Understanding Vehicle Pricing and Financing

Can I use bitcoin for buying a car?
While bitcoin and other digital currencies are gaining popularity, auto dealers and financing companies generally do not accept crypto. The reason is that crypto’s value can fluctuate dramatically in a short amount of time, leaving the dealer with a shortfall in payment if it declines. Customers are encouraged to convert their crypto into cash at their bank of choice.

Can I trade in my boat, RV, powersports vehicle or land/property on a vehicle?

Generally, dealerships only accept trade-ins for passenger vehicles, suv and trucks. Dealers are not equipped or trained to evaluate Boats, RV, personal motorsports and property and taking them on trade might pose a big risk should the resell able value be significantly lower than expected. That being said, it never hurts to ask if you have something of value that you are willing to trade for below market value.

My lease or loan is almost up. Can I get out of it early?

Depending on your remaining balance and the vehicle’s value, dealers can generally work a deal with your current lender to get you out of your vehicle a few months early. Some manufacturers even have additional incentives available for certain vehicles or additional trade-in cash which can be applied to your loan or lease balance.

What determines my interest rate on my loan?

Auto loans are generally based on the prime rate and then adjusted for credit risk. Banks and lenders evaluate risk based on factors like credit score, credit history, vehicle loan history, job history, income and other factors. Generally people with a lower credit risk get a lower rate and people with a higher risk have higher rates. Some manufacturers will “buy down” the interest rate if they want to sell more cars. This means they pay upfront to get a lower than market average interest rate. Or they might lower your rate if you are willing to forgo a rebate or if you have bought from them before.  Interest rates are also usually lower for shorter terms. 36 month rates are lower than 84 month rates because the longer the loan the greater the risk the loan won’t be repaid.

Should I get gap insurance?

If the amount you are borrowing for a vehicle is greater than the amount the insurance company will pay for your vehicle if it becomes damaged or totaled, yes you should get Gap insurance. Especially if you might have trouble coming up with the difference between the settlement amount and the amount you owe. Insurance companies usually pay what is called ACV or actual cash value. The moment you drive your vehicle off the lot, its value drops. If you do not have a trade in or decent down payment when purchasing your vehicle, its ACV might actually be lower than what you owe- meaning you would need to cover the difference. If you drive lots of miles annually it will also lower your vehicles value faster.

Why should I trade in my vehicle at the dealership?

In most states like Texas, when you trade-in your old vehicle at the dealership, the amount paid will be deducted from the vehicle selling price which lowers the taxable amount of your new vehicle. So in many cases its advantageous to you to trade in your vehicle even if you could sell it yourself for a higher price in the open market. You also avoid the hassles of listing your vehicle, fielding tire kickers, low ball offers and sketchy meet ups. Be advised that dealerships are required to sell vehicles that are in good mechanical condition and that can pass inspection. For example: if your tires are bald they will factor that in to your trade-in value. Other factors in determining your trade in value are mechanical performance, number of miles, paint and body condition, market demand,  and vehicle history. So that lime green color that was really cool 5 years ago might not be in high demand today. If you’d like more information about Toyotas in Early TX or check out our online inventory.

Tags: dealer cost, finance department, invoice, msrp, vehicle financing
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