I have a question about financing: given that the Prius purchase price is fixed at MSRP, the traditional advantage of bank financing (negotiating as a cash buyer) is gone. However, since there's no shortage of demand for the Prius, the dealer also has no reason to give a low interest rate, removing the traditional advantage of dealer financing.<br><br>So what should I do? Can anyone offer any insights? This is my first new car, so I've never done this before.<br><br>Thanks in advance!

Low dealer rates are something they've usually negotiated in bulk before hand, so they'd probably give it to a Prius purchaser also. The problem is that they usually do these as special incentives on a month-by-month basis. Since you can't predict what the dealer's favorite incentive will be for the month your Prius is delivered, you'll just have to wait and see at the time which rate is lower, bank or dealer. Don't forget to check out your credit union. They often have a rate lower than the banks.<br><br>You should also seriously consider breaking the expensive bank loan habit. Buy a cheaper car than you can afford and keep it longer than you usually would. Put the extra that you would have paid to the bank into a savings account earmarked for your next car. If you get a raise in the meantime, don't forget to increase the amount you set aside for your next car. When your loan is paid off, put those monthly payments into your car account for the remainder of the time you own the first car. When it's finally really time to get a new car, the amount in your account will define the maximum you should spend on a new car. Keep building your account with monthly payments to keep the intrest free cycle going.<br><br>So this year, maybe an Echo instead of a Prius and in 8-10 years you can buy outright something really cool.<br><br>Good luck in any case.<br><br>Robert Snyder<br>NJ-PIKACHU<br><br>"The percent that you're paying is too high priced, and you're living beyond all your means. The man in the suit has just bought a new car from the profit he's made on your dreams!" - Traffic

I came in with financing already in hand, told the dealer my rate and he beat it.

&gt;&gt;Since you can't predict what the dealer's favorite incentive will be for the month your Prius is delivered, you'll just have to wait and see at the time which rate is lower, bank or dealer.&lt;&lt;<br><br>Yeah, but have you noticed the trend lately? Auto makers have put the focus on cheap financing for poorer gas mileage vehicles. This isn't TOTALLY true, but a nice generalization. I don't think Toyota is likely to offer incentive financing with the Prius since there's no chance of dealer overstock. <br><br>&gt;&gt;You should also seriously consider breaking the expensive bank loan habit&lt;&lt;<br><br>I don't know about that one. The dealership I'm planning to get a MY02 with has new car financing of 9.9%, except for the special financing deals. You can get 60mos @ 7.15% at peoplefirst.com. Internet loan? Why not! These guys have been doing this online for 5 or 6 years now...it must work for them pretty well!<br><br>Preston<br>The Time is Near!

I disagree with your statement about financing, evne if I could have paid the whole thing in cash i wouldn't of, with my auto loan at 6.6% I am easily earning more on the cash than it is costing me. While staying out of debt is an admirable thing, its not always the mos teconmically sound decision.

One thing to look out for with the internet loans is what state the loan is issued in as some have different consumer protection rules.

Do you own a home? A home equity line of credit is tax deductable. You are only required to pay the (tax deductable) interest each month and you have complete control over the amount of principal you pay.

Do you own a home? A home equity line of credit is tax deductable. You are only required to pay the (tax deductable) interest each month and you have complete control over the amount of principal you pay.<br><br>You should be able to get a loan at prime.

After looking around quite a bit (had to have something to do during the 2 month wait!), I found that a credit union provided the best loan rate (7% APR) and the easiest approval (24 hours) for me. <br><br>Another thing to consider, if you have a 401K retirement program where you work, is taking out a 401K loan against your retirement savings. Advantages are you pay YOURSELF the interest, back into your retirement account -- no banks get rich off you, and you're guaranteed instant approval (it's your money, after all!). Down sides are: a) you don't get as good an interest rate (8.25% for me), b) the money you take out stops earning interest, and c) you pay the money back in pre-taxed income. Plus d) if you leave the company the loan is immediatly due. Something to consider though, in some situations it might be the more cost-effective thing to do.<br><br>In my case I decided to go with the credit union. But it was WAY lower than what the dealer said they would do...<br><br>[Disclaimer: I'm not a financial advisor, and in fact my finances are usually a mess! So don't take my advice blind, do the research yourself. Best thing you can do is SHOP AROUND for financing!]<br><br>-DanC

We went in with pre-approval with a credit union and the dealer beat the price. They usually will. But make sure they beat it by 50 basis points.