I talk about interest rates on a daily basis and sometimes take for granted that everyone knows the ins and outs of Interest Rates, but I believe it deserves some discussion.
The first Interest Rate that I will discuss is Incentivize Interest Rates from Manufacturers. This is where the manufacturer gives you an Incentive to choose the Interest Rate while giving up something, usually a Rebate. For Instance, On GMC Sierra Trucks on this date has a $5000 Rebate with no other Incentives except for Employee Pricing. Now, you can take a 2.9% Incentivize Interest Rate, but you must give up $2000 of your Rebate. So, you can get 2.9% and $3000 Rebate and Employee Pricing or you can get the best Interest Rate that your credit will allow and $5000 Rebate and Employee Pricing. I know, it sounds complicated and it is no telling what they pay the person who designs these programs! Many ask, why can it not be a certain Interest Rate across the board on every vehicle on the lot? That is a good question, but you have to look at supplies on the ground, supplies at the factory, parts that are ready for assembly, supply chains, contracts with suppliers, and a huge range of other factors. It has to be a major task to determine what car, truck, or SUV must move this week compared to next week and so on. There are millions of dollars at stake to make sure all facets of the supply chain flow at the right times that are controlled by supply and demand.
Interest Rates are a big determining factor that will push a person to buy. When you go to the dealership and the salesman does not know the Interest Rates right now, do not think he or she is stupid. It is so complicated and there are so many different ways to figure your car loan that you must put in the VIN to the vehicle you wish to buy to make sure what Interest Rates and Rebates and Combo Deals are available on your selected vehicle. You would be surprised at the number of options you have and then Bonus Cash is thrown in during a promotion, not to mention Conquest, Owner Loyalty, etc. The best way to determine is to pick your vehicle of choice and let your dealer do a Vehicle Incentive Look up. If you have GM Points on a credit card make sure they are allowable on your vehicle of choice as well.
Incentivize Interest Rates are also available on select Certified Used Vehicles as well. With Certified Used Interest Rates, you do not lose anything accept the ability to go extended terms. Most Interest Rates on Used Vehicles is for 60 months maximum. There are times when you get a lower rate for going a shorter period of time.
The best way to make sure you are getting the best deal is to figure using the Incentivize Interest Rate or Low Rate giving up some Rebate and then check to see what Interest Rate you would receive based on your credit and keeping the entire rebate. Now, something I always stress to customers. If you trade often, like every 2 years or sooner, ALWAYS take the Rebate. Here is why. Even if you pay a little higher payment, you will be starting out with a lower financed balance. The $2000 extra rebate you get on the Sierra will be that much less that you owe in 2 years when you go to trade. The Interest Rate will be pro-rated and the unused portion will be deducted at time of trade in anyway. If you plan to keep the vehicle the full term of 60 months, check and see which is the lower payment. Of course, the lower the payment, the lower amount you will pay back in the end.
Any Interest Rate Questions, feel free to leave a comment under this post and I or my readers will explain further.
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