# Car financing: Will this work? Is it ethical? **URL:** \ **Category:** In My Humble Opinion\ **Created:** [July 22, 2015, 9:01pm UTC](https://boards.straightdope.com/t/car-financing-will-this-work-is-it-ethical/725902 "2015-07-22T21:01:55Z")\ **Posts on this page:** 8\ **Page:** 2
**Author:** ![Joey\_P](https://avatars.discourse-cdn.com/v4/letter/j/919ad9/32.png) [@Joey\_P](https://boards.straightdope.com/u/Joey_P)\ **Post date:** [July 23, 2015, 4:29am UTC](https://boards.straightdope.com/t/car-financing-will-this-work-is-it-ethical/725902/21 "2015-07-23T04:29:14Z")
> [@Lightnin](#): > > We’re doing that right now. We got pre-approved for a vehicle loan through our credit union, then when we bought the car we got incentives (and a higher rate) through the dealer. Now that we’ve got the title, we’re refinancing through the credit union (and getting a lower rate). Dealers apparently don’t like it when you do it, but there’s nothing they can do. The bank you got the first loan through (that the dealer hooked you up with, even if it’s the manufacturer, like Ford Motor Credit or Honda Finance) might not like it but I can’t see why the dealer would care. Once you sign the papers it’s out of their hands, they don’t even own the car at that point. Honestly, the dealer won’t even know it happened. The only way I can see the dealer not liking it is if it’s a used car dealer and they work with a local bank and that local bank is getting annoyed with that dealer’s customers doing that all the time (originating a loan then paying it off a week later). But in both of those cases they dealer can try to come up with better finance deals to stop people from doing it. ---
**Author:** ![Lare](https://avatars.discourse-cdn.com/v4/letter/l/53a042/32.png) [@Lare](https://boards.straightdope.com/u/Lare)\ **Post date:** [July 23, 2015, 6:53am UTC](https://boards.straightdope.com/t/car-financing-will-this-work-is-it-ethical/725902/22 "2015-07-23T06:53:48Z")
> [@Joey\_P](#): > > Just to clarify, the OP wants to refi his house to pay off the auto loan. There will most likely be closing costs on _that_. Those costs will probably be more than $750. My bad. By “re-fi” I meant re-finance the car loan with a car loan. No way would I ever tie my home to a vehicle. Sorry I didn’t make the distinction. I see that others picked up on it, too, but I wanted to clarify. Did you have to wait to get the title, **Lightnin’?** ---
**Author:** ![Omar\_Little](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/omar_little/32/269_2.png) [@Omar\_Little](https://boards.straightdope.com/u/Omar_Little)\ **Post date:** [July 23, 2015, 11:59am UTC](https://boards.straightdope.com/t/car-financing-will-this-work-is-it-ethical/725902/23 "2015-07-23T11:59:10Z")
If you are paying cash, normally dealers will knock off more on the purchase price. I think Enipla said it also up thread. You could probably save more by negotiating a lower price on the car than doing these shenanigans with the finance side. ---
**Author:** ![kanicbird](https://avatars.discourse-cdn.com/v4/letter/k/5f8ce5/32.png) [@kanicbird](https://boards.straightdope.com/u/kanicbird)\ **Post date:** [July 23, 2015, 12:10pm UTC](https://boards.straightdope.com/t/car-financing-will-this-work-is-it-ethical/725902/24 "2015-07-23T12:10:38Z")
> [@Omar\_Little](#): > > If you are paying cash, normally dealers will knock off more on the purchase price. I think Enipla said it also up thread. You could probably save more by negotiating a lower price on the car than doing these shenanigans with the finance side. I’ve heard the opposite, to the point of taking the financing then paying it off the next day in full. Dealers get incentives to get people to finance the car. It does knock out one of the dealer’s tools for confusing the issue about price however. ---
**Author:** ![Tired\_and\_Cranky](https://avatars.discourse-cdn.com/v4/letter/t/a87d85/32.png) [@Tired\_and\_Cranky](https://boards.straightdope.com/u/Tired_and_Cranky)\ **Post date:** [July 23, 2015, 2:22pm UTC](https://boards.straightdope.com/t/car-financing-will-this-work-is-it-ethical/725902/25 "2015-07-23T14:22:20Z")
> [@Joey\_P](#): > > The bank you got the first loan through (that the dealer hooked you up with, even if it’s the manufacturer, like Ford Motor Credit or Honda Finance) might not like it but I can’t see why the dealer would care. Once you sign the papers it’s out of their hands, they don’t even own the car at that point. Honestly, the dealer won’t even know it happened. This isn’t true. The dealer cares a lot if you refinance or pay off the loan immediately. As others have noted, the dealer will normally get an incentive if it arranges the financing. It gets a bigger incentive for a higher interest rate loan. But, based on the agreement with the lender, the dealer only gets the incentive if the buyer has (and perhaps pays) the loan for at least three months. If the OP refinances the initial loan right away, the dealer won’t get the incentive. ---
**Author:** ![ivylass](https://avatars.discourse-cdn.com/v4/letter/i/9de053/32.png) [@ivylass](https://boards.straightdope.com/u/ivylass)\ **Post date:** [July 23, 2015, 3:52pm UTC](https://boards.straightdope.com/t/car-financing-will-this-work-is-it-ethical/725902/26 "2015-07-23T15:52:59Z")
Since you have the money to pay it off, why not just buy the car for cash? You may get a better deal that way. It seems like you’re bunching through a whole bunch of hoops. If they don’t give you a better deal, then feel free to shop elsewhere. Money talks. ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [July 23, 2015, 5:29pm UTC](https://boards.straightdope.com/t/car-financing-will-this-work-is-it-ethical/725902/27 "2015-07-23T17:29:40Z")
The financing you get from Ford will have a financing charge hidden somewhere in the paperwork that will likely reduce your saving. However, if financing through Ford gets you a substantially lower purchase price, it can be worthwhile. I just did the same thing through VW credit, then refinanced with Chase to take advantage of a 2.2% interest rate. I paid VW a $750 finance charge but I got the car for $3500 less than market price. ---
**Author:** ![OldOlds](https://avatars.discourse-cdn.com/v4/letter/o/a3d4f5/32.png) [@OldOlds](https://boards.straightdope.com/u/OldOlds)\ **Post date:** [July 24, 2015, 1:30am UTC](https://boards.straightdope.com/t/car-financing-will-this-work-is-it-ethical/725902/28 "2015-07-24T01:30:01Z")
> [@Tired\_and\_Cranky](#): > > This isn’t true. The dealer cares a lot if you refinance or pay off the loan immediately. As others have noted, the dealer will normally get an incentive if it arranges the financing. It gets a bigger incentive for a higher interest rate loan. But, based on the agreement with the lender, the dealer only gets the incentive if the buyer has (and perhaps pays) the loan for at least three months. If the OP refinances the initial loan right away, the dealer won’t get the incentive. I was just about to say the same thing. They will care. The debate over whether they deserve it is difficult to resist… [Previous page](https://boards.straightdope.com/t/car-financing-will-this-work-is-it-ethical/725902.md?page=1)