Dealership refusing outside financing - Is it common?

[TRD Pro or Die Trying]

So, I'll be meeting with the dealership to acquire my new TRD Pro in a few weeks. Beyond excited. I have a sizeable down payment (almost half the cost), but will be financing the rest. I have gone to a local credit union and have a letter of approval for a loan at 5.25% APR for the remaining balance. On the dealer website it says that their dealer rate is 7.94%. When I do the math, I would be saving over $3,000 over the course of the loan by financing. No brainer....go with the credit union.

But here's what I'm worried about. Through a little internet searching I've discovered that dealerships CAN legally refuse outside (credit union) financing and essentially force you to finance with them. Of course, you could just walk away but I'm not willing to do that. Worst case scenario is that the dealer refuses my outside financing, because they know they can because they can easily sell the TRD Pro tomorrow to 5 other people. So, I would take the dealer financing and then refinance to a lower rate a few weeks later.

My question to the forum members is.......has this ever happened to you or someone you know? Is it common for a dealer to refuse outside financing? Should this be a concern or am I just overthinking this? TIA.

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[Darkchief22]

Worst case scenario is accept their financing and immediately refinance but that is worst case. If you're getting a phenomenal deal, start with your financing and if they say no cash is king

 

[ricelX]

This was my situation, they happily took my money and matched my outside financing after looking up my banks rates.


No emotion, always walk away from a deal.

 

[TRD Pro or Die Trying]

This was my situation, they happily took my money and matched my outside financing after looking up my banks rates.


No emotion, always walk away from a deal.

That's what I hope they do for me. We'll see what happens.

 

[Everybodyduck]

They will accept your financing. They may or may not match it. The problem with your refinance option is paying two separate loan origination payments.

Short answer - You are overthinking it.

If they refuse 50% cash and don't allow you to provide your qualified lender for balance, then the Universe is telling you to sober up and get a Platinum!

Since it is unlikely you will come to your senses, I hope you get the best Pro ever built. You are going to love this truck, hybrid gen 6 is amazing.

 

[2222CareBearStare]

Your credit union may be able to just give you a check to take to the dealership for the amount you want financed. Then you can pay for the car with two checks (one from your credit union and one from you).

 

[bancroftdg]

This is what I did. Just make sure to get the amounts correct and the checks made out to the correct dealership name. I say this because my credit union made out the check to the overarching dealership name, in my case Imperial Autogroup, (they have Imperial Toyota, Imperial Ford etc) and it caused a bit of confusion when I gave them the check.

 

[HVLA]

This was my situation, they happily took my money and matched my outside financing after looking up my banks rates.


No emotion, always walk away from a deal.

I have done this the last 5 new vehicle purchases.
Preapproval through my credit union, who I trust. Dealer beats their rate. I immediately refinance at credit union who matches dealer rate. Easy.

 

[kgolive]

So, I'll be meeting with the dealership to acquire my new TRD Pro in a few weeks. Beyond excited. I have a sizeable down payment (almost half the cost), but will be financing the rest. I have gone to a local credit union and have a letter of approval for a loan at 5.25% APR for the remaining balance. On the dealer website it says that their dealer rate is 7.94%. When I do the math, I would be saving over $3,000 over the course of the loan by financing. No brainer....go with the credit union.

But here's what I'm worried about. Through a little internet searching I've discovered that dealerships CAN legally refuse outside (credit union) financing and essentially force you to finance with them. Of course, you could just walk away but I'm not willing to do that. Worst case scenario is that the dealer refuses my outside financing, because they know they can because they can easily sell the TRD Pro tomorrow to 5 other people. So, I would take the dealer financing and then refinance to a lower rate a few weeks later.

My question to the forum members is.......has this ever happened to you or someone you know? Is it common for a dealer to refuse outside financing? Should this be a concern or am I just overthinking this? TIA.

They can’t deny you from using your credit union. They give you an option contract that allows you so many days to provide the check.

 

[CyrusJones]

Just take their financing. It is easier for the purchase. Then refinance with your local Credit Union. Rates tend to be better.

 

[Everybodyduck]

Platinum/Pro or die trying. I know you are easily confused and influenced by the multiple opinions being posted. Take the best interest rate and terms for your circumstance at the time of purchase. Do not get yourself into a position where you pay for two origination loan fees. Aren't the loan origination fees roughly $1500 to $2000 a pop?

 

[Jakethewhippet1]

Your credit union may be able to just give you a check to take to the dealership for the amount you want financed. Then you can pay for the car with two checks (one from your credit union and one from you).

That's exactly what I did (actually one check from me, one from my credit union and my trade in). He did not question anything, if he did I would have walked. My credit union (Penfed) was 5.12% so it's worth it to go that route. If he gives you problems ask to speak to the GM.

 

[UOduck23]

I’d be mindful of simply refinancing the dealership loan as it is often simple interest as opposed to compound interest. The difference being that simple interest is calculated upfront and then folded into the loan whereas compound interest is calculated every month.

If I loan you $100 at 5% simple interest you owe me $105 regardless of when you pay me. Paying more each month or paying with a lump sum at any point just moves up the date of being paid off, it doesn’t save you any money. If I charge you compound interest then we figure out the interest month to month. Meaning, you could pay me back before the end of the terms of the loan and save interest. If you paid the $100 before the first month’s payment comes due, you wouldn’t be on the hook for any interest. This is how people pay off their home loans faster and save on interest. Compound vs simple interest. That’s the key difference.

Paying it off with your bank’s check can lead to you paying the bank’s compound interest on top of the interest Toyota has already billed you for.

If the dealership refuses to give you an options contract AND refuses to match your bank’s rate, consider taking out a loan at your bank and paying all cash at Toyota. Assuming the personal loan is better than what Toyota is offering, it would still be a win.

Just my two cents.

 

[Everybodyduck]

I’d be mindful of simply refinancing the dealership loan as it is often simple interest as opposed to compound interest. The difference being that simple interest is calculated upfront and then folded into the loan whereas compound interest is calculated every month.

If I loan you $100 at 5% simple interest you owe me $105 regardless of when you pay me. Paying more each month or paying with a lump sum at any point just moves up the date of being paid off, it doesn’t save you any money. If I charge you compound interest then we figure out the interest month to month. Meaning, you could pay me back before the end of the terms of the loan and save interest. If you paid the $100 before the first month’s payment comes due, you wouldn’t be on the hook for any interest. This is how people pay off their home loans faster and save on interest. Compound vs simple interest. That’s the key difference.

Paying it off with your bank’s check can lead to you paying the bank’s compound interest on top of the interest Toyota has already billed you for.

If the dealership refuses to give you an options contract AND refuses to match your bank’s rate, consider taking out a loan at your bank and paying all cash at Toyota. Assuming the personal loan is better than what Toyota is offering, it would still be a win.

Just my two cents.

I completed my undergrad at Oregon, class of '83. Seeing that UO23 brings a smile. The moniker "Everybodyduck" comes from the UO promotional campaign when Joey Harrington was ruling Autzen.

As to our Die Trying friends' situation, doesn't the lender charge a loan origination fee regardless of whether the loan terms are compound or simple interest?

 

[TRD Pro or Die Trying]

They will accept your financing. They may or may not match it. The problem with your refinance option is paying two separate loan origination payments.

Short answer - You are overthinking it.

If they refuse 50% cash and don't allow you to provide your qualified lender for balance, then the Universe is telling you to sober up and get a Platinum!

Since it is unlikely you will come to your senses, I hope you get the best Pro ever built. You are going to love this truck, hybrid gen 6 is amazing.

I don't know if everyone else is detecting it, but I think @Everybodyduck is hurting a little right now. When I was on 'Team Platinum' with him we were on good terms. But now that I've jumped ship to 'Team TRD Pro' I'm sensing some passive hostility. I believe I've hurt his heart!

@Everybodyduck , I hope you enjoy your fancy heads up display and rain sensing wipers while I will be crushing these technical trails down here in Orlando (elevation 112 feet) with my Fox QS3 shocks and my stabilizer disconnect function! #TRDProForever

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