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  • mjcisneros 08/03/10 12:45 am PST

    well, good credit is good, bad credit is bad, and no credit is bad. But, I bought the extended warr. on my wifes new car 5 yrs ago and it paid off, but its an american car. And also your looking at a used car , so it wouldnt hurt

  • Stever@Edmunds 08/03/10 1:11 am PST

    I'd go get prequalifed at a local bank or credit union. Or apply online under the Car Loans tab at the top of the page.

    The dealer is trying to scam you for a bunch of extra profit, either by loading up your interest rate or loading you up with an extended warranty.

    I'd find another dealer and it'd be worth it to call your local consumer protection agency and tell them what the dealer is doing.

  • gualm 08/03/10 1:18 am PST

    I would see if you can be financed through a bank instead of the dealer. I wld also try a credit union if you are a member, they wld be a little more flexible. I had a similiar issue about 4 yrs ago. Capital 1 did not want to finance a car that was under 5 yrs old because the warranty had expired from the manuf. They were difficult because at the time my insurance co offered a warranty plan but the rep tried to argue with me saying that there was no such thing, although, I had a brochure for it. A warranty program was also being offered through my local honda dealer. They were both under 1000. My credit was prob similiar to yours where it was fair but not super bad. Otherwise you would be paying 20 + percent and I was told that it can even go higher than that.

    But the reason I was told by a Cap 1 rep that the reason they did this is because higher risk people, when they encounter a significant repair on the car, they tend to stop making payments on the vehicle because they can't afford the car payment and the repairs. I understand the reasoning behind it, but the prob I have with it is that some of these warrantys can be for 6mos or a year, so what happens when the last day of the contract has past and the car goes kaput??? Well, you are still back in the same situation.. I would probably find someone else or buy a certified pre-owned vehicle. I am always leary when a deaker ask for a warranty up front . You can read prob thousands of emails where people paid for warrantys in one way or another and the dealer goes out of business, especially if it is a small shop. Sometimes they don't honor what is in the contract. Ask the finance co if they really need it.

    Hope this helps...

  • tls5 08/03/10 2:30 am PST

    You should read "Confessions of a car dealer" and "Confessions of a finance... (I forgot the exact name of the article) on Edmunds.com. . Good Luck!

  • johhny 08/03/10 5:52 am PST

    Are you being scammed? No.

    The reason your credit score is different, then the one the dealer pulls, is because the dealer will get a score that is auto specific. When you pull your credit, you get your overall credit score. When a dealer pulls your credit, they get your overall score and an automobile risk score, this risk score will usually be lower.

    So no, you won't have the same score.

    Why the warranty?

    Because Toyota financial offers a 2.9% rate, on pre-owned, factory certified cars. There is a warranty inspection that needs to be done to qualify as Factory Certified Car. This is the warranty the dealer is telling you about.

    It is all true, if you buy the warranty, the dealer will pay to have the car certified through Toyota and then Toyota will offer you 2.9% on the certified car. This is done everyday and it is not a scam.

    The factory charges the dealer $750 to certify a car, so the dealer does not want to pay for that certification, if the customer is not going to take the 2.9%....Who wouldn't take the 2.9%? Cash buyers, bad credit, that can't qualify. The dealer doesn't want to pay the $750 fee for no reason, so they make the customer agree to the warranty first, It is all good and you are not getting ripped off. You just have a bad finance guy at the dealership that doesn't know how to explain things....

    Source: I ran the biggest and most profitable finance department in the country. Also, I ran finance for Toyota.

  • limama143 08/03/10 5:55 am PST

    i did shop on myautoloan.com and they offered practically the same interest rate. and my credit union actually denied me. so what to do? keep shopping still? this toyota dealership is large and has been around for many years in a community i have lived in for many years. doesn't seem like it would be going out of business. is the platinum package warranty a total rip-off? has anyone price shopped toyota warranty packages? the car price is good. is adding a warranty for 2,400 so bad at 2.9%? there is also the 375admin fee and the 375destination fee. Are those negotiable? I just want to get the overall price down. Maybe I could save on negotiating the car price?

  • johhny 08/03/10 6:01 am PST

    Make sure you read me last answer


    You will have to pay a doc fee, or admin fee...you should not have to pay destination, unless they had to bring the car in for you, from a different location....you can always negotiate the price of the car. They might just tell you NO!!!

  • limama143 08/03/10 6:47 am PST

    I read your answers and thank you it helps. but i would like to know, doesn't a certified used car come with a warranty? why do i need to purchase an additional extended warranty package at 2,400 dollars?

  • johhny 08/03/10 7:23 am PST

    they are trying to sell you the highest level coverage, Tell them you want it certified and nothing else...

  • Stever@Edmunds 08/03/10 3:10 pm PST

    You said you were buying a used Toyota, not a Certified Used Toyota.

    If it's not certified, then the extended warranty requirement is a scam. There's no reason you have to package a car sale with a warranty sale. You can negotiate them separately and then roll the final number into your financing if you wish.

    If it is certified, you can appraise it Edmunds, based on a certified price.

    Remember that the extended warranty (assuming it's the Toyota one) is good for 7 years ... or 100,000 miles. The car you are looking at already has 75,000 miles so you are paying big bucks for those 25,000 miles of coverage. It's not worth it.

    Did I mention it's not worth it?

    I've read that people with poor credit are the ones who need extended warranty coverage the most, since they typically have more trouble paying for expensive repairs. That's fine, but if you do decide to get an extended warranty, you should be able to find one for a lot less than $2,400. Probably $1,000 less at least.

    Why is there a destination fee? It's not a new car being shipped from the factory. Total ripoff.

    The $375 admin fee is a rip too.

    I'd go shop Hondas at this point.

    Out the Door Pricing

    Confessions of an Auto Finance Manager

    Confessions of a Car Salesman




  • johhny 08/03/10 4:07 pm PST

    unfortunately Steve has no idea what he is talking about. Toyota is only offering 2.9% on used certified. You said you are buying a used Toyota, you didn't say certified or not. However the 2.9 says it will be certified. Should you do it? that's up to you. But i have explained what they are doing. You might want to figure out what the savings is between 11% and 2.9%. We call it a doc fee, they may call it a admin fee, if the admin fee is different from the doc fee, then no don't pay it, but you will pay a doc fee Can there be transport charges on a used vehicle? Sure, but only if you found the car at another dealership and had them ship it to their dealership. You can believe Steve or you can believe me, I do this for a living and have been for 20 years.

  • johhny 08/03/10 4:30 pm PST

    Here is another thing for you to think about. lets say you finance around $10K for 60 months. At 2.9 your payments are about $60 cheaper a month, then at 11%. $60 a month for 60 months is $2400. So at 2.9% you will pay $2400 less in payments over the life of loan, or you can go with 11% no warranty and pay $2400 more over the life of the loan. 2.9% with a warranty or 11% without is the same price.

    But up until now I have just answered your questions.

    It seems everyone else wants to tell you what to do and not just answer your questions. So here is what I think you should do.

    Agree to the 2.9% and the warranty. After you make your first payment to the bank, go to the dealer and cancel the warranty. This way you get the special financing and get the $2400 taken off of the loan, you win, you wont get the whole $2400 taken off, because they will prorate it for a month, but you will get $2300 and change taken off of your loan. you are worried about a dealer scamming you? This is how you scam them...

    Get the 2.9% ad then cancel all the crap they sold you, be sure to read the contract and really study the cancellation policy.

    People make buying cars to hard, you need to learn a little about how contracts work and then you can stick it to the dealer...

  • Stever@Edmunds 08/03/10 4:46 pm PST

    lol, believe me or a car dealer - maybe we shouldn't put the OP in such a position. ;-)

    I like your idea of getting the low interest rate and then canceling the warranty, but I'd really want to go through the contract with a fine tooth comb to make sure that's possible.

    And btw, a "certified" car isn't such a big whoop. You get a warranty with it but what's a 160 point check? Will the tech look and see that four tires are holding air and that's 4 checks? I'd rather pay my independent mechanic $100 to look the car over.

    You get a free Carfax report. Well, most all dealers subscribe to Carfax and they should be willing to give you one free anyway. Roadside service would be nice, but my insurance provides that.

    The special financing would be good (assuming you can qualify). Beware of dealers selling you a deal and then calling you back in 2 weeks saying you didn't qualify after all. Then they want more money and a higher interest rate - that's the yo-yo or spot delivery scam.

  • johhny 08/03/10 5:04 pm PST

    Steve's advice is good. Should you believe the car dealer on edmunds that is trying to help you? YES YOU SHOULD!!!!. If you are sitting in my office, don't believe anything I tell you, i am just trying to make money. But here, on Edmunds.....believe what I say, I have no interest in your car deal at all and I am just trying to shoot you straight....but so is Steve....take all of the advice and buy a car and be done with it.

  • limama143 08/04/10 6:19 am PST

    well i called the customer relations manager and spoke with her about the salesman trying to force me to buy the extended warranty as the only way to get the 2.9 percent and she reviewed what happened apologized said they don't do business that way and the used car floor manager agreed to give me the car for 2.9 with no warranty as a "favor" because of what happened. so they ask me if i still want the car and if i want to come take it home today. so i say yes.

    then i ask for a written contract so i can see all the numbers in black and white. it looks too good to be true because the price is 8700 for an 05 camry at 2.9 percent aside from the 375admin and 375transportation fee is still on there. anywyay we are there for way too long finalizing everything. we put 500 down on our bank card, purchased insurance from geico and blah blah blah in the finance office the guy is saying he can submit the paperwork and the bank will do him a favor, he knows who to talk to to get it approved even though my credit doesn't qualify me yada yada yada and then....AT THE VERY LAST SECOND, and mind you the car is pulled up outside but with no plates on it yet....

    they tell us YOU CANT TAKE HOME THE CAR because they don't know if the bank will approve it b/c of the late mortgage payments and they need proof and documentation that we went through the obama home loan modification program and thats why our payments were late and the letter should also say we are up to date on our mortgage! WHAT????

    They had my info before I got there! They knew my credit before, now the offer is subject to bank approval??? THe customer relations manager said come get the car and take it tonight? She did not say subject to financing. They knew my credit score and pulled the history already days ago when the first guy who was going to make us buy the warranty to get the 2.9 percent! THe customer relations manager said she and the used floor manager had decided to give me the car at 2.9 because of the salesman trying to make a bad deal with me. Now i am in the finance office and they need bank approval? They did not mention bank approval till the last second??? WHAT KIND OF SCAM IS THIS???

    My husband and I were furious. We wasted hours there. Now they want documentation of the home loan modification. What will it be next? ANd what do they ultimately want anyway? To not give us the car? Why is it all so mysterious and shady? Why can't they just tell us what we need to do to get the car. It was like they knew they weren't going to give it to us because they were mentioning the mortgage modification when we came in before financing the salesman asked us. Why promise us we can take home a car and then act like you just found some surprise on the credit history that you did not see??? They saw it before so tell me what kind of game are they playing???

    So today I will give them the documentation I guess and see what happens next. I did not even ask for the admin or destination fees to come off because I thought it wasnt worth fighting over considering they were giving me 2.9 percent when my credit score is a 630 and does not qualify. I would just walk out but I know that elsewhere I will most likely be paying a high interest rate on a higher priced car. I got denied by my credit union and my autoloan.com offered 11 percent too so what to do? I am so angry with this dealership! Are they all like this???

  • Stever@Edmunds 08/04/10 10:56 pm PST

    Please give us an update soon and let us know how it went. Thanks!

  • tls5 08/05/10 1:48 am PST

    I have a question concerning financing. I am looking to buy a new car in the next few months. I have been working the same job for 13 years, however, I have been receiving disability for the last ten months and I will be returning to the same job at the end of August 2010. Will I still qualify for a car loan?

  • jerrybcctx 08/05/10 3:05 pm PST

    they are giving u 2.9 percent on this used car bec its prob a certified car and they have special rates through toyota at this time....btw i have worked at toyota in sales for 5 yrs....the only reason i can think of why they would make u buy a warranty is bec they are having to cut the price of the car to sell it to u bec of what toyota financial will finance for u. so they cut the price of the car and dont make anything or sometimes lose money but by adding the warranty the deal makes a net profit...Is the car certified? also usually to qualify for special rates u have to have a higher credit score than that. You have to remember everything the salesman is telling u are things his manager is telling him to say. then after they get u payment or price u will agree to they give to business manager to try and accomplish what u want ...u may be on the borerling on qualifing for 2.9 and they may be trying to get toy financial to give u a rate exception...if the car is certified toyota gives it a 7yr 100k powertrain (engine and transmission) warr free and 3k mile bumper2bumper. is the camry a le 4cyl? if u buy the warranty then u can negtiate it down to around 1800. go to toyota.com and see how much they value the ext warranty...the warranty they are getting u to buy extends the bumper2bumper to 100k...honestly the camry all around is bullet proof and thing rarely break u dont really need it..

  • limama143 08/05/10 4:53 pm PST

    car was certified than they said its not.
    they won't certify it.
    they are playing games.
    said its cuz it has 75000 miles
    toyota website for certified says its up to 85000 that a car can be certified.
    do i need it?
    do i need a warranty?
    took it to mechanic today and he said its fine.
    that he would buy it without a warranty cuz the warranty is kinda a ripoff anyway.

  • Stever@Edmunds 08/05/10 4:58 pm PST

    Thanks for reporting back.


    Can you tell us the name of your dealer and the city they are in?


    Please write up a review:


    Dealer Ratings and Reviews

    (Tls5, you'll do better starting your own Question.)

  • ahq 08/13/10 10:51 pm PST

    First of all, before you apply for a single loan, you should buy your credit report and credit bureau scores from a site such as myfico.com. If your credit scores are below 650-700, then I guess that would explain why the interest rates you are being offered are so high. If you have no choice but to take a loan out at 11%, I'd seriously consider buying a less expensive used car.


    One other suggestion. Take a look at the car's CARFAX report. If it was a rental/fleet vehicle, you might have an increased likelihood of experiencing problems. As you probably know, rental vehicles are sometimes abused and not properly maintained. Certified warranty or not, I'd stay away from these types of used vehicles.

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