Did you recently take on (or consider) a loan of 84 months or longer on a car purchase?
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does it vary by dealer/location/age etc. or are the rates fixed on the fico score?
for example if I were to have a score of "x" should i get the same quote from all Honda dealers?
thanks,
If they are using outside financing through a bank or a credit union it can vary a bit.
And, yes FICO/BEACON scores determine the rate you will pay.
any idea what rate would be for the shortest loan time period (1-2 yrs) and the highest fico would currently be?
thanks again.j
Yes, they can pull your credit. You don't want your credit pulled too often because if it gets pulled several times in a short timeframe it will drop your score a bit.
They top out at 850. I've seen an 840. I'm an 827
About the best rates I see now are mid 6's. If you do a short term loan they won't get any better and your payments would be HUGE!
Not a big deal. This is a CAR not a house where a half point can mean thousands of dollars over the life of the loan.
#8-)
not really, it's just a question of using a home equity line which would be tax deductible versus the car loan, I'm leaning towards the equity line route, it's a little more flexible.
thanks, j
(827 nice!)
I'm not one for home equity loans in general. You may end up financing that car for fifteen years!
I thought about this a little more and it goes back to my issues ( and I acknowledge that they are my issues) with buying cars. None of the negotiation seems to take place up front. Even the finance rates have a sense of mystery, as does the magical walks back to the "managers" office.
I went to the Honda Financing website and they have a page where you can enter in all of you information, so I called the customer support and inquired if they could give me the rates after I fill in the form..... nope... "gotta go to the dealer for that".
So it's not the rates that have me perplexed, but the lack of transparency in the buying experience. I truly believe that the majority of people consider the car buying experience not fun, and if there was a shift in the way the transaction occurs, more people would be buying cars today and looking forward to the next one.
regards j
We hate quoting rates until we see a credit application. If we toss out a low number that we find out the customer can't qualify for then we lied. We are the bad guy.
If we pick a number out of the air that seems reasnoble but the customer thinks is too high, we will never see that customer.
I do have a solution for you. Why not arrange your own financing? Go to your local bank or credit union and get pre-approved. That way you will know n advance what your rate it. Tell your dealer what you have and just maybe he can match it or beat it.
This is no different than trying to guess the value of a customer's trade in. Sometimes they demand that we do this.
Make a guess that's too low and we will never see the customer. Hit them too high and then they think we lied to them to get them in. Can't win sometimes.
That way you don't have to pick a number out of the air, your customers could call Honda Financial, establish a rate and then walk into your showroom ready to buy.
j
I am really curious as to what kind of financial hoosgaw I placed myself in.
Here is the scenario:
I am 41 and have virtually no credit history, certainly not enough to even generate a credit score. My income fluctuates around 42k ~ 48k a year, and my only expense is rent and living expenses of about 1500/mo. I have a twenty one year old truck and need to have a reliable vehicle, I have a need for a truck more than a sedan or wagon.
Last October I realized that I needed to establish credit, so I got a secured loan with my bank, and two credit cards. My credit cards are paid in full every month, and my loan is on time/never late. I have also had the same work for over ten years and only recently moved from living in a Buddhist temple for five years.
So, I tried traditional financing, and without a co-signer, no institution would grant me a loan. I applied to loan broker and a local dealership called in response and got me approved with a credit union with a first time buyers program for a 15k loan on a '04 Nissan Frontier 4x4 in excellent condition with 35,000 miles. I am the proud owner of a 60 month/14% loan with this credit union, and have been advised that I will be solicited (with proper payment history) to re-finance at a lower rate in twelve months.
The question is, is this reasonable for someone that is just entering the fray, so to speak? What if I pay more than my payments? say, 600.00 a month instead of 368.50 that I am required to? Will the extra that I am paying off of the principle (sp?) ameliorate the high interest until I can refinance?
I have no intentions on trading in my new truck as it suits my needs perfectly. I plan to own this for fifteen + years, or until parts are hard to come buy.
I am also aiming at buying a house in four or five years... will this ultimately help or hurt, provided I hold up my end of the bargain on these credit lines.
Any insight is greatly appreciated.
Peace,
Shemsuddin
tidester, host
SUVs and Smart Shopper
In my opinion, financing with the dealer through the maker gives you a better opportunity to negotiate on price, since the dealer gets a flat rate for financing a deal honda. It seems to be a win win situation, I get the best rate possible, and the dealer makes another 150 or so bucks.
Make sure you don't pay it off to quick though, you need to establish a good 18-24 month payment history. I have helped people get established before and they think they have done something great when they pay it off in 6 months. Form a financial standpoint that is fantastic, from a credit standpoint all you have is a loan to new to rate in your bureau.
You can, all banks do is quote you there lowest rate and then tell you it is WAC. Sme thing a dealer can do. My best rate is 6.5% on 60 months with excellent credit and minimal overadvance. If you have less then excellent an/or an over advance your rate will go up accordingly.
Best thing to do is get pre-approved, then you will already know what your worst case would be. If the dealer can find you financing at that rate or better, then you can go with that if you like for convenience. If they start trying to play games in F&I you can cut them off without getting taken. Probably worst thing you can do is make a deal for a vehicle without knowing your financing options and end up at a disadvantage in the F&I office.
BTW, just looked at my local credit union and new vehicle financing starts at 6.24% for 49 - 66 month loans. Not really too bad since my home equity line of credit rate is now 8.25% and that is a variable rate...started out at like 3% 5-6 years ago. The credit union would be fixed at 6.24% and I think you can go to either 100 or 110% of MSRP. For comparison we get 3.99% in May 2004 when the dealer matched the credit union deal at that time. F&I guy had a book that seemed to have all the current rates for the area. Ended up with Bank One and they later changed names to Chase Auto Finance.
You're probably paying a lot of interest for that remaining credit card debt. Yes, the bus sucks, but maybe this is the time to double up on those credit card payments and make that debt disappear before taking on more debt. Shouldn't take too long, you're not that badly in the hole.
Just a thought - your score is not too bad and you don't have anything really ugly on your report.
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If he closes accounts without paying down his debt, he'll go from using 39% of his available credit to using nearly 60%, and the percentage of available credit used is a big scoring factor.
It's not a great idea to apply for *more* credit, necessarily, but I think it's fine to keep the credit you've got. The key is to leave it unused, though: I would advise the OP to cut up his cards and leave the accounts open.
One popular guideline I've seen says that your auto loan payment should not exceed 20% of the amount of money you have left over each month after paying all vital expenses like rent/mortgage, food, utilities, etc.
Do you live on your own with substantial monthly bills, or do you live at home?
You can buy a new Ford Focus for around $11K.. maybe $12K with all taxes, fees included.. If you have $2K for a downpayment, you are looking at $200/mo. for 60 months..
Can you afford that? If so, no problem..
If you want a V-6 Accord, then you might have a problem..
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WOW, I thought that this was a way low price you were quoting, either that, or there was some secret Edmunds Host discount I didn't know about. Then I checked.
To my surprise, Edmunds lists the TMV of a new Focus at about $11.2K after $2500 rebate. I will never doubt the Edmunds hosts again.
BTW, at $11.2K Ford is giving those cars away.
2019 Kia Soul+, 2015 Mustang GT, 2013 Ford F-150, 2000 Chrysler Sebring convertible
If you're living at home and don't have many other expenses, it shouldn't take you too long to get this paid off. (Assuming you also quit using your charge card!)
Right now, the bus is your friend. Get yourself at least back to even (with no debt) and then get yourself some savings, and THEN start your car shopping.
Might sound boring, but you'll save yourself a world of grief.
I found out that, in addition to traditional financing, Lending Tree also shops quotes for you to lease a vehicle. Has anyone ever had experience going thru them for this purpose?
Would love to know your thoughts.
Thanks.
My (limited) credit history:
I have one Cap One credit card which will be a year old this summer. Balances always paid in full. No late payments. I have had my landline phone account with Verizon since 2002. Also no late payments, always paid in full. Had a cell phone account with Verizon from 2002 to Dec. 2006, same as above. I switched to Sprint, also same as above.
My FICO:
My top score was 722, but when I switched from Verizon to Sprint it dropped to 689. With the big 3, my score average is high 690s / low 700s.
I emailed the Custom Finance Program people affiliated with Capital One Auto Loans, and they mentioned they also look at credit history length. I am looking to get financing for about $28K.
So everyone, what are my chances?
Thanks in advance.
That must be a Cincinnati price. In Chicago, I was not able to find a good price on a Focus. Of course, I saw very few Focus vehicles at any of the Ford dealerships in this area.
If you don't have a credit union, then check around your local banks.
Wachovia had suggested a voluntary repo, that's why I'm trying to get information on it from people who might have real life experience. Any help, advice would be greatly appreciated. I can't afford a rental car, forever.
Have you tried contacting Land Rover USA directly, not through the dealer? The Customer Service number should be in your Owner's Manual.
In the long term, it will probably be cheaper to pay for the engine than rentals.
the question should be why in the world did you get into a Land Rover in the first place? Do you go out on wild safari runs to hunt down the next meal?
And why was it financed for longer than the warranty?
Decided that a BMW was just to expensive to maintain so I started looking at less expensive models. Test drove several but the one car that I was most impressed by was the 2007 Honda Civic.
So I fill out the credit application for American Honda Finance and let one dealer run my credit. Honda denied it saying that I didn't have enough of a credit history to qualify! Evidently, student loans don't count? Anyway, Honda wanted a cosigner on the loan until I could establish credit...no problem. With the cosigner I ended up scoring 8.49% for 60 months...which I may be able to lower when I refinance. Not the greatest interest rate but not nearly as bad as I expected. And certainly not nearly as bad as the 15% rate that one dealer quoted!
At least I'm the proud owner of a lovely new Honda Civic! And I'll get a chance to rebuild my credit history!
Hope you can re-finance to a better rate in a year or so, too!
Please respond to jfallon@edmunds.com no later than April 25, 2007 with your daytime contact information and a brief description of your purchase and your trade-in, if you had one.
"The most important thing about your credit score is the ratio of your used credit to your income. "
I believe the proper ratio is credit used as a percentage of available credit.
I'd be in their face until they corrected the fault.
I'm planning on purchasing a new vehicle late in the summer. To the sales folks: any idea what rate I can get? Would I need a co-signer?
Thanks!
Actually, the most important thing about you credit score is paying your bills on time. Late payments and collections kill you. Even if it is a paid collection the scoring matrix does not care. it is weighing the fact that you let it get to collection in the first place.
As far as balances go, the matrix looks at how many accounts you have over 50% of the available credit used.
I am 22 and my fiance is 23. I have an 8 year credit history (yes, I know), and his is only 18 months old. We're incredibly money smart and would rather save than spend, but I can't say we're particularly credit smart.
We just got a new Fusion for me. We qualified for the promotional interest rate from Ford, though only barely. (I think we are both hovering right under 700.) So we're paying 2.9% for 5 years (though we have no intention of carrying payments that long.)
I am reading a lot about available credit ratios. We have two credit cards. A MasterCard in my name with a $1,000 limit, and a Visa in his name with a $5,000 limit. We asked for those limits, because that is what we spend. Every month my Mastercard bill is $1,000 and his Visa is usually $3-4,000. We pay off our entire card every month without fail, no exceptions. It's just how we were brought up - we will die having never paid a cent of interest to a credit card company.
But now I'm wondering if it hurts us that my available balance on my MC is often $0? Do the credit bureaus look at the balance on a card at any given moment, or the balance that we carry from month to month? We could easily have our credit limits raised so that there is much more credit available than we are using. Would this be the smart thing to do?
The plan is that in 3 years we will probably pay off my car (a year early). Then buy a house, then buy him a new truck, all in quick succession. This sounds like the optimal order from what I am hearing. Is that correct?
We are good with money and think that our credit score should reflect that, but we understand that it's up to us to make sure it does. What else is involved in scoring besides available credit ratio, diversity of loans and collections?
Check out Understanding your Credit Score in our Guides section for more info on how your score is calculated.
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2015 Kia Soul, 2021 Subaru Forester (kirstie_h), 2024 GMC Sierra 1500 (mr. kirstie_h)
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That seems like a lot for a young couple..
Anyway... getting to the advice..
Do you want a good credit score? Pay every bill on time, every time. No excuses.. No "it got lost in the mail".. No.. " I was only two weeks late, three times..
Just pay every bill on time.. Then, your credit score will take care of itself.
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We put EVERYTHING on our cards. Groceries $900/month, rent $1000/month (no, that's not a particularly high rent - we live practically in downtown Houston). There's half of it right there. Every bill we have is put on our credit cards and paid off at the end of the month. I think that for the two of us to only have $4,000 a month in total expenses is pretty good. We gross about $8,500 a month, and so all that extra is going into savings and investments.
Anyway, we put every blessed thing we spend on one card - gas, groceries, clothing, trips, home improvement, medical costs, etc., and then pay it all off every month. It's also typically around $3,000 or so. We get a rebate of 1% at the end of the year. Our credit is great.
I'm sure yours is too. If you're comfortable with the lower limits then leave it alone.