DCU Approval - At what point do you inform the auto dealer?

[EW800]

I am considering a DCU auto loan at some point this year.  I assume that most auto dealerships are not particularly thrilled with people that already have financing arranged, since they make money on the loans.  If I am correct about this, is there a rule of thumb as to when it is best in the negotiations to reveal the fact that you already have financing taken care of and do not need their offers?  

Thank you!  

[BluePoodle]

I have wondering about this same question. 

[EddieK]

I had a DCU check in hand when I went to the dealership.  I mentioned it after I negotiated the price.

[EW800]

Thanks, Eddie.  I figured it would be best to pretty much saying nothing until we have a final price in hand.  

You mentioned that you had the DCU check in hand.  Since the final price is not known in advance, is it basically a blank check that you have in hand, filling it out when you know the final figure?

[EddieK]

No problem, you're welcome.  I had an idea of what amount I needed the check for so I asked for that amount on the check they overnighted to me.  It's a $15 fee to have a check overnighted and on the check it states "not valid for amount over XXXXXX"  and that amount is the amount that you requested.  Yes, you fill out the amount when you're in the finance office.

[Appleman]

I personally have no problem letting the salesman know that I have my financing in hand. This can do a few positive things for you. First you are now seen as a serious buyer who has the means to purchase right now. There is no real need for the salesman to see if they can get you 'qualified'. They will most certainly want to know your rate and terms but I let them know I would rather not share that information right now. Second, the dealer will need to give you a solid opening offer. If you have done your homework (KBB, Truprice, Cargurus and various forums) you should have a pretty good idea of what a 'reasonable' offer is for the vehicle you want to buy. Also (per car sales training videos) the sale is likely lost once the buyer leaves the lot. The mention from you that their price seems high and that you need to go check another dealer is likely to send the salesman running to his manager to 'see what they can do'.

Now if you have a trade, this is where the dealer truly has the upper hand. Here in Kansas if I trade a vehicle into the dealer I only pay sales tax on the difference between my purchase price and the trade value given. Say my trade is worth $20,000, @ 9.35% that would be $1,870 in tax savings I would get versus selling the trade myself. I also suggest if you have a trade, get Carmax to give you a buy offer. With this information in hand you know at minimum what your trade is worth. If you don't have a Carmax make sure you have at least two dealers run numbers for you as they can often be far apart price wise.

If you do decide to purchase you can allow the finance department to compete for you business. At this point it is up to you if you want to reveal your current financing terms. However, the dealer is only likely to beat your current numbers by .25 to .5 %. If you received the DCU best financing, the dealer will likely not be able to beat their rates unless there is 0% from the manufacturer.

Ultimately, the dealer is going to make money which is not a bad thing as they have bills and need to make a profit as well. And like the rest of you I want to be the buyer who is prepared and doesn't make all of the profit for the dealer that month.

If you have the time while researching your next car search for 'car sales training videos' or 'auto finance training videos'. It can be fairly enlightening when you start to understand front end profit, back end profit, and the many techniques that are used to sell you. At any rate good luck and let us know how the buying experience worked out for you.