Did you recently take on (or consider) a loan of 84 months or longer on a car purchase?
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Purchasing Strategies - Questions & Success Stories
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2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
No such thing in MA as temp plates. Here you either transfer your existing plate or get a new one. Big dealers are have a supply of new plates and are on-line with the state. They can process the plates in-house instead of sending a runner to the RMV. But it's not a free service - the state charges them for the convenience.
When we bought our last two cars, the salesmen made counter offers, which I think is a reasonable thing to do.
One time we offered $17300 OTD for an Accord and the salesman said, "Can't you at least increase it to $17500?" Of course, he didn't say they would accept $17500. He was only asking us to increase our offer.
I thought it was pretty funny. I mean, if I wanted to offer $17500, I would have done it in the first place. I guess it works on some people, so that's why they try it. Such is life.
Yes, they are. It is no mistake, because the sales process is designed to confuse the average consumer, to refocus your attentions from price to monthly payments if possible, and to wear you down by putting you through a process that usually involves at least three seperate people.
It's very moronic IMO.
I'll disagree with that, it actually makes perfect sense from the dealer's standpoint. It generally works very well, and the commission structure encourages it, which is why they continue to do it. The trend within recent years has been to take the edge off of it a bit, in an effort to encourage greater brand loyalty and a somewhat happier shopping experience, but the goal of getting more of your money remains unchanged.
I eventually went to Infiniti and Acura years ago because I wanted to be treated respectfully during the car purchase.
That's another area where I differ. I frankly don't care whether the salesman is extremely polite, extremely rude or somewhere in between, these are simply cosmetic variations in style that still ultimately lead to the same goal -- an attempt to get a higher price than you'd otherwise need to pay.
If they try to shake you down with a smile and employ a greater degree of courtesy, it's still a shakedown. Same cake, different frosting.
Yep, that'll bring them back as repeat buyers.
2018 430i Gran Coupe
The thing is, though, is that if the sales team is good at its job, the average consumer who buys on impulse and does no research won't even know that they've been had. The fact that the sales guy was "nice" will override the fact that they may have paid far more than they needed to, got less for their trade than they could have, and bought extras from the F&I department that were entirely unnecessary or else were overpriced.
The current trend in car sales seems to be toward the role of salesperson as consultant. That seems fair enough, but that "consultancy" process is really geared around getting enough information about you that they can hit your hot buttons and close you on a deal, preferably today and preferably involving a car on their lot right now. (It's not as if the dealer is going to start telling you about his holdbacks and extra spiff available to him if you share with him your job and income information, his intent is to have the information flow move toward his direction. In negotiations, information is power, and they prefer to be the ones with all of the information.)
So I wouldn't mistake niceness for true objective consultancy. If a Toyota Corolla would better serve your needs than would a Chevy Cobalt, then I seriously doubt that the Chevy "consultant" is going to tell you to get out of his dealership and head on over to the Toyota dealer. If you are intent on being a payment buyer, there is no way that the "consultant" is going to advise you that this one of the worst ways to approach a purchase, and that getting the lowest price, highest value for your trade, and the lowest rate possible will naturally give you the lowest payment.
Yet I'm sure that there are consumers who will mistake the friendly demeanor for one who is going to get them the best deal, when no salesperson worth his salt is going to give you a bottom dollar deal unless you know how to get it for yourself. That's why I'd recommend not worrying about getting a "quality" salesperson, and focus instead on paying as little as possible, borrowing on the best terms possible and getting as much for your trade as possible.
I'm looking at a Nissan Sentra because the rebates are pretty good right now at $2500. I also know a couple of months ago there was $750 dealer marketing support as well, but not so sure.
Anyway, I have shaky credit so that hurts my negotiating power and was planning to try to at least neutralize that with a sizeable down payment of about 6-7,000. Trouble is, I keep hearing the deals are best before April and I won't have my money in time for the end of March.
I also wanted to target the end of the month because I figure that's the best time to make a deal and maybe even get them below invoice + the rebate since there are a lot of Sentras on lots in my area.
I've been told by a dealer that I can go in there on the last day of March, agree to a deal and make some kind of arrangement to pay within a 30-day window, but I'm skeptical. Seems there's all sorts of ways that can bite me.
Anyone know if that's a real possibility or am I better off just waiting until I truly have the money down and hoping the rebates stay at the same rate by the end of next month?
Thanks in advance.
If you are hoping to get some kind of cut-rate financing deal from a dealer, and you have poor credit, then you might want to forget about it, because you probably don't qualify.
It's OK to get the dealer to provide the financing if he can provide you with a better deal, but having other financing preapproved will give you the negotiation power that you need. The rate might not be great compared to what somewhat with good credit could get, but it will be better that what you'd get if you walk into the showroom without a loan pre-approved. Remember, your dealer effectively serves as a loan broker, so you can negotiate the interest rate; however, you have no negotiation power until you first have pre-approval from someone else.
That, and remember that there are rarely consumer rebates available in combination with low-rate financing, you typically have to choose between one or the other. As you can see from JenRN's Altima purchase above, she actually ended up with a lower payment despite the higher interest rate because the lower price combined with rebates required a smaller loan amount.
According to Automotive News, the Sentra currently offers a choice between a $2,500 consumer rebate or a low interest rate package, but there is no factory-to-dealer marketing incentive. I'd check the Edmunds site to see if they offer any different information about this, as different sources don't always provide the same data.
Also, looking at the March inventory numbers, they seem to be at reasonable but not extreme levels, so I would take a wild guess and say that time for these particular incentives may be running out. But that's just a guess -- however, if there used to be a factory-to-dealer package that has been suspended, that may tell you that they are getting to a point that their excess supply problem is getting solved, at least for now.
I wouldn't personally panic about rushing out to buy at any one time. If you're in no hurry, you'll find good deals throughout the year, including the fall when the 2007's come out, and again at year end.
It wasn't quite to those levels but one place I worked at actively encouraged us to make our own recommendations if our cars weren't going to meet the customers needs. As a new store, the managements attitude was that if we couldn't make a sale then at least we would do our best to get a positive reputation in the community.
I'm not so much worried about the finance rate -- I expect to pay my dues for at least a few months due to my poor credit and then try to refinance. (Actually, this raises another question if you'd be so kind -- is there any language to watch for if I finance through the dealer for penalties if you refinance or should I be OK?)
The bigger concern is if the time is running out to capitalize on the rebate. On one end, I did think of the '07s coming out with the redesign, especially, and how that would bring great deals in the fall. But I might need a car well before that which brings me back to thinking I should move in March.
The other question was, is there a way to sign off on a deal by the end of March, but can agree to a pick-up and payment within 30 days after that? A dealer told me once that was possible, but considering one of the biggest incentives for them to cut a deal is to move a car off the lot, I wonder about that.
Thanks again.
Probably the best thing you can do, is straighten out your credit ..... I wouldn't be worrying about pick-up payments, current rebates and how the 07's might effect the market right now.
The best thing you can do is pull Free credit reports.com, or any of the full service info sources and find out the "why" - and how to fix it .... fico scores are nice, but they rarely tell the whole story .. there's plenty of 20 year old "Cosmetic Technicians" at Dilliards with a 720 Fico score that make $1,200 a month - and still can't buy steam off a hotdog.
Yours could be a glitch, it could be bad advice from a divorce attorney (that's a given) .. perhaps a student loan that got stuck in the wheels of progress, maybe even a BK .. but whatever it is, I'd get it fixed because it doesn't happen overnight ... sometimes it takes months, sometimes it can take a year if you're not tracking and following it correctly.
Dealers can get deals bought that other lenders can't get done because of their huge volume ... but why pay the extra interest if you can get the credit problem done and handled in the next 60/90 days..? ... also keep in mind, there's no guarantee that you will get refinanced after you get the first loan ..... do it right the first time and you won't have to worry about the rest.
Terry.
Avoid any loan that includes amortization based upon the "Rule of 78". Effectively, this accelerates your interest payments toward the front of your loan, so the amount of your remaining principal balance will be reduced more slowly than would otherwise occur. The Rule of 78 isn't allowed on car loans of 61 months (five years) or more, and isn't permitted in every state, but it might be something for you to watch out for. This link might help you: "Figuring out auto loan terms"
For this one, I'll agree with Royce in that all things being equal, you are better off improving your credit before borrowing than you would be borrowing on one loan, then refinancing to borrow for a second time. For one, the rate and terms on a used car loan will probably be worse for those on a new one, so getting refinanced might either not help you or else may not even be possible. Again, I would shop for the best deal possible before going to the dealership, then haggle for the best terms that you can get out of the dealer.
Perhaps not what you wanted to hear, but if your credit is that bad, perhaps you should buy a car that doesn't require a loan, or find some alternative transport options in order to save yourself cash, rather than paying some ridiculously high rate just to pay an economy car. The economy car may not prove to be so economical if you end up paying a high rate to own it, and you may be better off refocusing your priorities until you better able to afford it.
I hope that helps.
I've been looking at things for quite a while now and thought I had most tricks covered, but I hadn't yet found anything about simple interest loans vs. precomputed.
Excellent link and information and I suggest anyone shopping checks this out, especially if you have poor credit like I do.
Fortunately, I live in New York and the site listed that as one of the states the rule of 78s was banned in, but I still wonder if I can get bit with a precomputed loan. Socala -- or anyone else for that matter -- do you know if that only can be dangerous if the 78s rule applies?
Seems from the link that just a precomputed loan applies some of the same penalties for paying off early or, rather, does not reward you or make refinancing an appealing option.
Also, after reading so many helpful tips about refinancing out of a bad loan, none of them pointed out as the link and socala did that you are then financing a USED car, which I wouldn't have immediately thought of ... thus increasing the rate.
I definitely have a lot more to think about. The irony is, I was figuring I had to suck up some higher payments to actually improve my credit because I don't have many other ways to do so. I just acquired a $300 limit credit card after some past rejections, so that's a start. As I said, a lot to think about and I thank you.
(or is that the amount my ex-brother-in-law still owes me.?)
If you do ... deposit that with the local bank or Credit Union and borrow against that as a "Secured loan" for 6/8 months and that will pump your Fico score by 30/40pts, then start thinking car loans .... of course you have the make the payments on time .l.o.l....
Terry.
Didn't know much about that one either. Granted, the cash isn't quite rolling around but it's getting there. And, keeping with my revived obsession with the Sopranos, I can only ask ... "You want I should do somethin' 'bout your brother-in-law?"
But otherwise, very interesting. I'll have to research that. Thanks once again ...
I handle most of the challenged credit clients who purchase here. And I can give you a few tips to make the transaction run smoother.
Know what your credit is. Because many times people think that their credit is really bad when in actuality it is not. So what will happen is the dealer will mark up the rate because the client thinks that their credit is poor. Lenders tend to look at mortgage, car payment and revolving (in that order) for the past 12 months. Back child support and Tax Leins are big deal breakers too.
If you know your credit is really poor (550 and below) bring these items to the dealer up front:
Current paycheck stub (if self employed 1099s for past 2 years)
Proof of residency: Utility bill (in your name)
Phone bill:
Mortgage information, or current lease with lanlord name and phone number.
6 references with names addresses and phone numbers.
If you give this information upfront after deciding on a car, It makes the F&I persons job easier, It makes the approval process smoother and puts you in a better light to the bank. The most time consuming aspect of a special finance deal is making sure the customer meets the programs stipulations.
DO NOT PAD YOUR INCOME. IF you make 3500.00 a month do not tell the finance person you make 4000.00 per month. Because if you are approved, they want to see proof of the 4000 per month and if you do not have it they will kick back the deal or might require more down payment.
Good luck!
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
( I apologize for the cross posting, I wasn't getting any love in the other thread and I need to make a decision this week)
I'm moving from a small town in VA to NJ. My fiance and i need a second car to pack in all our stuff. I thought that it would be better to just buy a car in VA and then transfer the registration when we move in a month and a half. At least the money we'd spend on a rental would be going to car payments instead ( I have my eyes set on a toyota corolla).
Since I'm going to NJ next week to finalize our new apartment, someone also suggested that I buy a car in NJ before we officially move up to save me the hassle of transferring the title. Is that even possible?
To focus on the actual move issues, let's assume that I could get the same car price (before TTL) for the same options in either NJ or VA.
Thanks ahead of time.
If you buy in NJ, you may be able to register it to the apartment, but I wouldn't bet on it (the insurance if nothing else migh be messy). But, you can buy it as an out of state buyer, and they will give you a temp tag (inteneded for transport home), which is either good for 15 or 30 days IIRC. I suppose you could then just register it normally at the DMV when you get back to Jersey.
OVerall, I'm thinking a couple of days on a rental car may be cheaper 9and easier) overall. Enterpise is all over, and shouldn't cost too much. or just go with U haul and have plenty of room for junk!
2020 Acura RDX tech SH-AWD, 2023 Maverick hybrid Lariat luxury package.
That said, look into how long NJ and/or VA will let you have a temporary tag. Some states I think only allow 10 days, but others allow a month. If you could get a temp tag for a month, then it wouldn't matter where you buy it, you could still register it in NJ before the month is up, if your apartment address is final by then.
I'm pretty sure we need a 2nd car. Our one car is a 95 Camry with a 160K miles on it. I'd feel better knowing my fiance is commuting in a dependable new car. We don't have much stuff. We're grad students and I'm pretty much writing off all the cheap furniture we've accumulated over the past two years. Also, limiting transportation to two sedans will hopefully force us to get rid of stuff we don't need ( goodbye life size cardboard standup of heidi klum, i've found someone else).
From a dealer and bank perspective, should I be upfront and tell them I'm moving in a month or two?
Thanks again.
I've saved enough in a special fund to pay cash for a new vehicle. Is there any reason I should even consider financing any part of the purchase?
My credit is good so I don't need to build that up. Loan interest rates would probably be anywhere from 3-6% depending on the car I pick and when. I typically keep my cars several years (as in 5-10+). I know paying cash doesn't improve my negotiating position. I'm also not that interested in a monthly payment and can't think of a reason I should finance. Just wondered if there was something I wasn't considering. Thanks
If I knew how to invest money to get a good return, then it would probably be a good idea to finance our cars and invest the money. However, all we know to do is buy CDs which pay 4.6%, which is 3% after taxes. Most car loans are more than 3%, especially if you are getting the car for a pretty low price like we do.
However, there are advantages to financing a car purchase. The primary benefit is a matter of financial risk mitigation. By paying cash for a car, you are committing a significant amount of cash in a hunk of depreciation metal might either limit your investment opportunities elsewhere, or else put you in a bind if your life changes enough that you find that you could have really used the cash that you had paid toward the car. The cost of financing new cars is lower than it is for used cars, so you expose yourself to higher costs and greater risk by paying cash, instead.
I would recommend that you never purchase a car that you couldn't afford to purchase all-cash; however, that does not mean you shouldn't borrow the money. Particularly if the terms of the financing are favorable, I would certainly consider borrowing it.
That being said, if you have a choice between low-rate financing and a factory-to-customer rebate, you may very well be better off taking the rebate than you would be by taking the low interest deal. (This point assumes that you pay the appropriate low price for the car, and deduct the rebate from that amount -- for example, if you can get a car at invoice and there is a $1,000 rebate, you should both pay invoice AND take the $1,000 rebate, not pay $1,000 over invoice, and then apply the rebate to get the net price to the invoice level.) In these instances, run the numbers on both scenarios to see how each plays out.
What leverage....? ... the dealer doesn't own it and they don't hold the title .. the lender does ...
"If ..." ... it became a massive service problem it would be between the manufacturer and the current owner ... the lender and the dealer have nothing to do with it ..
Terry.
There are several legal and practical avenues to pursue in order to resolve a lemon or defect complaint - stopping loan payment is not one of them.
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Find me at kirstie_h@edmunds.com - or send a private message by clicking on my name.
2015 Kia Soul, 2021 Subaru Forester (kirstie_h), 2024 GMC Sierra 1500 (mr. kirstie_h)
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So if someone only has $5000.00 in the bank they should only buy a $5000.00 car? So if someone only Has $50000.00 in the bank, but can afford $2200.00 a month on a A8 they should not buy it? I think that is a little unreasonable.
Sad, to say, we live on credit.
People who don't have money shouldn't be working overtime to spend what they haven't got, particularly when they could be investing it into something that could create value. Nobody today is going to fund his retirement a few decades from now with would be become a 30-year Audi. As much as I like cars, I can think of more than a few people who would smart to dump their BMW leases in favor of used beaters and a bank account.
Yes, that's exactly right. They should not buy it. If that is all they have saved, they should buy a much cheaper car.
$50K in the bank is not a lot of money. $2200/month for any vehicle is not wise if only $50K in bank. Need to set sights lower. People buying luxury "should be able" to write a check for full amount and suffer very minimal or no consequences in their overall net worth and/or cash flow.
That IS sad.
My unwritten thought when posting which was touched upon, was wondering about investing the money at a higher rate than what I was paying to finace, but it didn't seem to be worth the small savings it might generate. This is the first time I've had the ability to pay cash so it just feels a bit strange albeit good. I don't plan on mentioneing that until I get past any purchase/trade discussions.
As mentioned in one of the replies, I've always worked the numbers of cash back vs low financing in the past and something I would always recommend since things aren't always as obvious as they seem. Unfortunately (for me) the two cars I'm considering appear to be selling somewhat well and aren't too incentivized at the moment.
One seems to have dealers wanting to charge closer to MSRP. and in fact, the closest dealer is having difficulty getting one in the trim /engine I want to test drive. The other is a leading model and often recommended by reviewers. Sales were up in Jan or Feb, but IIRC, down overall for the quarter compared to last year in the figures released last week. It's still generally quite a bit over invoice although there are enough reports in the prices paid forums that I have some hope :confuse: I wish I could embrace this whole buying process with as much enjoyment and as easily as some others appear to do.
$2,200 a month??? My mortgage isn't $2,200 a month.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
First of all I said if financing was done through .....A company that you were buying car from...it would give you leverage should car turn out to be a lemon. For instance " General Motors Acceptance Corporation, a wholly owned subsidiary of General Motors Corporation, operates under the brand name GMAC Financial Services".
Secondly, try checking with someone that has gone through
"legal and practical avenues to pursue in order to resolve a lemon or defect complaint ". It eventually might help but you're at the mercy of a third party and the red tape involved gets more complicated all the time.
Believe what you want but its great to be able to send a letter explaining you unresolved problem(s) and letting them know you're not paying till its fixed. I know first hand its effective.
Maybe in some of the far reaches of the upper Amazon River delta that might work ....
But ..... GMAC is a totally separate entity of GM, they're a lender - not a baby sitter ... that's like someone calling their mortgage lender and saying: .. "I'm not making my mortgage payments til' they repair the air conditioning system of my house..." ..l.o.l.... you might get a sad shoulder to cry on, but you still have to make those payments ....
Terry.
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Find me at kirstie_h@edmunds.com - or send a private message by clicking on my name.
2015 Kia Soul, 2021 Subaru Forester (kirstie_h), 2024 GMC Sierra 1500 (mr. kirstie_h)
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I'm now looking to buy a $40k - plus convertible as a second car, and might either pay cash or finance part of it. The only reason I'm considering financing (and it would be less than 50% of the value of the car), is that I'd have to pay capital gains taxes on anything taken out of my mutual funds. The money I have in CDs in my "car account" would not be affected by that consideration. I have to run the numbers carefully on that. Either way, I *could* pay cash if I want to.
During those years from 1980 to 2000, I was a regular, middle-class American, no fancy investment banker salary, and now I'm retired (retired early, thanks to dedicated savings). I had a good job, yes, but the key was in buying less house than we could have afforded, always paying off any revolving charges every month, and paying myself first for retirement savings and for my car savings account. It works, really. You don't have to put yourself through the credit wringer in order to have a nice life.
(Bobst, maybe this is off topic, but you might want to consider investing some of your CD funds in a plain-vanilla index fund with Vanguard or T. Rowe Price or somebody. No fancy calculations required, and over time, should return you 8 - 10% a year.)
Anyway, basic financial planning - everyone needs to have an emergency funds account equal to 3 to 6 months living expenses, contribute to some sort of retirement account, either at work or in an IRA, and get your credit cards paid off. Once you've accomplished that, you can think about saving towards your next car. When you've saved as much as the new car of your dreams costs, then you're in a position to buy what you want.
If you can't, then think long and hard about buying anything, because you're heading in the wrong direction.
If you can't, then think long and hard about buying anything, because you're heading in the wrong direction.
But wouldn't it ruin our fluorishing credit "instant gratification-big credit card balance-big budget deficit-no savings-buy more than you can possibly swallow" economy? Imagine suddenly everybody buys only when they have money. Three quarters of our panelists in car sales would have to quit or move to a used cars lot, not to mention half of the shopping malls closed.
Now, seriously - I think there is nothing wrong with a loan - but exactly not the ones that are often promoted by manufacturers or dealers (0 down, no payments until next year, etc.). If one pays a good percentage down, keeps the loan balance well ahead of depreciation and payment amount in less than 20% of their take-home pay along with aggressive payoff schedule (can you say 36-48 months rather than 72 months?), it is allright, IMHO. But how many do that? Myself guilty, too (60 month loan)
How about a lease? Fantactic - low payments, right? Yeah, right... For who could buy it anyway (or afford a hefty loan), but opt for a lease for convenience reasons (i.e. they CAN afford the car, but they CHOSE to lease so they have no troubles with trading etc.) it it OK, too. The worst kind of idea is to lease "to keep the payment low". Usually, they go with large down payments (you guessed it: "to keep payment low").
Sometimes leas actually makes sense for the promotional rates and/or subsidized residuals, like Audi, Saab, or a BMW, but I would still keep the pencil sharp, cause there are so many pitfalls there, one can get in trouble really fast.
Rule of thumb remains for me, though - even with low rates - if your can't buy it (i.e. either outright or with loan with sizable downpayment), can't lease it either. Anything else is just a voodoo economics - justifying overspending by focusing on little part of the large picture and completely disergarding the rest.
By the way, if someone could pay monthly $2000, but has only five grand in the bank, something is seriously wrong with the person's habits. It is well known that savings rate is virtually independent on the income level. The amounts can differ, but the have/not have factor depends on the person.
2018 430i Gran Coupe
$2,200 a month??? My mortgage isn't $2,200 a month.
A loaded A8L, meaning the long wheelbase version, is well
over 100,000 dollars. It is a whole different league up there.
The last Supercharged Range Rover I leased out back in March worked out like this.
MSRP of the car was just under $93,000. They wanted just under $3,000, retail value, of accessories installed. This particular couple is one of our best customers. They are on their fourth Range Rover and will be leasing a fith one come October or so. I have sold cars to three or four of their family members. Keeping all that in mind we throw the accesories in for free. Real cost to us is just under 2,000 dollars.
They are still paying full MSRP for the car but getting the accesries for free so a discount of $1,800 or so dollars.
Lease worked out like this...
20,000 miles a year 30 month lease.
Just start up fees and first month payment down which worked out to about 3,500 dollars.
$1,880 a month all taxes included. Add it all up and that is just under $60,000 to drive an almost $100,000 for two and a half years and put 50,000 miles on it. At the end of it that car will be out of warranty and totally used up.
I'm now interested in leasing another car with nothing down. Am I better off in negotiating (i) just the monthly lease payment or (ii) the sales price first (like when I purchased) and then figuring out who has the best money rate, residual, etc.?
Remember, monthly payments naturally go down when you negotiate the terms that drive the payment -- if you lower the effective purchase price, the payment goes down. (Remember -- a lease payment equates to paying an interest rate on a certain amount of depreciation, so lowering the purchase price effectively reduces the amount of depreciation upon which you are paying interest.) If you focus strictly on the payment while ignoring how the payment is calculated, chances are good that other things will get tossed into the deal that you didn't expect, such as a reduced mileage allowance or higher down.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Erika Neely
California 90260