How hard is it to finance a car?

[LuckyTaxi]

My car finally gave in and now I desperately need to find a replacement.
I'm thinking of looking in the $5k-$6k range, but they have miles racked up in them.
So, now I am looking to stretch it to $7k-$9k, and I'm only looking at putting down $2k.
Anyone bought a car lately? I wonder how much my monthly payments are going to be.

I am 23 and I have excellent credit. I've had my credit cards for close to 5 years now and I've
never been late for anything. My dad has bad credit so I hope I dont need a co-signer!

 

[conjur]

Sounds like you're in good shape.

Do you bank with a credit union? If not, at least go to the loan officer at your bank and get pre-approved, if you can. You may have to shop some cars and give them detail (year, make, model, mileage) and then get pre-approved. Don't get financing thru the dealer if can avoid it. They'll tell you an APR but it really isn't that. They have tricks that end up bumping that up a percent or two and costing you more money. I've seen it happen when I sold Hondas for a while.

But, $2k down on even a $10,000 car is 20% and with excellent credit (assuming you're probably pushing 680?), you should be in no problem.

BTW, a $10,000 car at 5% interest for 36 mos. with $2000 down (and assuming 6% tax) is $257/mo. And, don't forget to hit http://www.kbb.com or http://www.edmunds.com and price the vehicle you're looking for before signing anything to get an idea as to how far down to negotiate the selling price.

Good luck!

Oh, and you could go to http://www.privacyguard.com and sign up for the $1, 3-month trial and pay an extra $10 and get your FICO score from all 3 credit bureaus and print a copy of all 3 of the bureaus' reports and take those in to the loan officer at your bank (that way, only one inquiry shows up on your credit history). Just be sure to call Privacy Guard before the 3 months is up to save yourself from getting charged $89.99.

 

[BurnItDwn]

If your work has a Credit Union they may get you a good rate on a loan too ... I'd recommend looking into it.
When I took out a loan on my car ... I had very little credit (only used CC before it) ... and I didn't need a cosigner, but i got a crap interest rate ... when I refinanced thru the credit union ... it cut the rate down a LOT.

 

[Kevin]

See if you can get the 0% APR some companies are offering like Mazda...

 

[XZeroII]

According to the dealer, nothing is easier


Seriously, good luck.

 

[RossMAN]

Dealers usually screw you over so here's what I would do first:

1) Apply for a used car loan at your local credit union.
2) Find a used car being sold through a private party, ask the usual questions esp if it's a salvaged title (if it is RUN AWAY).
3) Have a trusted mechanic check it out.

If that doesn't pan out then take your Dad to a car dealer and get ready to haggle.

 

[ElFenix]

Originally posted by: conjur
Don't get financing thru the dealer. They'll tell you an APR but it really isn't that. They have tricks that end up bumping that up a percent or two and costing you more money.

there's no trick, they just outright lie. the only way to catch them on it is to calculate it yourself with a financial calculator or excel, and walk out if they don't match that figure.

 

[RossMAN]

Originally posted by: ElFenix

Originally posted by: conjur
Don't get financing thru the dealer. They'll tell you an APR but it really isn't that. They have tricks that end up bumping that up a percent or two and costing you more money.

there's no trick, they just outright lie. the only way to catch them on it is to calculate it yourself with a financial calculator or excel, and walk out if they don't match that figure.

They do lie, they usually get people with "well how much can you afford" ... people think "gee I can afford $139 a month"

Until they read the FINE print about the 13.9% APR, $100 loan fee, 72 month loan term, etc.

 

[Nocturnal]

If you honestly have excellent credit and a good enough paying job, go down to your credit union and talk with a loan officer. I cannot stress enough that you go to a credit union and not a regular bank.

My gf and I wanted to get a car, she tried through a regular bank and they denied her. She had at the time, excellent credit, I'd say a high 600 FICO score. Then she even tried with a co-signer and she was denied a second time. Next we went to a credit union. I had slightly bad credit at the time due to non payments. Anyhow, I had just fixed up most of the bad credit and I was on the right track. We went to the credit union, joined it, applied for the $5,000.00 loan and we got $3,200.00 of the loan on the spot no questions asked. The reason we did not get the entire $5k is because we did not make enough money yet.

Fast forward a year.

We paid off the $3,200.00 loan in March of 03. Just this month, in the beginning of September my gf wanted to get a second car, for herself. We went to a Honda dealership and found a 2000 Honda Civic Hatchback for $10k. We applied for the loan through the same credit union and guess what? We got it like cake. I know have a higher income than I did back then and so does she.

So as long as you make enough money, have good credit, you're guaranteed to get a 5-6k loan from a credit union.

 

[Turkish]

Originally posted by: conjur
Sounds like you're in good shape.

Do you bank with a credit union? If not, at least go to the loan officer at your bank and get pre-approved, if you can. You may have to shop some cars and give them detail (year, make, model, mileage) and then get pre-approved. Don't get financing thru the dealer. They'll tell you an APR but it really isn't that. They have tricks that end up bumping that up a percent or two and costing you more money. I've seen it happen when I sold Hondas for a while.

But, $2k down on even a $10,000 car is 20% and with excellent credit (assuming you're probably pushing 680?), you should be in no problem.

BTW, a $10,000 car at 5% interest for 36 mos. with $2000 down (and assuming 6% tax) is $257/mo. And, don't forget to hit http://www.kbb.com or http://www.edmunds.com and price the vehicle you're looking for before signing anything to get an idea as to how far down to negotiate the selling price.

Good luck!

Oh, and you could go to http://www.privacyguard.com and sign up for the $1, 3-month trial and pay an extra $10 and get your FICO score from all 3 credit bureaus and print a copy of all 3 of the bureaus' reports and take those in to the loan officer at your bank (that way, only one inquiry shows up on your credit history). Just be sure to call Privacy Guard before the 3 months is up to save yourself from getting charged $89.99.

Conjur, how good is a credit score of 710, for a 20 year old?

 

[Vic]

Originally posted by: RossMAN
They do lie, they usually get people with "well how much can you afford" ... people think "gee I can afford $139 a month"

Until they read the FINE print about the 13.9% APR, $100 loan fee, 72 month loan term, etc.

I agree with what you're saying, that car salesmen lie, but on the other hand, I have a REALLY hard time feeling sorry for someone who signs documents without reading them.
And the APR is never in the fine print. That would violate Reg Z and make the loan unsaleable. It's clearly displayed in bold print in its own little box. For auto loans, look approx. 1/3 of the way down the main financing contract form in the (as always) Federal Truth-in-Lending Disclosure section.
Everything you mentioned will be in that form, including APR, fee, and term, all in bold print. I can scan in (for my own personal records) and post a copy of what this form looks like for anyone who wants to see it (will take me a while though to blank out my own personal info, etc.)

A side note on this topic: always take as long as you want to sign car documents. Never allow yourself to feel hurried. I personally read every line and, when pushed for time by the closer, get downright nasty.

 

[RossMAN]

710 is great.

But there's other factors lenght of residency/employment, debt to service ratio, credit history, etc.

Having a high credit score alone doesn't mean you can get any loan you apply for.

 

[Vic]

Forget to mention that a key issue in used car financing, asides for the usual applicant qualifications besides credit, income, debt ratio, etc. is the age and value of the car itself. This is secured financing. Be very careful about what you pay for the car. If the dealer tells you that you need more downpayment, it's only because they're ripping you off on the car. Also, for cars more the 10 years old, the going rate really is above 10% for financing, edit: regardless of how good your credit is.

 

[Thegonagle]

Originally posted by: Kevin
See if you can get the 0% APR some companies are offering like Mazda...

You can get a 2003 Mazda Protege DX for $9,999 with current year end incentives. No features on that DX though.

Hondas and Toyotas aren't a really good used car buy. There are better used car values. I just got a freaking loaded 2001 Mazda Protege ES (ABS, side airbags, sunroof, power windows/locks, 16 inch rims, etc.) with 18,000 miles for $9,433 at a dealership. (I rule!)

If you value a comfortable ride and good fuel economy, a good 2001 Chevy Prizm LSi should be around $8,000 tops. I was shopping for Prizms, but I ended up with the Protege because I didn't like how the Prizms handled, and nice 2001 Civics were still going for almost $11,000.

The Protege handles like a little sport sedan, and rides a little harshly, but I'm used to it now, so I don't mind. The only thing that I dislike about the Protege is the fuel economy. It's not very good. I think the bad mileage is mainly because it's got sporty low gearing, and the relatively large engine (2.0L) lacks any sort of variable valve timing. The engine has enough torque that it would drive just fine, yet probably get better mileage, if the final drive was raised about 15%. I mean, this thing turns 3400 RPM at 70 MPH!

 

[conjur]

Originally posted by: Xiety

Conjur, how good is a credit score of 710, for a 20 year old?

While that's a great score, I agree with RossMAN that other factors determine your creditworthiness: Length of time on job, debt-to-income ratio, length of established credit, amount to use for a down payment.

When I was about your age, I didn't have the best credit in the world but it was good enough. I was able to buy a brand-new car with little money down but a somewhat higher interest rate (would have been lower if I'd put more down.)

 

[Angrymarshmello]

What's the difference between getting a rate at the bank and a credit union? I've heard CU's offer a lot lower interest rates. I'm shopping for a new car too and have been advised by different people and sites to not go through the dealer. (BTW, thanks RossMAN, I bow down to your ferengi-ness)

Is applying/getting preapproved for a car loan at a bank/CU as simple as going in and filling out paperwork and waiting for the "results"? And when you get an auto loan, you basically pay the bank who in turn pays the dealer, or how does that worK?

 

[Angrymarshmello]

 

[conjur]

Originally posted by: Angrymarshmello
What's the difference between getting a rate at the bank and a credit union? I've heard CU's offer a lot lower interest rates. I'm shopping for a new car too and have been advised by different people and sites to not go through the dealer. (BTW, thanks RossMAN, I bow down to your ferengi-ness)

Is applying/getting preapproved for a car loan at a bank/CU as simple as going in and filling out paperwork and waiting for the "results"? And when you get an auto loan, you basically pay the bank who in turn pays the dealer, or how does that worK?

Credit Unions have a reputation for offering lowering rates to their customers than a normal bank. And, as I said in my first reply in this thread, dealerships' finance departments will tell you one APR and stick you with a higher one on the back-end. I've seen it happen first-hand several times when I was selling cars. A saleman working a deal at the next desk was trying to tell this guy his APR was 3.9 but the guy punches up something like 7.5% on his watch calculator. I was at the mgr's desk when the salesman came up explaining things and one of the sales mgrs said, "oh, so he's on to us, eh? ok...give him the 3.9%"

 

[Angrymarshmello]

Originally posted by: conjur

Originally posted by: Angrymarshmello
What's the difference between getting a rate at the bank and a credit union? I've heard CU's offer a lot lower interest rates. I'm shopping for a new car too and have been advised by different people and sites to not go through the dealer. (BTW, thanks RossMAN, I bow down to your ferengi-ness)

Is applying/getting preapproved for a car loan at a bank/CU as simple as going in and filling out paperwork and waiting for the "results"? And when you get an auto loan, you basically pay the bank who in turn pays the dealer, or how does that worK?

Credit Unions have a reputation for offering lowering rates to their customers than a normal bank. And, as I said in my first reply in this thread, dealerships' finance departments will tell you one APR and stick you with a higher one on the back-end. I've seen it happen first-hand several times when I was selling cars. A saleman working a deal at the next desk was trying to tell this guy his APR was 3.9 but the guy punches up something like 7.5% on his watch calculator. I was at the mgr's desk when the salesman came up explaining things and one of the sales mgrs said, "oh, so he's on to us, eh? ok...give him the 3.9%"

Thanks for the info. Don't have a CU unfortunately Regarding the APR - isn't it printed on the contract itself? I'm working at Capital One Auto Finance at the moment and I see contracts after contracts and the APR is printed right on it.

 

[kt]

Originally posted by: Angrymarshmello
What's the difference between getting a rate at the bank and a credit union? I've heard CU's offer a lot lower interest rates. I'm shopping for a new car too and have been advised by different people and sites to not go through the dealer. (BTW, thanks RossMAN, I bow down to your ferengi-ness)

Is applying/getting preapproved for a car loan at a bank/CU as simple as going in and filling out paperwork and waiting for the "results"? And when you get an auto loan, you basically pay the bank who in turn pays the dealer, or how does that worK?

Someone correct me if I am wrong, but I think after you get approved for a car loan. You get a blank check from your lender valid up to a certain amount as agreed upon. And you go shopping for a car with that blank check.

 

[RossMAN]

Originally posted by: Thegonagle

Originally posted by: Kevin
See if you can get the 0% APR some companies are offering like Mazda...

You can get a 2003 Mazda Protege DX for $9,999 with current year end incentives. No features on that DX though.

Hondas and Toyotas aren't a really good used car buy. There are better used car values. I just got a freaking loaded 2001 Mazda Protege ES (ABS, side airbags, sunroof, power windows/locks, 16 inch rims, etc.) with 18,000 miles for $9,433 at a dealership. (I rule!)

If you value a comfortable ride and good fuel economy, a good 2001 Chevy Prizm LSi should be around $8,000 tops. I was shopping for Prizms, but I ended up with the Protege because I didn't like how the Prizms handled, and nice 2001 Civics were still going for almost $11,000.

The Protege handles like a little sport sedan, and rides a little harshly, but I'm used to it now, so I don't mind. The only thing that I dislike about the Protege is the fuel economy. It's not very good. I think the bad mileage is mainly because it's got sporty low gearing, and the relatively large engine (2.0L) lacks any sort of variable valve timing. The engine has enough torque that it would drive just fine, yet probably get better mileage, if the final drive was raised about 15%. I mean, this thing turns 3400 RPM at 70 MPH!

Great advice and I agree on the Mazda Protege. Or even a used Nissan Sentra.

What works in your favor is they don't hold their resale value like Honda/Toyota does. Try buying a used Honda Civic and you'll have to go mid to late 90's.

 

[RossMAN]

Damn Thegonagle was right on the money (as usual) with his sound car advice.

I searched for Mazda Protege cars being sold by private party on our newspapers web site and found this deal:

Mazda
2001 PROTEGE DX model, 24k mi, 5 spd, green, AC, PS, CD, excl cond, $6000. 503-xxx-xxxx

As for payments I used a simple loan calculator

$8,000 @ 9% for 5 years = $166.07 per month

 

[LuckyTaxi]

last time i checked my FICO score was like 720

 

[ElFenix]

Originally posted by: Vic
Everything you mentioned will be in that form, including APR, fee, and term, all in bold print. I can scan in (for my own personal records) and post a copy of what this form looks like for anyone who wants to see it (will take me a while though to blank out my own personal info, etc.)

the APR has to be printed but the APR printed on there doesn't have anything to do with what you're actually charged. the only thing on there that matters is the payment and term you agree on.

 

[Aharami]

if u have atleast 5 yr credit history, u wont need co-signer