Toyota Can't Beat My Credit Union For Tundra Buy, But Dealer Is Pressuring Me

A nearly standard in-house dealer financing may seem fishy for some car buyers as one Toyota Tundra buyer suspects the dealer's motives and feels uncomfortable with the situation, which Toyota doesn't want to be a Tundra deal-breaker.

Car dealerships must to better jobs informing car buyers about the motives of in-house financing not to raise suspicion and not to break the deal as one Toyota Tundra buyer took it to the Tundra owners' community questioning the dealer's motives. His question and the following explanation of why dealers push for in-house financing and are reluctant to accept outside financing may benefit other car buyers as well. By the way, Consumer Reports recommends this important negotiation point to focus on when buying a new car.

N. Enchilada went to his local Toyota dealership to purchase a Tundra truck. The dealer pressured him to ditch Credit Union for in-house financing and that push raised red flags for the buyer. Should you cave into dealership pressure?

Enchilada took his concern to the 2022+ Toyota Tundra Owners group on Facebook and asked the community.

Question for the group:  Has anyone been forced to finance through Toyota initially for their Tundra?  Dealer is saying they don't accept outside financing at all because it was taking forever for them to get the money from banks so they have a blanket policy of no outside financing.

I suspect it has more to do with incentives for the dealership than it does with waiting on the funds, but I could be wrong. Anyway, it just feels a bit weird and gives me an uneasy feeling because I have never been told that by a big dealership before, but these are also different times we are living in now.  

Am I worrying too much?  They can't come close to beating my credit union, so my initial thought is to just refinance as soon as I leave the dealership and not make a big deal out of it.  Has anyone that has done this before ever had any issues?

I definitely don't want to make a big deal about it because the dealer and salesman have actually been really good to work with otherwise and I haven't had any major issues, no market adjustments, no dealer markups, etc. LMK your thoughts?

Why Car Dealerships Prefer In-House Financing?

There are several reasons why dealerships prefer in-house financing when selling you a car.

If there is a shortage of available cars, it's a dealership advantage market. If there is a shortage of Toyota Tundra trucks, Toyota dealerships will have an advantage in that market. This is similar to when they charge above MSRP. In the same way they can demand that you finance through Toyota because that’s a back-end profit for Toyota and the dealership. This is true for any car dealership. The housing market has some similarities to this as well. If it's sellers' market, the builder may ask you to finance through their "partner" bank.

Car dealers might give you a good deal on a car, but then try to get you to finance the purchase through them instead of letting you use your own financing. This is because they make money when you finance with them, and they might be missing out on that profit if they gave you a discount on the car itself. It's especially common these days since they aren't selling as many cars, so they're looking for ways to make up the difference.

One guy wrote that Audi gave him an extra $1,000 off for financing with them. He bought it out of state. Within the first month, he refinanced it with his local Credit Union.

Several people, like S. Molina, replied and wrote that they were in the same boat. "I put a deposit on mine (Toyota Tundra) due here in the next 2 weeks. The dealer also wants me to finance through TFS (Toyota Finance Service) because when they do, they prove to Toyota they are selling vehicles and this helps increase their allocations. My bank (USAA) has much better rates than TFS at the moment, and I am on the same boat you are," Molina writes.

Your Options When Buying a Car and Financing It

In situations like this, you can probably get a cashier's check from your bank. Then have your bank finance it.

Or, save yourself the headache and just finance through Toyota. Check your state, but most don’t have early payoff fees. The finance guy may say to you that you need to stick with a loan for three months. I don't know if that's true in case they say something like that. I have heard people saying they already had a Toyota account and were able to refinance after a week of buying the truck.

D. Robitaille from the group discussions writes, that "most dealerships have something they’re gonna get you with. I have had all the experiences: market adjustments, walking out, hidden fees, saying we need to finance through them to get the deal and etc... I’d say, if you can get the vehicle at MSRP and they want you to finance with them, and that’s the only thing holding the deal up, do it… then refinance with your bank or credit union 1-3 months later. A 1-3% difference for 1-3 months really ain’t more than a few bucks. Pretty sure Toyota finance doesn’t have any early fees or anything to swap banks (yet)."

I think this is a good suggestion. Or, at least make them match your rate or stretch the length of loan out to get a better rate for your Toyota Tundra purchase, and then save some extra cash, and make extra full payments or more to pay it off early.

Have you ever been in a similar situation? How did you finance your vehicle's purchase: in-house or outside through your bank? Please, click the red link below to write your comment, and see what happened to this 2022 Toyota Tundra owner, who says this is the third and last time his truck will leave him stranded on the side of the road after going back to the dealership for 3rd motor at 49,000 miles.

An know, if you are buying a new car, the nicest satisfaction rating goes to Subaru. At least this was the case two years ago.

Also, see this interesting story from Torque News Youtube Channel.

Armen Hareyan is the founder and the Editor in Chief of Torque News. He founded TorqueNews.com in 2010, which since then has been publishing expert news and analysis about the automotive industry. He can be reached at Torque News Twitter, Facebook, Linkedin, and Youtube. He has more than a decade of expertise in the automotive industry with a special interest in Tesla and electric vehicles.