question about car lease

[QueBert]

Sat down with the sales person today who ran my info, I'm approved for a 60 mo loan at a stupid rate of 14.5% if I put 2k more down I can get the payments down to $390. Then 2-3 years in my credit should be where I can refinance at 1.9%'ish with my credit union.

Thanks for all the posts, it gave me things to consider. The sales person was saying I should lease for 36 months then when my credit's good buy it at a 2.9% rate with them for 36 more months. As opposed to paying 14.5% for 60 months. That makes sense, ut I think out right buying it with a refi 30 months in makes more sense and save me some bucks too.

 

[Kaido]

Anything more than $0 down on a lease is a baaaaaad idea.

Totally agree. I never put anything down on a lease. I also started playing the dealers against each other...they cut out the down payment on my Kia Soul to $0 & dropped the payment by $100 a month doing that :biggrin:

 

[Kaido]

Sat down with the sales person today who ran my info, I'm approved for a 60 mo loan at a stupid rate of 14.5% if I put 2k more down I can get the payments down to $390. Then 2-3 years in my credit should be where I can refinance at 1.9%'ish with my credit union.

Thanks for all the posts, it gave me things to consider. The sales person was saying I should lease for 36 months then when my credit's good buy it at a 2.9% rate with them for 36 more months. As opposed to paying 14.5% for 60 months. That makes sense, ut I think out right buying it with a refi 30 months in makes more sense and save me some bucks too.

On the flip side of all of the previous posts...you're not going to live forever, so if you have the cash to responsibly get what you want now, then go for it! Otherwise you'll wake up every morning to a car you don't love, but you're still stuck paying for. If you can cruise around in your dream car for the next 3 years and then figure it out from there, I'd say go for it. If the finances don't work out, then you can just return the lease and go from there.

 

[TheFamilyMan]

Sat down with the sales person today who ran my info, I'm approved for a 60 mo loan at a stupid rate of 14.5% if I put 2k more down I can get the payments down to $390. Then 2-3 years in my credit should be where I can refinance at 1.9%'ish with my credit union.

Thanks for all the posts, it gave me things to consider. The sales person was saying I should lease for 36 months then when my credit's good buy it at a 2.9% rate with them for 36 more months. As opposed to paying 14.5% for 60 months. That makes sense, ut I think out right buying it with a refi 30 months in makes more sense and save me some bucks too.

This is what they're paid to tell you...not what actually is. They make more money when you lease. Period. They are not looking out for what is best for you, they are looking out for what is best for them.

Talk to a local credit union, talk to your bank, talk to leprechaun in a tree...they will all be more truthful than the snake in the stealership.

You haven't said what your credit score is but with 40% or 50% down on a car, banks/credit unions will almost turn tricks to get you into a car with a somewhat reasonable rate.

 

[Doppel]

The sales person

The sales person is not your friend.

To him you are a mark, a sucker with terrible credit and an appetite bigger than your stomach.

You are considering getting a $25,000 car with a 14.5% interest rate HAHAHAHAHAHAHAHA Even with $10k down your first month you'll pay about $200 in INTEREST on a CAR. That is so absurd as to be truly laughable.

It really is easy to see why your credit is so terrible, and with the way you deal with money it always will be.

You don't even know what the money factor is on that lease yet, do you? Nor do you even know what this means, do you?

 

[Arkaign]

Yes, without a doubt, virtually everyone who sells you cars is a complete Ahole.

Go to creditkarma (not freecreditreport, which isn't really free), and start looking at why your credit is bad. It's not too hard to fix. In the meantime, who do you bank with? How long have you banked with them? Getting a used car loan from a credit union isn't too hard if you go in and talk to someone personally. Pick something that won't have too much further depreciation but is reliable, drive it, make the payments, do the other stuff to fix your credit, and before you know it you'll bust the 640 zone, then onwards to 700+, where you'll get great great rates on new stuff. It really doesn't take that long at all.

 

[Arkaign]

Oh, and the sales person is definitely a fraud if he tells you that your credit is going to improve that much simply from making the lease payments to get you 1.9% in 3 years. You have a lot more to do than installment loan payments to get that credit up.

 

[OILFIELDTRASH]

I'd like to see the numbers before proclaiming the OP an idiot although it's not looking good so far. With that much down and having paid 3 years of payments what would be the balance? Then said balance would need to refinanced for another 5 years to keep him in his comfort zone payment wise. So a total of 8 years of payments! Not to mention he'd have loan fees for refinancing.

 

[OILFIELDTRASH]

Oh, and the sales person is definitely a fraud if he tells you that your credit is going to improve that much simply from making the lease payments to get you 1.9% in 3 years. You have a lot more to do than installment loan payments to get that credit up.

Yeah I think those rates are reserved for 740+ scores which I think it took me at least 5 years of paying on a house and paying off 2 cars before I got there.

 

[jaedaliu]

Yes, without a doubt, virtually everyone who sells you cars is a complete Ahole.

Go to creditkarma (not freecreditreport, which isn't really free), and start looking at why your credit is bad. It's not too hard to fix. In the meantime, who do you bank with? How long have you banked with them? Getting a used car loan from a credit union isn't too hard if you go in and talk to someone personally. Pick something that won't have too much further depreciation but is reliable, drive it, make the payments, do the other stuff to fix your credit, and before you know it you'll bust the 640 zone, then onwards to 700+, where you'll get great great rates on new stuff. It really doesn't take that long at all.

This is the thing. WHY is your credit bad? why do you think it's going to jump up in 2-3 years?

Is it lack of credit history? or is it a delinquincy that will drop off? When are you going to buy a house?

Is the credit score the main thing? or is it the shiny new car?

oh yeah, and comparison shop for your car loan if you decide to buy outright. It doesn't have to be from the dealer's financing branch.

 

[boomerang]

Better check on how much insurance is going to run before going any further. In my state, insurance is based to a great degree on your credit score

 

[Topweasel]

Better check on how much insurance is going to run before going any further. In my state, insurance is based to a great degree on your credit score

This and several other issues I would have on this.
OP

1. A FR-S or BR-Z will cost a heck of a lot of money in insurance. Even more if this is the first car you are insuring under your name. I am assuming that the you are 18-21. In a car like that its probably $200-$250 easy a month. When I was 20 and got a loan on a 4k used sedan as my first real car and had 2 speeding tickets at the time, they wanted to charge me $400 a month. At that price I would have nearly paid for another Car by the first probationary period and would have exceeded the original car price after 1 year.

2. Don't get your dream car this early in life. You will beat it up, you will probably wreck it, and if you don't someone will do it for you.

3. I felt bad putting 500 down on my lease earlier this year. Don't toss money at a lease specially if that is barely covering the interest. It is as near litterally tossing money down the drain as any one can do. Even if you intend to buy it. Because again it was only covering the interest, so it did nothing to help you buy it.

4. Spend 3-4k on a decent used beater (maybe something with good MPG). Put the other 3-4k away for the future purchase of the FR-S (when you can keep an eye on used options as well). Be able to do PLPD or equivalent or maybe something with a really high deductible. Get a couple high APR cards that you use throughout the month and pay off. Save money (like the super high payments you avoided) for 2-3 years and then reproach buying the car at a decent rate (5-6 apr). It will be a 5-7 years before you can get to the low APR's people advertise.

You shouldn't allow yourself to be so seriously raped just because your new to the game and really want a specific toy.

 

[Midwayman]

It really is easy to see why your credit is so terrible, and with the way you deal with money it always will be.

Exactly. Trying to buy toys you can't really afford right now is just going to perpetuate the cycle. If you want to fix your credit, look into doing that. Buying a car at an absurd rate is just a way to get you deeper in debt and make your financial situation worse. You'll end up in a much healthier position a few years down the road if you don't do this.

 

[QueBert]

This is the thing. WHY is your credit bad? why do you think it's going to jump up in 2-3 years?

Is it lack of credit history? or is it a delinquincy that will drop off? When are you going to buy a house?

Is the credit score the main thing? or is it the shiny new car?

oh yeah, and comparison shop for your car loan if you decide to buy outright. It doesn't have to be from the dealer's financing branch.

It's a lack of credit, but it might as well be bad because places that give out loans look at people like me pretty much the same as people with bad credit. I've never gotten anything on credit and until very recently never ever had a credit card. I've avoided credit and pay cash for shit up until now. Last car I bought was 11k I paid cash. I've never made a larger than $75 purchase on my credit card.

I want to buy a house in about 5 years.

Credit scores half of it, shiny new thing is the other half. With a car I want it would actually give me something I want and build my credit fast. Outside of a car I don't want anything, and my credit score isn't going to go up on it's own. At least not quick or enough points to make a difference.

Midwayman said "you can't afford" but that's not the problem here, it's my lack of credit that would make the payments higher. I have a set limit I'm willing to drop a month, but I could easily afford it. I could comfortably pay $700 a month on a car and still not worry about money. I don't make ATOT money, but my debt to income ratio's 14%

So basically if I want a new car I'm going to pay a high ass interest rate, there's no way around it. Paying on my credit card every month would help, but I don't use it much at all. There's nothing I want to buy and my monthly bills I could pay using it are only $150 bucks.
I don't have bills, so I don't really have shit to build up my score. It's a catch 22. *shrug*

I never claimed this was a good, or even smart idea. But I can afford to pay it and get something I want, the alternative is staying with no credit and never getting anything new.

 

[jaedaliu]

Sounds like you've decided. And you can afford it, you just don't like the interest rate quoted to you by the dealership.

You should finance your purchase and buy it. Shop around, and save your $700/month towards a larger down payment. that way, the interest won't hit you as bad when you do start your loan.

Good luck! I only hear good things about that car.

 

[QueBert]

Sounds like you've decided. And you can afford it, you just don't like the interest rate quoted to you by the dealership.

You should finance your purchase and buy it. Shop around, and save your $700/month towards a larger down payment. that way, the interest won't hit you as bad when you do start your loan.

Good luck! I only hear good things about that car.

The thought of paying that interest is killing me, I won't have to stop eating well or going to the casino or anything. But I'm not use to credit and interest rates. I understand it's going to cost a butt load more than if I had good credit. But my credit won't be better to the point I can get a good loan on it's own. So I'm stuck buying an older used car if I get something now. So I had to take into consideration what I want vs what I'll have to do to get it today not 5 years down the road. I might wait a few months and put another G down, but at least I'm not leasing. And after 2 years I should be where I can refi at a sub 5% rate, which I'd be much better with.

But the bold, no I haven't or I would already be in one. My friend who works at the Toyota dealership would have ran my credit 2 weeks ago when I 1st started talking to him about it. I'm close to deciding but still teetering.

 

[Topweasel]

So basically if I want a new car I'm going to pay a high ass interest rate, there's no way around it. [/b]Paying on my credit card every month would help, but I don't use it much at all. There's nothing I want to buy and my monthly bills I could pay using it are only $150 bucks.
I don't have bills, so I don't really have shit to build up my score. It's a catch 22. *shrug*

Part of the problem, use it every where and try to leave some money on it. Like a hundred or two (sure its another 5 bucks a month in interest) but for the most part pay it off at the end of the month. Having a card at 0 and never using it doesn't do anything for your credit score, maintaining a balance while making timely payments is what helps. Do that on a couple of cards and you will be up to 650+ in like 2 years.

 

[Topweasel]

And after 2 years I should be where I can refi at a sub 5% rate, which I'd be much better with.

Problem is year 2 is when the value of the car is going to be at it's worse and a time you will will still be paying more interest than premium meaning that you will be severely under water on the Loan. It will be hard to get a refinance on the car at that point. Year 4 would probably at its best for a refinance.

I wouldn't be surprised if the 7-8k you paid wouldn't be enough to keep you afloat.

 

[QueBert]

Part of the problem, use it every where and try to leave some money on it. Like a hundred or two (sure its another 5 bucks a month in interest) but for the most part pay it off at the end of the month. Having a card at 0 and never using it doesn't do anything for your credit score, maintaining a balance while making timely payments is what helps. Do that on a couple of cards and you will be up to 650+ in like 2 years.

Problem here is, I don't spend money. I have 2 bills I can pay with a card, but they're pretty tiny. My roommate keeps the house stocked with food so I never really buy any. I do eat out 4 times a week, but the 3 spots I always go to are cash only. I don't spend money out of my pocket that I could be charging to better my credit score. I literally would have to start buying shit I don't want, which to me seems maybe more stupid than paying 14% on a car loan lol. I've had my Visa for about a year now, and my score has gone up 6 points. Such a small number it could just be due to normal fluctuation, or even inaccurate. Even if it's spot on @ 6 points a year I'm not getting a resonable % loan for another 20 years lol

 

[OILFIELDTRASH]

What was the out the door price on the scion?
You realize interest rates can be negotiable. They get more kickbacks for selling you the high interest rates. My first car I had a dealer tell me the best they could do was 18%. I left and found another dealer and got a 8.5% rate. If you're dead set on this scion you'll have to get the car at the rock bottom price to begin with. Less amount of money financed will equal less interest paid. Then you'll need to get a better interest rate. Once those are taken care of applying more money towards the principal would reduce the amount of interest paid. There are good car loan calculators on the internet to better explain in exact numbers what you'll pay in interest and how applying money will reduce the life of the loan and interest paid. Here's a good calc. http://www.bankrate.com/calculators/auto/auto-loan-calculator.aspx

 

[Topweasel]

Problem here is, I don't spend money. I have 2 bills I can pay with a card, but they're pretty tiny. My roommate keeps the house stocked with food so I never really buy any. I do eat out 4 times a week, but the 3 spots I always go to are cash only. I don't spend money out of my pocket that I could be charging to better my credit score. I literally would have to start buying shit I don't want, which to me seems maybe more stupid than paying 14% on a car loan lol. I've had my Visa for about a year now, and my score has gone up 6 points. Such a small number it could just be due to normal fluctuation, or even inaccurate. Even if it's spot on @ 6 points a year I'm not getting a resonable % loan for another 20 years lol

Okay lets put it this way is buying something you could use a tablet, a new tv, some entertainment part, going to a random sporting event, taking up a hobby as stupid as paying an extra 6000 dollars on a car because you didn't ever get any toys. You never did say how your credit got so bad or how old you are. On top of that why are you jumping into a must have brand new FR-S if you don't do anything?

Keep in mind at a loan value of 18k with your 7k down. You will spend almost 5000 more on a car than what two years of credit would build up. And with that 7k down total in total you will be spending roughly 32k on the FR-S. It's also 7k more than than what good credit would get you (690-740 min depending on place, credit service, and person you talk to).

It took me 5 years to go from 450 to 680 and another year to go up to 720+. It's not easy. But you said you don't put much on the Visa. No activity means no increase in credit rating. Payments (not amount) but payments in general increase credit rating. Also be-careful of looking up your credit rating specially when your already that low, some detect that as a failed attempt to get a loan. A car is going to get valued at nearly the same thing as the card. So it will help. But your not going to go up 200+ points in 2 years. You will probably go up 70-80 in 5 just based on the car. Eskewing doing simple things to get your credit score up is only going to hurt you more when you are trying to get something big like this car. At this rate it will probably be 10 years and if this car is an example, 12-14k given to the banks before your rating is at a good level. Vs. working it up a little quicker buying nice things for yourself and others and carrying a little over each month on your card (probably should get more than 1).

 

[WilliamM2]

Have you checked with your credit union? Usually cheaper financing than the dealer in your situation.

 

[QueBert]

Out the door with the upgraded exhaust it'll be around 27k. I looked at the calculator link, if I put 0 down @ 14% it's saying my interest at the end of the 60 months would have been $7,525.81. That's pretty much exactly what I was looking to put down. Not close to what I'd like to pay. The problem with the the FR-S everyone wants wants one. Most dealers can hardly keep them in stock, so talking them down on price is pretty much just wishful thinking.

What I need to do now is figure out is there any way to realisiticly get my credit to where I could get the loan for less. Apparently though Scion wasn't going to give me a 14% loan, because in that link you posted 7.5k down @ 14% it's saying my monthly payments would be $441. I was quoted 380, which would put it around 8%, which is still high but I could deal with that.

Although, I was under the impression if I get it now and my credit gets better I could refi and save a ton of money for the last 2 years of the loan. Apparently it doesn't just work like that. I'm going to go call my credit union right now and talk to someone in financing so I can grasp my head about this better. And at least unlike most cars sales men I think I can trust my friend at Toyota. He did initially recommend I keep my car as it's paid off and running great. As a salesperson of course he's going to sell me a car if I want one, but he's at least not pressuring me.

 

[Topweasel]

Although, I was under the impression if I get it now and my credit gets better I could refi and save a ton of money for the last 2 years of the loan. Apparently it doesn't just work like that. I'm going to go call my credit union right now and talk to someone in financing so I can grasp my head about this better. And at least unlike most cars sales men I think I can trust my friend at Toyota. He did initially recommend I keep my car as it's paid off and running great. As a salesperson of course he's going to sell me a car if I want one, but he's at least not pressuring me.

The main key with refinancing is that it's almost exactly a normal loan. Which means that if your car is worth 14k and you want to borrow 20k to pay off the previous loan they would probably decline it or jack up the interest since they would be taking a larger risk on the car if you don't pay. It's the same as getting a loan for a personal sale. They want current miles, run it through what ever KBB like service they use and if its within a given range of the KBB value for it they ok the loan at a normal APR based on your credit report.

You should be mostly fine because of the substantial down. Problem is I don't know how much it will help your credit. You will probably only go up 20-30 points based on the car loan alone. Even with better service at the CU, it's still not going to be a tremendous savings.

 

[QueBert]

Okay lets put it this way is buying something you could use a tablet, a new tv, some entertainment part, going to a random sporting event, taking up a hobby as stupid as paying an extra 6000 dollars on a car because you didn't ever get any toys. You never did say how your credit got so bad or how old you are. On top of that why are you jumping into a must have brand new FR-S if you don't do anything?

I saw you mention insurance and my age, I checked insurance it'll be $115 a month, as for my age I'm a bit off your estimate. I'm 38, going to be 39. As for the bold

I'm entering my mid life crisis, and for whatever reason the FR-S has stuck out in my mind more than any car I've ever seen. Prior to this I've never even wanted a new car. I guess a combo of those 2 and it's pretty much a wrap

I'm learning to drive stick and somehow believe a car will fix my blah life, Car are the most common male mid life crisis purchase no? lol Well or a motorcycle