Did you recently take on (or consider) a loan of 84 months or longer on a car purchase?
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Car_man
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Smart Shoppers Message Board
Bingo.!
Terry.
Can someone please help me out...Im thinking about tradin my car in for a new one.
I recently bought a 2000 Honda Civic EX Coupe a lil over a yr ago. I really didnt have any credit bc i was just starting out so I had a friend co-sign for me which had bad credit which made my internest rate about 20% anyways but that was the only way they would finance me.
Anyways, my question is I want a new car now. How hard would it be for me to trade in my old car which the payoff is now $9,999 on my 2K Civic which now has 96,000 mi on it. I want to get a car that is approx $20K and dont have any $$ to put down.
My credit shows my car loan which is a joint account open/never late for over a yr and a nordstrom cc that has been charged off...oops. and also a collection account paid off, thats it.
I could have the same friend co-sign again...
What should I do??
Thanks!!
Then go to your local credit union/bank and see what is the highest they are willing to lend you and at what rate.
Then go to the dealership and see what kind of financing they can get you.
A recent charge off and a collection acccount will hurt your score. If it's a few years old, it won't be as bad.
Meaning: Don't buy everything that you want unless you can afford it.
If you hold out now and tell yourself you are doing it for YOU and your future I can guarantee you will look back and not regret it.
I agree with the others here...keep ur car and pay it off. You don't "need" another car if this one is running properly and not becoming a money pit. You just "want" a new car, as we all do from time to time. But only you can make that decision.
Good luck and keep us informed. Listen to your inner self and I believe you'll do the "right" thing for you. It's like those shows when we were younger with the angel on one side, and the devil on the other. Funny, but so true!
The Sandman :-)
If you take a 5 year balloon loan, can you sell or trade in the car after 2 years without penalty??
Thanks,
PJ
The main difference between payoff options with a loan and a balloon loan are that in regular loan you can pay it off at anytime you'd like (in most cases) without penalty. With a balloon note, you are agreeing to pay them over xx months and agreeing to pay them the interest on those months. If you want to walk away from the contract, you owe them the remainder of it first.
The key word here is want!!!! Keep the Civic until you pay it off. By that time your charge offs will be gone, and hopefully you don't make same mistakes. You credit will be better in 4-5 years if you keep everything under control. Wanting a $20K car while not being able to afford the $10K is something you should forget.
You are about $5000 upside down on the civic right now. So, by geting a $20K car you will be paying a $25K loan plus interest. That would be a $500-$600/month payment, can you handle that for the next 5 years? Don't forget that insurance on the more expensive vehicle will be more expensive. You might as well double your insurance premium right now, can you handle that? If you can handle a $1000/month car note, how come you have no savings? Most people on this board make good living, but would never sign up to pay $1000/month on a car/insurance note.
If you really want that $20K vehicle, and you can handle the $1000/month note, start putting the difference from our current car payment and the $1000 into a savings account. Do that for 2 years, and you should have a nice downpayment. By then you will think more in terms whether you want a new car or a condo/house.
Good luck
unfortunately, most people in that position will say "forget them!" and go to dozens of car lots until someone gets them done. then they make 3 or 4 payments, find out that its too much car, and take a repo. then, the lending institution comes after them for the difference and they file BK.
now they have gone from a few charge-offs to downright credit thief.
Thanks for any help!
Your credit score is not bad so you should get a good rate. But then again your score is not the only thing they take into consideration. Other things like your revolving credit, how many lines of credit you have open, debt-to-equity and few other things will affect the rate you will get.
Then go into the dealer and see what kind of rates they can offer you.
dont just go into the credit union and look at the rates on their board. sit down with a loan officer and apply for the loan. this way, you have a concrete rate to shop with.
many, many people in my experience tell me something like "my CU offered me 1.49% on 72 months."
but all they did is walk into the lobby and look at the poster board with the *as low as 1.49%, or for as long as 72 months* wording.
"sir, i need to see that so we can accurately quote you a payment"
this is not only true, but its a good way to verify if its actually an offered rate.
Our credit union offers 4.25. Of course we'll need to apply and see if we qualify for that rate. It's a catch-22 because we will have inquiries on our record and may just decide not to finance the car at this time!
(1) We've owned our house free and clear since 1996.
(2) Pay the Master Card off monthly...i.e. never carry a balance.
(3) Never a late charge.
(4) Bought things 3 times with the free finance offer but paid entire balance before the date, so no interest charges.
Basically, we don't buy if we don't have the cash somewhere readily available. Some folks at work said our score would not be in the highest tier because of these situations.
Could this be true?
The Sandman :-)
This is just my personal experience but, with $9,000 down your rate should be considerably better than mine. You may want to apply with Eloan and obtain various offers so you have more ammunition when dealing with F&I.
They don't look at assets so the fact that you own your home without a mortgage doesn't factor in. Your paid mortgage also doesn't factor as it has most likely dropped off the report since you paid it off over 7 years ago.
The fact that you pay your credit card off monthly and never pay interest or late charges never shows up on the report. What the report shows is if you have had a 30+ days late payment in the past 7 years and the balance owing and Limit as of the last time the cc company reported (usually at the end of the month). Meaning, if you have a $5,000 limit and at the time they report you have $4,000 in charges then that may count against you since it shows you have account charged at 80% of its limit. Of course if your balance at the time they report is $500 then it shows good because it is only 10% of the limit. In other words, there is no payment history on a credit report, only current balance and any late notices that the company has reported.
The 3 free finance offers (if paid w/i the past 7 years) will count towards you since it shows a high balance and shows as fully paid with no late notices.
Because I am concerned about fraud and my credit, I subscribed to a service through Equifax where I can get my credit report and FICO score any time I want. The small yearly fee is worth the peace of mind.
I pull my credit regularly and find out when my credit card companies usually report. They are pretty consistent.
So, if I know I am going to apply for a car loan on the XX of the month, I make sure that every credit card was paid in full BEFORE their reporting date (regardless of when the bill is due) for the prior month so that, at the most, the only thing showing on the report is any charges that occurred between the day I paid it and the day they report it.
I've had no problem keeping mine in the mid to high 700s using this method. I've also seen it drop to a 690 when I had three cards that had balances of over $4k each when they reported. Of course those cards were paid off by the time I pulled the report, but it only shows what was last reported.
kcram
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Smart Shopper and Wagons Message Boards
My scores are in the same range with a debt load on my cards - 719, 721, and 768 as of September. It's how you manage your credit that impresses, moreso than not having any debt.
kcram
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Smart Shopper and Wagons Message Boards
Some habits are hard to break.
The Sandman :-)
I think you got me wrong. I NEVER charge on a credit card things that I can't pay for in cash. However, if I can use someone else's money for free for 25 - 40 days AND make a rebate on that then I make money. All the while earning interest on my cash in the bank, then I make money. Last year I earned almost $3,000 in rebates from using my credit card for purchases I'd normally use cash for. (plus saved those darn check printing fees!) Isn't that what it's all about?
People at work think we're nuts not to just buy everything we want, but we're not missing much. How many t v's, cars, clothes, and electronics can people really have...and use?
The Sandman :-)
Starting in the '90s we got into a really bad habit of using debt to get what we want. And the bankruptcys skyrocketed. The only way you can really have freedom is to spend less than what you make.
But whatever makes you happy...go for it. I'm happy to know I can afford most of what I want and still not be in any debt.
To each his own!
The Sandman :-)
Interestingly, my balances were pretty high last report pull... 82% of credit lines, and they haven't been zero in a long time (but will be by the end of 05). All the accounts have been open since at least 1993, so I likely have history on my side there.
Next September, the credit load should be right around 30% but there will be a new vehicle payment in there. Will be interesting to see how the bureaus read that.
kcram
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Smart Shopper and Wagons Message Boards
I know having no credit cards actually hurts and having a big stack of cards with high limits hurts even worse.
I keep a VISA and an American Express that I've had for over 20 years. I can run some pretty high balances but they are paid off every month in full. We have no other debt.
The last time I looked my beacon was 818.
kcram
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Smart Shopper and Wagons Message Boards
"The only way you can really have freedom is to spend less than what you make."
OK guys, cease and desist!
This is unamerican, and you have been reported to the authorities.
Expect a knock on your doors from the dept of Homeland Security and/or Alan Greenspan.
As a friend of mine likes to say: "Where would the world economy be if the American Consumer behaved responsibly?"
The devil of it is, supposedly all this overspending IS good for the economy. I don't get it...
-Mathias
People who constantly swap balances for low-APR transfer deals aren't paying their debt down, they're usually moving it around in hopes they can lower their minimum payments.
The best way to pay down card debt is to stop using the card and pay as much as you can for as long as it takes. Two years of making steady $300 payments is way better to your credit score than 7 years of minimums or constantly swapping balances between cards.
kcram
Host
Smart Shopper and Wagons Message Boards
We just wanted to bring that point up.
The silliest thing I've heard people do is talk about "paying down their debt" and "swapping balances" then admit they haven't stopped using the cards!
I think one of the things that helps me stay out of revolving debt is that I've been using Quicken to manage ALL of my finances for 12 years. When you open up Quicken it shows a tally of the balances on all of your cash accounts, credit accounts, assets, etc. (This is all updated via the internet in the past few versions so it can current). I can only imagine the effect that it would have to people who carry revolving debt to open up that Quicken screen every morning and see all of those red balances and the negative net worth show at the bottom.
I'm new at the purchasing game, and I'm seriously considering buying a used '02 Highlander. I've read in other forums that it is better to get financing on your own instead of doing it through the dealer. If I get financing from a credit union or bank, do I have to get the financing letter or notification before purchasing the vehicle, or should I just bring the information with the interest rate to the dealer and hope that they can match or beat the rate??