% or other incentives.

 

Toyota Financial will pile in all that APR money into the loan. Doesn't matter if you pay it off in 6 years or 1 year that money is complied into the loan no matter what. They should have told you in the finance office at the dealership!

So now if you refinance through your CU you are going to be hit again with APR amount. Not sure if you're gonna win this one unless you just take the TFS deal at whatever % they gave you

 

APR (Annual Percentage Rate) is a calculated rate based on interest charged over the life of the loan plus anything legally considered a "pre-paid finance charge" (loan placement fees, etc). The interest over the life of the loan is the significantly larger component in that calculation. The interest component of APR won't be paid to the dealer's lender if you refinance. You will pay that to your new lender, hopefully at a lower rate. It's the prepaid finance charges like loan placement fees you won't get back. Those, however, are usually not a large amount of money, and if the rate you get from your new lender is a decent amount lower, you will still end up well ahead. My deal had $100 tacked on as a loan placement fee. It raised the APR calculation by 0.1% I got a LOT more off the price of the truck than that, and $100 didn't stop me from refinancing at a lower rate, especially when the credit union doesn't charge any fees.

I do agree that the dealer should have told the OP up front that their price was contingent upon financing with their captive lender, which in this case is SE Toyota Finance, not TFS. Buyers in the SE Toyota Distributor's territory don't have access to TFS.

 

Same here: Toyota finance rates were better than my credit union, but not by much. Still, telling them that I was pre-approved at my credit union got them to offer their best interest rate, which they don't always do if you walk in there and are a "lay-down". Invoke the spectre of you using your credit union as a tool to buying their financing favorably (because you are doing just that: you are first buying a car, then you are secondly buying a loan), but do it as late as possible in the sales negotiation. Inquire about ALL incentives early-on. Get them to show ALL their cards, not you. Once you have all the information, once YOU have controlled the sale (not them), THEN use the threat of going with your credit union as a tool to incent them to lower their interest rates. You first drive them as the dust before the wind on the truck deal, then casually mentioned your credit union while the salesman writes up his part of the paperwork. Say this at that point, "I need a copy of that to send to the credit union. Those are your costs of doing business, not mine." That's all it takes. He will put the Finance manager on notice when he walks his paperwork in there. I first got a significant discount on the truck, and later, zero percent interest on the Toyota Credit Corp loan.

I paid inventory fees and loan placement fees only once, for that first new truck after college. I've even had them delete the documentation fees a time or two. AFTER driving the price down on the vehicle as low as possible, these things are obvious ways they use to add additional profit dollars back to the transaction, more money out of your pocket. When the finance guy lights up the desk with the sales order/disclosure, just point to those things (along with the paint protection, etc) and say this, "No. Those are chickens you're going to have to pluck yourself. Those are your costs of doing business, not mine". If he balks (and he will), say nothing. Just sit there. Do not enter into a discussion about it with him. If you do not participate in his sales "judo" he cannot prevail. Then, get up and walk out. They are not going to lose a sale that they got as far as to go into the finance office. They will delete those charges. You just going to have to man-up and buy with your rational mind, not your emotional heart. Walk out. Say, " You know, I'm not sure I really need to buy a truck right now. Lemme' think about this..." as you leave. Play them like a fiddle. What that does is set the Sales manager against the Finance manager as he berates him for losing his sale, and either they'll give you a lower price on the truck to compensate, or Finance waives those charges. Net/net, you win. Done properly, you want them to never want to sell you a vehicle ever again. You want them to wonder as you drive off their lot in your new "stolen" truck, "Who was that guy?". Invoke here mental image of Clint Eastwood riding off into the mirage in High Plains Drifter. Done correctly, it is fun.

How did I learn this? I was once, for a very short time after retirement, and only long enough to get my Johnson outboard's powerhead replaced at employee pricing, a finance manager in the marine industry. Previous to that I had sold new cars in college, also for a short while. Both times included intense training for the jobs. That training is the best training a person could go through to become a very informed consumer. It allows you to know their job as well as they do, so that you can be always one step ahead of them. They know that they must sell you a car to retain their job and to feed their family, but you can walk out at any time and do not have to buy anything. YOU always retain the high ground, UNLESS you allow them to control the sale. Recommend to your kids that they sell cars for one summer after high school. My daughter did. She had a blast doing it. Your kids will become very astute consumers in those three months. Best gift you will ever give them, behind your love and guidance.

 

Today 4x4 Tacomas on the lot waiting for a buyer are scarce. Most are in transit and sold before they arrive, so the dealer could care less if you walk cuz somebody is in line right behind you. At least where I live.

 

What ever you do OP, don't listen to this guy. It's a loan, not a lease.

 

So is there a time limit after signing papers until you refinance so they don't lump that interest in?

 

Never said anything about lease. I have a 6 year loan for mine & if I pay it off in 4 years they don't pull that interest back out for a payoff amount. It's piled into the loan total & not pro rated back out so I was told by TFS

 

If you're talking about pre-payment penalties, it depends on the lender. If they have one it would be disclosed in the Truth In Lending disclosure you get when you sign for the loan. For example, SE Toyota Finance charges $75 if you pay off in the first 6 months. Not enough of a penalty to stop me from refinancing.

Interest is never "lumped in". The only up front charges you pay are the pre-paid finance charges I mentioned before, like a loan placement fee. Interest is a "pay as you go" type of proposition. It almost sounds like you're thinking about the old Rule of 78s type loans which do front-load interest. Those are very few and far between these days. I haven't seen a loan use a Rule of 78s calculation in decades. They were actually outlawed in 1992 for loans with terms over 61 months. The vast majority of auto loans these days are simple interest loans. If someone offers you a Rule of 78s loan, run!

 

Yeah, you are right. The dealers have the upper hand right now. But only right now. This too will pass. If you buy trucks with your brain and not your heart you don't buy one right now. Your fiduciary responsibility to your family and the older you requires that you wait a little longer.

You are correct there too. The truth is...regarding Tacomas, the current situation of there being somebody there to buy it if you don't, it has always been that way. Tacomas have never languished on the lot unsold! It has only now become that way for the rest of the vehicles. You are preaching to the choir: I started trying to buy a Tacoma, buy one right, favorable to me, in 2014. I only succeeded in October of 2018. I walked and they didn't care! But I finally found one that did and caved. Stay the course, buy with your mind, not emotionally with your heart.

 

I don't think you quite understand how a simple interest loan works. The interest isn't included in the loan balance when you open it, it's charged monthly based on the outstanding balance. There is nothing to back out.

https://www.creditkarma.com/auto/i/car-loans-interest

 

or…



pay ca$h.

 

You could, but odds are high your price for the vehicle would be higher (and we aren't just talking a few bucks higher) vs someone who uses the dealership's lender, because they aren't making money on placing the financing.

 

That is true, my dealer also use the term "Simple Interest", a mis-leading term, since the interest is calculated every month base on outstanding balance, it is in fact a conventional compound interest loan.
Today's dealers do NOT prefer cash, they want you to finance to make more money. It's better for you not to mention cash or use your own finance when negotiating.
My truck is thru TFS, no penalty for early pay-off.

 

Exactly. I financed my truck through US Bank. The dealership financed me because they were able to beat the APR that my bank offered me. I called US Bank a few weeks ago and they said that if I paid off the loan early, I would save money, because I won't pay those daily finance charges.

The loan balance when I started was just over $30k; because of that I was paying about...$1.25 - $1.36 per day on the loan. On Monday, I paid $10k towards the principle. Now I pay .80 - .82 cents per day on the loan. When the balance goes down, the amount of interest that I pay goes down.

Last year I paid about $490 in interest. This year, I'll pay about $200 less in interest.