When was this? The best I could find over the past few days, online and from my dealer (I'm 43 and I have excellent, well-established credit, no late payments for over 10 years, etc.), is 5.29%. I got 4.79% on my FEH, last April, so I was assuming that rates have gone up a bit in the interim. But 4.85 sounds great - was that within the past month or so?

Oh, I am SO excited! My '06 Prius has actually arrived, and I'm going to pick it up tomorrown evening!!! Red, Grey interior, Package #5. And we're right in the middle of this great "warm snap" - so maybe I can get a good tank in before it gets cold again...

 

This is very good advice, and I agree with it all the way - in theory. But for those of us who are prone to impulse-purchasing vehicles (call it midlife crisis, if you want, this time - I'm 43, I guess that qualifies), it's easier said than done. In that case, I'd say, at least put together as much of a downpayment as you can, and shop aggressively for a good rate. Try e-loans and local credit unions, for starters. Tell the dealer that you can't afford it unless you can get x % or better - they sometimes have connections to certain banks or CUs and can get good deals. I've had luck through all of these methods. Of course, get and keep your credit good, and it will help more than anything.

 

Unfortunately, the money you have in a regular savings account at 4% is netting you 0% because an inflation rate of 4% is eating up your buying power....Banks take in your hard earned cash and lend it out at 7% for mortgages, car loans, etc and pay you only what the current rate of inflation is..... Banks are the only ones making any money. And to top it off, the fed takes 28% of your interest earned so you end up negative....

 

What's worse is they are allowed to lend out up to 10x the amount of savings they have in deposit, plus if the lent money is deposited into an account they can lend out 10x that too... It's a real mess because it inevitably bursts, but it keeps the economy expanding like cancer, and that's the local god of consumerism. In growth we trust.

 

I bought my Prius on 8/6/05, just 5 months ago. My credit union (GEICO Fed. Credit Union) is still giving a 3.99% on new cars and 4.99% on used for all members. The dealer I was purchasing from checked all lenders for the lowest rate available and it ended up being Suntrust, which beat my CU by 0.14% (I should have spotless credit and put 40% down), and it was less of a pain since my CU wouldn't work directly with the dealer. Toyota seems to have really crappy financing deals.

Good luck with your new car.

--
Hillary

 

Try to join a credit union. They tend to have the best interest rates. Liberty Toyota showed me a list of lenders and their interest rates. I was able to join Ent credit union because I'm a civilian employee of the DoD.

 

Sometimes. My CU (CFCU, formerly Cornell Federal Credit Union but now a state CU for some obscure reason) gives a .25% rate discount for loans on hybrids (cool, no? Gotta love Ithaca!), but was still higher than I found at e-loans, and from my dealer (don't know yet where he's getting the 5.29% rate).

 

Speaking from the 'Dark side', here is the basis for applying one rate over another in the F&I office. Most may be aware of this but for those just starting out..
To avoid lawsuits most large Finance companies and Banks have set up a 'tier system' based on your FICO score. There are some variations but in simple terms there are 5 tiers.
FICO score
> 730 Sign and Drive = superior credit
> 700 Tier 1 = top credit
> 660 Tier 2 = better than average
> 620 Tier 3 = average to worse than average
< 620 Tier 4 = all others, including first time buyers/no cosigner (FTB), those just out of bancruptcy (BK), those who dont take care of themselves financially, those with a ton of money and two tons of credit-most of it in use.

As the Tier goes higher so does the interest rate. Ask what your score is?

Often different lenders have different rates for the same Tier. We most often use TFS but equally often BBT, Chase, Local CU's, etc. if their rate beats Toyota's. Captive finance companies like TFS are banks but they are also arms of the Commercial Dept. That's why on difficult to move vehicles like the 4Runner now there are subsidized rates ( It's a commercial discount ) but on other vehicles like the Prius or Corolla or soon new Camry there is just the normal market rate.

Usually most captive Finance companies are roughly equal to most credit unions and below most banks on market rates. In the end the rates are influenced the Fed Reserves actions. Rates are inching up now over the last year or two.

 

Ok, too many financial topics to cover here. I don't have enough patience and I'm sure most of the rest of you don't have that much to spare to me either.

Many argue that reserve banking is a fraud. Ok, sure, it is a numbers game to have an entity take deposits and then lend out up to 90% (based on federal policies) of that deposit to somebody else with the purpose of making money and then returning some of those earnings to the original depositor for the courtesy of lending out their money. If the depositor and the bank were not getting paid to do this then nobody would participate in banking. If banks were not allowed to lend out the vast majority of their deposits banking would be difficult and few would even try to make it happen. If banks do not exist there is no liquidity in the market and as such your economy comes to a grinding halt. History proves that. Just take a look at the middle ages and you have your answer.

Let's look at it another way. Let's say that none of us has to borrow to buy a house or car, but individuals who want to pursue larger projects, such as opening a new business or expanding a business need money to do it, but don't have it. If there were no banks, then those individuals would have limited opportunities to find funds for expansion or progress. Sure, they could bring on extra owners (sell equity, stock market) however that dilutes the original owners stake and claim to the business. Lots of small business owners don't want to water down their interest in their organization, which is really their sweat, blood, tears and ideas. So, if bank's and lending do not exist, and there is only an equity market, these individuals are left with little opportunity to create or expand without loosing interest in their business. With no funds easily available for expansion or development business opportunities are reduced and the economy is stunted or non-functional.

Now let's look at the person who has some money. Without banking they have to hold their money in some item of value, be it government printed money (fiat money) or something precious (gold, silver, diamonds, wine, whatever) Not only is value in something precious hard to store, but its evaluation is always in flux and will be negotiated when traded. What if this person wants to do something with their wealth (in this instance wealth is used as a general term for any of their personal holdings, not the state of how much money they have). Since banks don't exist their only investment opportunities is whatever equity market there is out there, which means that they have to take their wealth and buy ownership of an organization. The problem with this is that the individual might not want to be an owner of an organization, or they might want a fixed return on their holdings rather than waiting to cash out in full at some point in time in the future. The equity market is not a place where guarantees regarding return are often offered. People who have wealth they wish to invest like to know up front what they will get for parting with their funds for a period of time. Companies that are looking for equity investors only want to commit to continued growth and stock value improvement. In general, they do not want to expose themselves to further expenses by taking on an investor who demands a fixed return each month or quarter, etc., regardless of the organizations performance or income seasonality. Once again there is a mis-match of needs here. Enter banking to solve this issue.

If there is anything certain about economies, vehicles are created to provide the right investment and funding options based on what people want to do. If our economy didn't need banking, there would be no banks. If our economy didn't need an equity trading market, there would be no stock exchanges. People create the vehicles necessary to acomplish a goal, and people choose vehicles based upon what they desire to do.

A true investor doesn't worry about inflation unless it is out of control. A true investor is concerned with their return and the preservation and growth of their principal. Money begat money. As such, a true investor is always retaining earned income to create investment principal and is always retaining investment income to create more investment principal. Sure, the investor invests for some end goal (major purchases, retirement), but until that goal is reached the investment should be earning an acceptable return, but it should continue to be fed more money from work earnings and investment earnings. It's like a sourdough starter, it has to be fed for it to stay alive and do its job. If an investment portfolio is established and all the income off from it is stripped and despensed with at every payment period the investment cannot grow, and then is affected by inflation and taxes in a huge manner.

I'm not discounting the fact that inflation has a negative effect on the earnings from all investment, I'm just trying to state that a reasonable investor has already considered inflation and has decided if the investments they are making will return to them an acceptable amount in spite of the effect of inflation.