Car Buying Advice-First auto loan

magnumek

Hi. I found a car which I want to buy for $11k. I was at the dealer today to get it and I chose to finance it. I wanted to put a $2000 down payment and pay tax upfront. They gave me an option of paying 295/mo for 60 months which gives a number of $17700...the interest rate that they got me for is 7.8% which is to high in my opinion. My credit score is 740 but I never had any loan or mortgage, they said that its that high because of that. Even with 7.8% interest it doesnt add up. Its my first loan so I dont really how it works. I said that I am going to get a loan myself and come back with cash. Could you help understand it? Was a a good deal or did they want to rip me off?

kyfdx

magnumek said:

Hi. I found a car which I want to buy for $11k. I was at the dealer today to get it and I chose to finance it. I wanted to put a $2000 down payment and pay tax upfront. They gave me an option of paying 295/mo for 60 months which gives a number of $17700...the interest rate that they got me for is 7.8% which is to high in my opinion. My credit score is 740 but I never had any loan or mortgage, they said that its that high because of that. Even with 7.8% interest it doesnt add up. Its my first loan so I dont really how it works. I said that I am going to get a loan myself and come back with cash. Could you help understand it? Was a a good deal or did they want to rip me off?

$9000 for 60 months at 7.8% is $181.63 per month.

Must be some massive fees and extra charges on that loan. Go to your local bank to get pre-approved for a used car loan, and quit shopping at used car lots.

magnumek

Thank you very much.
I never had any loan so its something new for me, the dealer was trying to convince me that the rate is very low and that the $295 payments are very low. I used the calculator but I got confused that there is so much difference and I started to think that maybe thats how it is. He told me that there are no additional fees included other than $375 transportation fee (weird because the car is in their parking lot) and $375 administration fee (for vehicle check up), I would try to take off the fees because I did not feel the need of paying it. But I decided to walk out and see what others think. It was a dealership.
What do you think about lenders like LightStream?
Can I get an auto loan before getting the vehicle? Can I change my mind and use it for a different car?

kyfdx

Check with the local bank that has your checking account. You need a baseline rate, so you go in to negotiations with knowledge. Download a simple financial calculator app to your phone, so you don't have to guess about the numbers.

[Deleted User]

@magnumek you should only be paying sales tax, the documentation fee (sometimes referred to as the dealer services fee), and any DMV/Registration fees. There might be a few local municipal fees/taxes but other than that I wouldn't pay a transportation fee if it is already on their lot. Always ask for a detailed/itemized breakdown of the out the door price. Like @kyfdx mentioned, get pre-approved from your bank or a credit union. In most states, dealership's are allowed to mark up the interest rate. So, getting pre-approved can eliminate most if not all of the mark up.

Either way, the payment should be around $181/mo at that rate and 60 months. $295/mo would equate to about a $14,500 loan at 7.8% for 60 mo.

magnumek

Thanks guys, you all really helped me a lot.
The car is in an Audi certified dealer, he has just few used cars. That is why I thought that they are reliable but it looks like they are even bigger lairs than the small dealers.
I applied for the loan to Lightstream but they declined, I also applied with a local CU - Bethpage. I will get the decision on Monday but the sales rep told me that I will more than likely be approved. I got 8 hard inquires on credit karma from the dealer...hope they are going to count is as 1. Should I try with another CU to have more room to play?
Could you help me understand how does the CU loan work? Will I get a check after I apply or do I have to hand the preapproval letter to the dealer? I applied for $10k.
Can I transfer registration from my current car?

Oh I called the dealer that I got my own financier and I want to get the car for the 11k+tax+DMV+$750 (administration and transportation fee, they said that there is no chance that they would wave it), the manager told me that the $11k price is just for financing but I told him that there is nothing about that on their website and I will come and buy the car for their online price, I noticed that he was very mad but he said okay. The car has a very good price if it would be the $11750 and its in excellent condition.