Toyota Tundra Financing

If you’re considering purchasing a new Toyota Tundra, then you’re probably curious about financing. As of March, 2007, Toyota is offering special interest rates on the new Toyota Tundra. However, are these special rates the best financing deal for your new Tundra? Here are some questions you can ask yourself:

1) Do you belong to a credit union?

If you have access to credit union financing, I highly recommend you investigate this option first. Credit unions are in the business of saving their members money, and they do this by offering some of the lowest vehicle finance rates available. Often times, a simple phone call will tell you everything you need to know. However, before you pull the trigger at the credit union, talk to your dealer first. They may be able to meet or beat your credit union’s rate (wouldn’t that be super?)

2) Do you have a home equity line of credit?

The home equity line of credit is a great way to save. You can often borrow at a lower rate than you would on a vehicle, but you must remember, you only save money if the term of your home equity loan is the same length as comparable vehicle financing. In other words, if you take out a home equity loan at 4.99%, but you take 10 years to pay it back, you will lose thousands of dollars. Typical car financing is only five (or six) years in length — make sure you structure your home equity loan to be paid back in that same time period.

3) Can you lease the vehicle?

Often times, leasing makes more sense. Why? First of all, you can save money up-front. Lease payments are almost always lower, and the amount of money required up-front (aka down payment) is very low. Second, a lot of people buy cars but trade them in before they’ve been paid off. If you buy a new Tundra but trade it in 2 years from now, you may end up owing more on the vehicle than it’s worth. If this happens, all you “bought” was debt. In that case, a 2 year lease would have made a lot more sense. With a lease, as long as you take it to term, you have no debt at the end. Last, when your lease ends you can buy the vehicle out. Sometimes the combination of lease end value (aka residual value) and lease payments will add up to less than the up-front purchase price. How can that be? Simple. Toyota may provide more of a discount for leasing than for buying. Check this option out, but remember, you must drive less than 15k miles per year for this to make sense. If you drive more, leasing is definitely out.

4) What if you have very bad credit, what can you do?

Sometimes the best choice when you have bad credit is to buy nothing. Your interest rate will be very high (20%+), and the amount you pay could have bought you two vehicles. Instead of buying a new car, concentrate on paying off any collections and re-building your credit score with credit cards. However, if you must buy, make sure you ask lots of questions. Find out if the rate your being quoted is the best rate available (or if it’s just the best rate they’ll quote). Also, don’t feel pressured to buy anything extra like extended warranties or credit insurance. Dealers make a killing forcing people with bad credit to buy all their expensive extras. Most importantly, find and join a credit union when you buy. Even if they don’t approve you right away, if you make your payments on time, after 6 months to 1 year, you can refinance your new Tundra at your credit union and save money.

5) Here’s the best advice I’ve ever gotten about vehicle financing. “Don’t do it. Pay cash.” Easier said than done.

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