Questions About Financing New Vehicles

gamen

You'd have to take something other than a train since only cargo trains run through Oklahoma at present. But a valid point nevertheless.

Katelynn

Would someone please tell me if GMAC loans go by the "Rule of 78"? Where the interest is paid in the first 12 months thereafter you are paying off the principle.

KeavDog

I have a very good income but have a few spots
on my credit, one collection, and a few lates.
I am debt free with the exception of a mortgage
and the vehicle I plan to trade in. What
sort of lease options are there for me? I tried
the internet on-line car loan and was denied.

KeavDog

I am trading in a 94 caravan for a 1999
Chevrolet Suburban k1500.

hbarron

I'm considering trading in my two cars and am interested in leasing possibly a Ford F-150 and a SUV (of some make). I've read Edmund's suggestions for leasing, however, I have high mileage requirements (one car averages 23k a year). Buying the vehicle after the lease agreement is up sounds interesting, but do you still have to pay for the extra mileage and "wear and tear" if you buy it?

And...what's so special about the GMC Smartlease?

CarMan@Edmunds

Well, KeavDog, depending upon your specific credit rating, leasing may prove to be extremely expensive for you. Lease rates for individuals with poor credit can be as high as 16.5% through GMAC! You may actually be better off financing your next vehicle. Financing will enable you to put down a decent size down payment. By doing so, you will lessen the amount that you have to pay interest on and increase your chances of getting approved. I don't advise putting a large down payment down on a lease, this is essentially throwing your money away. Even though it will mean higher monthly payments, you are much better off leasing a vehicle with $0 down. Your trade-in will definitely help. Make sure that you don't take too low a price for your van on a trade. You can always sell the vehicle yourself and use apply the money that you get from the proceeds towards your new vehicle. Good Luck.

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CarMan@Edmunds

Hbarron, it seems as though you put a lot of mileage on your vehicles. Leasing is probably not for you, unless you plan on purchasing your vehicle at lease end. It's generally not a good idea to lease a vehicle if you plan on driving more than 15,000 miles per year. The excess mileage charges will become extremely expensive if you drive 23,000 miles per year. In answer to your question, no you do not have to pay for wear and tear or excess mileage if you plan on purchasing your vehicle at the end of your lease. There really isn't anything special about GMAC SmartLease. This is just the lease program that is offered through General Motors' captive finance company, GMAC. GM frequently offers low lease rates through the SmartLease program in order to help sell its vehicles. However, these offers can sometimes be beaten by other finance companies like World Omni or Chase. It's important to shop around when leasing a vehicle.

rushforth

Car man,

In response to Hbarron, you made the point that you should shop around for a lease and not just plump for the mfrs finance.

My question is if you take the time to negotiate the selling price of a vehicle to somewhere close to invoice with the dealer, then can you get a third party lease at this price, OR would you have to negotiate a new deal with that company?

CarMan@Edmunds

Rushforth, this situation may not ever occur. Generally captive finance companies offer the lowest lease rates, but you never know. That's why I mentioned that you might want to look around. Whether you have to renegotiate your deal will probably depend upon the dealer that you go to. Some dealers may feel as though they are not making as much money on the deal if you finance through another source and decide that they want to renegotiate the price. Others may not care at all. There's not really any specific rule that applies in this situation.

oshma

Hi, all.

Has anyone gotten financing through Auto Credit Finders in Tempe, AZ?

dingdong

To those who experienced w/ PeopleFirst..... do you all have good credit history? If so, I think that's why you guys and gals got the loan w/ such low apr.... my question is, my credit history isn't so good, so do you think I can still get a good apr with a not so good credit history???

shawkins

Dingdong,

I financed through PeopleFirst a few months ago. I think your credit must be in pretty good shape and you have to OWN your own home. Sounds like you may not be a candidate for them. But hey, why not give it a try. They call you back in 15 minutes. All they can say is no.

Scott

dingdong

Scott,

Hi! Thanks for responding.... Okay, I do own my home..actually, my mom does... but still, we do own it. If I try them and they reject me, will it make my credit history even worse... The reason I ask is because see, when you apply for a loan or credit cards, they check your credit history first. So if I were to apply with PeopleFirst, and they didn't approve, then there's another kick in the butt for me, another rejection...so, I will try it anyways when I'm ready to buy the car.... but thanks for your info, Scott....;)
dingdong

shawkins

Dingdong -

I'm pretty sure a law was passed a while ago that made it so that credit inquiries made for a car purchase are lumped together as one inquiry. I think it also covers a seven day period as well. So, I believe it is okay to shop for car loans for 7 days without each one counting separately.

I'm a bit puzzled about the home ownership thing you mentioned. You said your mom owns the house, but if I understood Peoplefirst correctly, I think they want Dingdong's name on a mortgage loan. But still, all they can say is no.
Give them a try, you have everything to gain and nothing to lose.

Scott

dingdong

Hello Scott,

Thanks again for your info.....

Oh, Okay, so PeopleFirst wants my name on the mortgage loan...why is that?? Well, whatever it is, I'm gonna give it a try when I'm ready to buy the car..... if I can't get the loan, then I'll just have to get it later then.... Thanks a bunch!!

dingdong

ay107

Scott,
Try CarFinance.com as a financing source too. You do not have to own your home with them, I don't, and I got approved. I do have a good credit history though.

shawkins

Ay107 -

I'm not in the market for financing. I bought in April and used PeopleFirst. I have excellent credit and own my home. It was a no brainer for me.

Carfinance.com is just Nationsbank. I deal with them with my checking and savings accounts and they weren't willing to account for that. Their rates were competitive, but nothing you can't beat through a credit union. They didn't seems to be anything special.

Scott

dingdong

Hi All!!

I just wanted to find out when you guys and gals went through financing your new car, did you apply for finance like two weeks before, or like way ahead of time, for ex. a month before your purchase of the new car? The reason I'm asking is because my boyfriend told me to try to get financing done now (it's gonna be a joint acct) and I told him that in any case we get rejected, it's gonna show up on our credit report. And if we try to finance w/ another credit union, then they're gonna see our bad credit history due to the rejection. So I'm wondering when I should try to get a loan if I'm gonna get the car in about a month or so. And i am getting a Honda Accord, my boyfriend says to get the V-6. So we're probably gonna have to borrow at least 20K. Any advice would be wonderful!!! Thanks a lot!!!

dingdong

msellow

dingdong:

Even without perfect credit, it's important to know what's on your credit report. Getting a copy beforehand gives you the chance to ensure that there are no errors. If you plan on a joint purchase, then each of you will need to get a copy of your respective credit reports. The bank/credit union will evaluate both credit reports in the process of making a decision. It takes at least a month to fix "minor" errors, so now is a good time to start.

The three major credit bureaus, i.e., Experian, Equifax and TransUnion, have Web sites. Each one also has tips on how to correct errors, links for financial planning, etc. If you ask, your specific credit union may even tell you which credit bureau they use as a basis for their decision.

As far as timing or when to apply for the loan, most banks, credit unions or other commercial lending sources will hold your approval for 30 days. If, as in my case, you're waiting for the car to arrive, some will extend the time if needed.

Good luck

dingdong

msellow,

Thanks so much for your advice... Okay, first of all, I do have my credit report. Now I just need to get my boyfriend's. Second, I got my report from Experian. I can tell my credit isn't so great, but at lease it's not bad.

So I think now would be a good time to apply for a loan... I don't know if I should go to a bank or go to my local insurance co. for the loan.... Any advice for someone living in s.f.?

dingdong

msellow

dingdong:

Perfect credit or not, there's still some form of competition for your business. After all, you will be paying THEM interest. I'd suggest checking with all of them (insurance co., credit union, local and national banks, and whatever's available on the net) to see what their rates can be.

If you're able to add a down payment, repay via direct deposit or automatic transfer from your account, some sources will lower the interest rate regardless of your credit rating. It may only go down 1/2 a percent, but every little bit helps.

Overall, credit unions usually have the lowest rates, but look around. The place where you currently have an account may give you a lower rate than they will someone off the street.

Dealers will, of course, offer you a loan, but you'll have a lot more bargaining power if you walk in pre-approved and have the freedom to tell them NO and can concentrate only on the price of the car. Other parts of Edmunds and other Web sites have more detailed info on the car buying process.

There is a GREAT site, it contains the graphic of a bull "doing his duty," that is the best plain english guide on how to buy a car. Hopefully, someone reading this will post the address, since I don't have it handy.

dingdong

msellow,
Oh yeah, I know what site you're talking about. It's the site that a guy name Jeff Ostroff who's the creator. I think that's the one you're talking about? Anyways, yeah, I have read his whole website. Very, very informative. I love his site. I always go there every other week to check on what's new that he added in.;)

When you mention credit union, what exactly does that mean? Aren't they the same as banks? I'm sort of confused of what you and everybody else means when they speak of their "credit union". Please define...

Also, yes, I will be putting a down payment, 20% at least. So will that make a difference? I sure hope so. Because as Jeff's site suggested, if you don't have at least 20% to put down, you're going to be upside down of the car loan. So I will be putting 20%, or a little bit more down.

msellow

dingdong:

Yes, Jeff's page is the one I was referring to.

Although this may a little long, I've copied the definition of a credit union from the National Credit Union Association (they're the 'FDIC' for credit unions) WEB page. Most people, based on where they or a relative work, can join a credit union. http://www.ncua.gov/ also contains a listing of credit unions by state.

"A federal credit union is a nonprofit, cooperative financial institution owned and run by its members. Organized to serve, democratically
controlled credit unions provide their members with a safe place to save and borrow at reasonable rates. Members pool their funds to
make loans to one-another. The volunteer board that runs each credit union is elected by the members. Not for profit, not for charity,
but for service is a credit union motto.

Credit unions are not new. Originating in Europe, credit union history began in this country when the first credit union was formed in
Manchester, New Hampshire, in 1909. Today, over 12,000 credit unions with $316 billion in assets serve 70 million people in the
United States. More and more people join credit unions every year and they are pleased with the service. Credit unions have rated No.
1 in customer satisfaction at financial institutions for 10 years according to the American Banker Newspaper's annual customer
satisfaction survey.

To join a credit union, you must be eligible for membership. Each institution decides who it will serve. Most credit unions are organized
to serve people in a particular community, group or groups of employees, or members of an organization or association.

Community development credit unions are a unique form of credit union. They serve primarily low-income members in distressed and
financially underserved areas. In the past few years, NCUA has emphasized the benefits these institutions provide to the many people
who are often unserved by traditional banking institutions. NCUA also manages a Revolving Loan Fund and provides technical
assistance grants to low-income designated credit unions."

dingdong

msellow,

Oh, okay. I see. So that is a credit union. Thanks so much for all your help. I will try to finance at the credit union if I can. If not, I will try at the banks and the insurance cos. Thanks again for your patience. I will keep you posted.

Yep, I knew you were talking about Jeff's site. He is such a wonderful man. I have e-mailed him my questions and he answers me almost immediately. I'm very glad I found his post. And I'm glad you are here to help me out also.

dingdong

msellow

dingdong:

You're welcome!

Once you become a member, the average credit union is pretty good about approving loans. The interest rate they offer will depend on your credit history, but having a 20% down payment will help a lot. In researching for my loan, I discovered that most credit unions in the Washington, DC area will give a rate reduction for an automatic transfer of payments. Therefore, my guess is that you'll get the same option.

One more thing, you didn't ask and I think Jeff talked about this, be sure to factor car insurance rates into your budget. A quick call to your local agent will let you know what the ballpark rates are for the car(s) you're considering. This can sometimes mean reevaluating your choice of car.

dingdong

Hi msellow!!

Boy, are we both just taking over this post or what?? Anyways, you know what? I asked my boss if our company is in a credit union. He said no, but will look into it. So hopefully when we have the info, we'll join the credit union and I will get a loan, hopefully...

You know what? I already called my insurance co., State Farm, as a matter of fact, to get a quote. Because I have another car under my name, an Acura Integra that my boyfriend and I brought in 96, the insurance will not be that expensive at all. It is only because I put myself as the primary driver on the Integra, and that one driver cannot drive all two cars at once. So therefore my insurance for the Accord, once I get it, will only be about a little more than 1K for a year. So I'm quite happy with that. Yeah, Okay, thanks again so much for all your help. I'll keep you posted on my loan... And if I don't find you here next time, I'll e-mail you.....;)

dingdong

hbarron

A salesperson at a Ford dealer suggested I consider a Customer Option Purchase (COP) instead of a lease. He said the only difference is that the title is in my name and not Ford's and that I don't have to pay taxes if I either buy the car or lease another car at the end of the agreement. I can also keep any equity I earn if the value of the car is higher than the predicted residual value of the car at the end of the agreement. Is this information correct?

sschwartz

CAN YOU HELP? I know that I can shop around for car financing for purchasing. But can I also find alternatives if I want to lease? I want to have something in hand re leasing alternatives when I go to negotiate in about 2 weeks? Otherwise I believe that the dealer will really try to rip me off!

Anyone know where I can get 'independent' leases from...other than the car co. I buy from?

CarMan@Edmunds

Sschwartz, there are independent companies who are not affiliated with manufacturers who offer leases on vehicles, including Oxford, Primus, and World Omni to name a few. However, manufacturer's captive finance companies often offer the best deals because the manufacturers themselves support the rates in order to help sell more vehicles. Dealerships usually quote you the cheapest possible lease on a vehicle. They really don't care what company the lease is through, they just want to sell the car. So if an outside leasing company has cheaper rates than the manufacturer's captive company, they will usually run the lease through the cheaper one. Go visit a couple of dealerships and get quotes on how much it will cost to lease the vehicle that you want. Make sure to look at all of the variables, not just the monthly payment. Will you have to pay a bank fee? How much money will you have to put down? How many miles per year can you drive without paying a penalty? The answers to all of these questions are very important. Good Luck.

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sschwartz

CarMan: thanks for the info. I know that all the 'terms' are negotiable, at least I'm going to negotiate them! But its good to know that I can look at some other companies just to get additional quotes to use with the dealers.

Thx again!

katski

Could someone please explain APR?

Thanks.Kat

shawkins

Dodger -

Are you sure you're allowed to talk like that here?? ;-o

Scott

Dodgers

I think so... unless helping consumers from getting ripped-off is a crime.

I've bought at least 3 new cars where knowing how to calculate the payment has helped me from falling victim to the finance manager's lies. And I hope everyone learns it too.

ldkusmin

My wife and I are shopping for a car--we'll probably get a Honda Civic or Toyota Corolla. Neither is offering cash rebates right now, but they are offering below-market financing, so we'll probably want to use their financing (even though we do have preapproval from our credit union). My question is, when we go in to negotiate on the car, do we want to have financing documentation with us? And if so, what do we need? I don't want to ask the dealer, because I figure we'll seem too eager if we're already talking about loan documentation before we've negotiated a price--but I don't see a reason to make an extra trip if it can be avoided. Also, in this situation, do we still need/want to avoid signing the contract until the financing goes through? We know we have backup financing, and we're only asking for the advertised rate (and we *should* qualify).

PORTS88

I WANT TO PURCHASE A 98 GRAND PRIX. I GOT MARRIED LAST YEAR AND MY WIFE IS ELIGIBLE FOR A GM DISCOUNT BECAUSE HER FATHER WORKED FOR THEM. IS THE DISCOUNT CALCULATED OFF OF THE SUGGESTED RETAIL OR THE INVOICE BASE PRICE?

CarMan@Edmunds

ldkusmin, you really son't need any sort of documentation that proves that you have financing already, if you know what special rates Honda and Toyota are offering. It's probably just a waste of time. Having preapproved credit is a good idea in the event that there are not any special APR programs in effect. This way you can ask the dealership can beat your best rate. You really shouldn't have to sign any agreements before your credit is approved if you don't want to, this can usually be done in a matter of hours. If you do sign for the car before your financing is approved, make sure that the contract states that this deal is dependent upon your acceptance in the special financing program. Good Luck.

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pc003c

Carman Need help!

i just got an integra LS automatic for the price of $19435 (including dest. charge and state tax).
well, this morning we left the lot with the financing through the dealership at 5.9%. The finance guy said it was an American Honda special going on...so we signed the papers, with my monthly payments of $317 on the paper (i had put down payment of $9000, making the loan of $10435).
well, that was morning. 7 hours later (about an hour ago), the finance guy calls again and said he made a mistake with the interest rate. he said it was supposed to be 4.9%, a whole point lower from the 5.9% that i had agreed and signed onto this morning. so he wants me to go in tommorrow morning to get the papers down again. now i checked the edmunds sites for any special finance programs the honda/acura are running and i couldn't find any. so i have "fishy" feelings about going in tommorrow. do you think it's legit? could he be planning some kinda switcharoo on me?? hope you can reply soon....

pc003c

pc003c

ps.

thanks! i think these Edmunds conference halls are GREAT! i've learned so much valuable info and can't tell you how much you guys are appreciated. thanks again..!!

spud4

I am about to buy a new Ford Explorer and am prepared to pay cash, but 1.9% financing is available. Could someone show me the numbers that would suggest which way I should go.

rockycow

You can make a safe 6% on a CD or put your money in the market. Seems the way to go with 1.9% financing.

CarMan@Edmunds

pc003c, take a close look at any papers that the dealership wants you to sign. Make sure that the price of the car that you purchased and the term of your loan are exactly the same as your previous agreement. If so, then great! They just saved you some money.

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CarMan@Edmunds

Well, spud4 I would take advantage of Ford's special financing and invest the cash that you would have used for the purchase if I was in your situation. It shouldn't be very hard to get a return on your investment that's better than 1.9%. Even money market accounts pay around 4%.

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spud4

I had a feeling what you guys are saying is true. I am getting 5.1% with a balance over $10,000 at my bank. I guess I'll just get used to paying monthly notes (which I'm not used to doing) and save myself some money. thanks for the input.

obi1

Does anybody know current apr's on a 99 mercury cougar? I plan on using Ford's college grad program and nobody at Ford credit or the dealer seems to want to tell me.

chris18

Is 84 months, a little too long to finance a car?

CarMan@Edmunds

In my opinion 84 months is way too long to finance a new vehicle. The interest that you pay on a loan that is that long would be enormous. If you have to finance it for that long in order to purchase the vehicle that you want, then I suggest that you consider a less expensive one.

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CarMan@Edmunds

Obi1, Ford does not have a special APR program on the Cougar, so you if you decide to finance through Ford Motor Credit then you will have to pay whatever their standard rate is. For individuals with good credit, it is probably around 8%.

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be83412

I just grad from college and I plan to lease a car,suppose the dealer and I agree the price of the lease first,is there any reason for the finance guy higher the price ? cause it seem like the everything we agreed were already calculated (interest,monthly payment,etc).

CarMan@Edmunds

Be83412, if you agree to a price with the salesman, then there's no reason why it should increase when you go to the F & I manager. The dealership is probably just trying to squeeze more money out of you.

thomas6

I am a university student just arrived in the states . I would like to buy a car . I have a cash budget of 5000 or if it is possible i can lease a car