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Auto loan rate from banks? (BC)

2K views 6 replies 4 participants last post by  Tinfoil Hat 
#1 ·
Hi folks. BC question here.

Well, as you all know, I'm debating between a used car (Impreza) and a new car (Mazda 3).
However, when I was in TD Canada Trust, I checked out the rate thingy and it said that the rate for an auto loan was 8%...

I was like "EIGHT PERCENT?! At that right, I might as well get a new Mazda!" What's attractive about getting financing from Mazda is it's very low rates.

If most other banks and loan services will only give me 8% as their lowest, then I'll be looking at a new car for sure. And chances are that rates will NOT go any lower (the government has already lowered the rate to super low levels already) so... yeah...

Does anyone know if there banks are giving out loan rates for less than 8%?
 
#2 ·
Sorry, have to make a correction.
The 8% was actually just used a comparison sample rate, not an actual rate.

But how does one become eligible for prime rate... even from dealerships?
 
#5 ·
Money costs what money costs. If you want to get an idea of interests rates, then take a look at the prime rate. Prime is what banks will offer to their very best, usually corporate customers. Any time you see offers less than prime it means that someone in subsidizing the rate. In this case Mazda buys the rate down because they have an interest in seeing your ass in the seat of their car. A bank will not lose money offering you an artificially low rate for a car loan because there is no reason for them to. They are not in business to lose money. There is a difference between "Dealer financing" and "Factory financing". A dealer will buy the rate down out of the profit they make on the deal. That is why they will offer customers a choice sometimes between say $500 off or 2.9% but not both. Factory financing is a decision made at head office to subsidize the rate and therefore has nothing to do with your deal. It is the manufacturer rather than the dealer losing the money. If you have a chance to obtain factory financing at a great rate, take it. It is free money.
 
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