Questions About Financing New Vehicles

lee14 · January 2005

Hi all again...

I'm trying to finance a subaru legacy gt ltd. 05' and just finished talking to the dealership. Depending on my credit they will offer 3.9%apr to 4.9%apr. BUT I HAVE NO CREDIT!! I'm a student and my parents are at overseas even though my father works for an american company..... I don't have any relative and my sister who makes more than 80k a year won't cosign me..... This blows man.

I can afford the car and willing todo down payment of the %40 of the car value, but I have to finance the rest. CAN ANYONE GIVE ME SUGGESTIONS?? IT WILL HELP A LOT

lee14 · January 2005

Ok I just did a credit report and found out that I have a pretty good credit 714, but still my income is low. Do I still need a cosigner? It's really difficult for me to get a cosigner and is there any other soultions to this to finance a car? I know it can't be this eazy to get a car loan since my income is like 15k (full time student).

danf1 · January 2005

How much are you trying to borrow? You mentioned 40% down. If you are borrowing less than 10k then your payment should hover around 200.

1250 income -200 payment - ?????? whatever other bills that you have. If your total bills with the new payment equal 500 or less you should be able to get it done. Debt to income is more important than income alone.

isellhondas · January 2005

Your 714 score won't help if you have no credit history and not enough income.

You need a strong co-buyer who lives in the area.

qbrozen · January 2005

how are you paying for it with such low income?? Are YOU really paying for it, or is someone else? If someone else, wouldn't they be the ones financing it?

40% down is alot, but you are talking about, what? a $28K car? So that's still financing somewhere around $18K after taxes and fees. That's about $350 or so a month. Quite a bit when you pull down less than $1k a month after taxes.

danf1 · January 2005

That is true if a person at the bank reviews the credit app however, many lenders accept credit applications online. Some of them use automatic computer decisions which are based off of score and LTV. I get people approved that shouldn't be without a cosigner because of this very often. Until the banks change the system I will continue to exploit it.

dbauer · January 2005

do your folks LIVE overseas? or are they there only temporarily?

lee14 · January 2005

I think I said my parents "LIVE" overseas. Anyways, if I include what my parents support me every month, my net income is close to 30k. Yes my "net income" that is. But I don't know if the lenders would consider that as part of my income. Plus I have no debt with 2 year credit history with 714 points(someone told me I need atleast 4 years of credit history and after I heard that I just went nuts about it and the guy is probably right but just wanna make sure if he is right..)

So what are my chances to get approved for 20k loan for 60 months with 2.9-4.9% apr from subaru??? Subaru told me unless I got bk and insane debts, I would most likely qualify for 3.9% 60 months. But who knows, they didn't look at my credit report and income.

Any suggestion would be great!

matt6 · January 2005

hi all

im in bc canada, i make 17/hour~2,000p/mo

i was rescently at a crooked car lot, not knowing very much [near nothing] and trying to do things on my own. im 22 and very new, i must be a bbig red bullseye to these car dealers. in short, i put a 500$ deposit down for a 99 maxima but i decided against it. luckily it was on my credit card and i can dispute it with pretty good favor.

but iv agreed with myself that it was my own fault

im still on the market and here's my real situation

the car ive been back and forth to test drive is a 99 nissan maxima SE at a price of 13,875. ive got the price to 13,375. im almost happy with the that.

im not sure what to do about the extended warranties they're offering me, not sure what to look out for. i can pay for this car fairly easy at 500p/mo over 3 years. even more so with no other financial ties. well a cellphone..

this dealership www.milani.biz is a giant step up from the last one i visited..needless to say it was pretty scary for me. theyre a bit more honest and i trust them a bit but have a feeling theyre trying to play the good guy after what happened to me prior. they put me through their own finance dept who is mediating me through a bank and is getting me 7.5% int. which cannot varry.

over all im wondering what i should look for in the deal.in how many ways could the bank own this car/i loose this car? given that i make every payment on time which im confident, even more so. im pretty determined to pay this off in half the time or at least possible.

what sort of things should i have in writing to protect myself? im hoping to get the most square deal as possible meaning, i pay for this car properly and do not get screwed in the end!

it's such a difficult thing to do on my own but there's nobody around to help me out! my father knows less than i do about financing etc.

my email is mes_151@hotmail.com

help please! thanks alot for your for your time

ps: a rough price of 13,300 divided by 100 =7.5

is this how the bank finds the interest in this situation? and if it is, what does '100' represent? price of car / 100[?] = 7.5

thanks again - matt

CarMan@Edmunds · January 2005

Hi Matt. You are definitely on the right track. Rather than jumping into a purchase that you might regret, you are doing research first. Now that you have decided what car you want, make sure that its selling price is fair. One way to do so is by comparison shopping for similar vehicles with a few other dealers in your area. You also may want to shop around for financing. While it definitely is convenient to use dealers' F & I departments to arrange the financing of your new vehicle for you, dealers often "mark-up" banks' interest rates to add additional back-end profit to deals. Let's take the 7.5% interest rate that you were quoted for instance. The bank that you are financing through might have approved you to finance this car at 6%, but the dealer that you are working with is trying to get you to agree to 7.5% and getting a kickback from the bank for the difference. I am not saying that this definitely is the case, just that it never hurts to get pre-approved to finance the car that you want prior to discussing financing with dealers. Doing so serves two purposes. First, it gives you an idea of what sort of interest rate to expect. Second, it often motivates dealers to try to beat the rate that you have already been quoted.

Edmunds.com has an informative article on this subject that you may want to check out. Here are links to them: Financing Basics - What You Need to Know About Paying For Your Next Car.

That about sums it up, but please let me know if you have any other questions.

Car_man

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matt6 · January 2005

yeah

im sure that my interest is high due to my high liability. im young with small credit, iv just recently started to use it but have been doing okay. by the sounds of it, my credit score is probably less than 620

despite what i am paying, which im prepared to manage even if too much, i still want to protect myself from any small print that theyre probably going to slip in the contracts. i will be absoloutely happy with a good sound contract that will not come back to bit me in the [non-permissible content removed]!

does anybody have tips for me? things that are common that i should realy look out for? also thanks car_man for your post

dumont · January 2005

Hi,

I co-signed the purchase of a 2003 GM delivery Van for my cousin with 60 month's financing. I think there are about some 45 months to go at around 8 pct interest (while my credit rating would have obtained a much lower rate my cousin in the principal and his credit rating was low for lack of history).

Now I know GM can quote us a payoff amount that does not include future interest. But before I make an a** of myself and ask GM, do you think there is any chance GM would negotiate an even lower payoff amount. I'm thinking some companies would welcome getting money up front? Am I being too optimistic?

Thanks in advance

isellhondas · January 2005

To do this when you are responsible for the entire balance owed.

BTW, I think the world of my many cousins but I wouldn't do what you did! You must really be a nice person!

dbauer · January 2005

lets get the terminology right...did SUBARU tell you that? or did a person at a subaru dealership? this is a huge difference.

lee14 · January 2005

I think i see your point dbauer, and yes a subaru "sales person" told me that I can get 2.9%apr - 4.9% apr depending on my credit. BUT he also said that if I have a low income or a bad credit, as long as I do a decent amount of down payment I should be fine (obviously a down payment greater than 50%). I'm in the process of sending my loan application to the subaru dealership and send it in and pray that I will get approved for the 4.9% apr for 60 months with a down payment of $7000.

BTW the car that I was about to trade in finally broke down.. I should have sold my car earlier, now I lose the hope of even getting it traded in or getting $4000 for it. The car has 80000 miles and some electronical problem... its a 00' saturn LS2 (paid 23k for it cash) what a pain in the butt, spent nearly $12k on repairs during the 5 years I owned it.

matt6 · January 2005

here's a link to vancouver honda's Flash comparison of financing vs leasing. it makes leasing look better than financing, but i would like to own the car i pay for.

http://vancouverhonda.com/frameset1.asp?LINK=Finance&MAIN=lea- se_vs_finance

is this fairly accurate? is it possible to keep my car once the financing term is over? or would i probably need to sell it to settle the debt?

dbauer · January 2005

i never tell people that a downpayment can improve the rate...it doesnt. a downpayment only changes the liklihood of an approval...nothing more. you will still get the same rate as if you financed the whole thing.

askmeimightkno · January 2005

i would hit hard at joining a credit union. THey are a bit more flexible when it comes to loans. Your credit rating should not be bad because you are young like under 23 right? so dont' look for anyone except yourself. if you really want a car. i would definitely call around and present my situation to a loan rep for a new vehicle. don't get so hung up on credit..you are young and people are willing usually to help with first time buyers. don't have the whole world pulling your credit ask questions first to the person that will be approving your loan. Make sure that you look solid for example you lived in the same place for 4 years, and you had the same job for 4 years. Don't fret.

let me know what happens.

askmeimightkno · January 2005

negotiation is part of business and if you have one don't be afraid to present it. Don't even think that it is uncouth. Try it and let me know. Chances are you will get almost exactly what you ask for if you make it fair but don't ever put your negotiation skills down. TRY IT FIRST

let me know.

Sherry

askmeimightkno · January 2005

I would really look into not buying an extended warranty on a used car. it is almost a rip off. If the car is not new or has any factory warranty left you are probably just giving away money. I believe that a place with a 30 day warranty that is included fairs a lot better. just please verify your information and then ask someone who is more knowledgeable about the subject who has nothing to gain from you.

isellhondas · January 2005

There a few makes of cars I would never buy because of extreme maintenance problems.

For the people who must have one of these cars, an extended warranty is something I wouldn't want to be without!

lee14 · January 2005

Thanks for the great advice sherry,

I was soo stressed out about the whole loan situation because the family member I live with is being rude and asking for my car in the exchange for getting a cosign...... long story... well since I'm an exchange student at a young age (20s) it is hard to get a loan and I'm just gonna forget about getting a new car until I become financially stable (just gonna repair my lemon for $1500 for electrical problems and repair it more if needed...sigh). However I learned a valuable lesson that you can not trust anyone dealing with money and cars, and far more importantly I need to become financially stable on my own.people don't waste your time asking for cosigners, just do yourself a favor and save up some money ahead of times.

Kirstie_H · January 2005

This is fantastic advice! I hope many young people will read your post and follow the same path.

Wishing you a beautiful, brand new vehicle with your very own financing in a couple of years,

kirstie_h

isellhondas · January 2005

Yes, excellent advise!

cooper123 · January 2005

I'm getting ready to buy a Honda CR-V. My credit union's loan APR is 5.25%. CapOne and Edmunds partner, E-Loan, both list their best rate as 4.79%. Banks I've called in the area are above either of those two rates, so they aren't an option. Would there be any reason to think I can do better than 4.9%? A couple posts here in December mentioned people getting a 3% rate, but I don't have any clues how to get one that low. I have excellent credit.

Are there drawbacks to dealing with companies like Capital One and E-Loan? Or, should I stick with a local institution, even if the rate is higher? Thanks!

Kirstie_H · January 2005

Have you tried going through Honda Finance? Sometimes they'll have the best rate. I have one car financed through the manufacturer's finance company, and one financed through Capital One. It was difficult to get the dealership to take the Capital One check, but in the end they agreed. If you go this route, make sure to tell them up front that this is how you'll be paying - that way you can walk if it's not acceptable to the dealership.

mirage5 · January 2005

Hello,

I have a situation that I need a little advice on. I had wanted a Honda CRV and there's a dealer in my area that needs to make a sell and he's offering what I think is a great deal. However, I just bought a house and my savings are totally tapped. I only have about a $1,000 for a down payment and I would basically be financing $22,000 which I can handle because I have a good paying job. He's saying they will finance me with that low amount. Will that somehow affect the rate I would get? My credit score is still excellent. It's 780 even after the home purchase. Do you think I should wait or jump on this deal?

dbauer · January 2005

jump. the rate only goes up if you borrow mor ethan the value of the vehicle. and with that credit score, its pretty much automatic anyway. go enjoy your crv.

kyfdx · January 2005

ditto... If your total borrowed is less than the MSRP, you have nothing to worry about..

They are reporting buying at invoice on the CR-V prices paid board...whatever that is worth..

regards,

kyfdx

janz · January 2005

$1,000 barely pays the sales tax. How is there NOT going to be negative equity.

GET GAP INSURANCE!

janz · January 2005

ex v6 · February 2005

Hi, I am planning on a applying for a preapproved loan from Honda. Is this a good idea? if not, what are the disadvantages? Thanks

dbauer · February 2005

its always a good idea to get financing before you go into a delaership. apply to your bank also to compare.

ex v6 · February 2005

dbauer, thanks for your reply. The thing is no other bank is offering a 2.99% APR. So i do want to finance thro' Honda but not sure if i should apply at Honda financial serives myself and see what rate they can offer me or go to the dealer and risk them marking up the rate higher than what I qualify for.

dbauer · February 2005

if its an incentive rate, they dont have flexibility there. dealer should be fine. but if you arent comfortable there, go ahead and apply online.

kyfdx · February 2005

I might be wrong... but, I don't think Honda Finance will approve you for a specific rate.. They will just "approve" you.. Then, they'll let the dealer know what your credit tier is, so the dealer can then offer you whatever they want, as long as it is at least as high as the base rate...

So, in that scenario, no point in getting "pre-approved".

But, dbauer is correct.. go to your local bank or credit union first, to see what they will offer you... Having that info will sometimes cause your local dealer to "fall in line", and offer you the best rate available.

regards,

kyfdx

ramble · February 2005

If you think you may have a problem getting approved for that dream car ask your dealer to do what Grainger Honda in Garden City Ga does. They get you to sign a blank credit application and then fill it out according to the banks requirements. Any "misstatements" are theirs. They know what the banks want to hear. Your dealer does as well.

danf1 · February 2005

The only problem with that is that is a felony. It is more commonly referred to as fraud. Your signature on the application is stating that "any information given in this application is true, correct and complete" just to quote an application I'm looking at. I can't tell you where the liability falls, but I would never consider doing that. My job and livelihood is far more important than one car deal.

dbauer · February 2005

i usually like to be PC abut things like this, but in this case, i cant help it...that is idiotically stupid.

ex v6 · February 2005

Thanks guys, one more question. I am going to get a pre approved loan from a bank but the manufacturer is offering a lower interest rate. Does applying at the bank reduce my credit score? My expperian score is 755 and i don't want it to go down when i apply for loan with manufacturer. Any suggestions? Thanks

danf1 · February 2005

One or two inquiries will not lower your score and even if it did if your score is that high you don't need to worry.

Kirstie_H · February 2005

Sounds like you're a good enough personal financial manager on your own! But, just don't start applying for stuff like credit cards and store cards at the same time - applying for loans & credit cards at the same time could make it look like you're strapped for cash and THAT would hurt your score.

mayabr · February 2005

How many miles can a previous model car have and still be financed as a new car? What is the mileage cut off?

rroyce10 · February 2005

...... It becomes a used vehicle when there is no longer an MSO and it's been titled .....

Terry.

anonymousposts · February 2005

Some banks and credit unions will give you a "new" car rate on used cars that are less than 2 years old. My CU will give the same rate on 2003-2005 models.

snoopy3 · February 2005

I recently bought a 2002 Nissan Maxima SE for $13,000 from a dealer. I was able to get this great price, because they made a mistake in an ad they placed on the internet. So, I didn't have to talk them down in price- thank God. But, they did make me pay for a $600 alarm that they already installed in the vehicle. I kept arguing with them that I didn't want the alarm, but they told me they wouldn't sell me the vehicle if I didn't purchase the alarm. I think they were looking for a reason to not sell me the car so they could correct the ad and sell it for $5,000 more. I eventually gave in and paid $500 for the alarm. So, did I really have to buy the alarm?

dbauer · February 2005

they made a $5000 mistake in your favor, and you are complaining about $500???

quit worrying and enjoy your car.

p.s. i would have refused the deal to begin with. my response would be..."sorry, but we made a mistake. i hope that doesnt keep us from doing business on other vehicles in the future."

snoopy3 · February 2005

I completely agree with you, but I'm not complaining. I was just curious. I knew I was getting a great deal and that's why I gave in. It just didn't seem right to make me pay for an alarm I didn't want. The car already had an alarm. I'm surprised they didn't refuse the deal and rush me out of the lot.

dbauer · February 2005

"I'm surprised they didn't refuse the deal and rush me out of the lot."

i would have...not rudely or anything, but i wouldnt do the deal.

BTW...remove the alarm and sell it on ebay or something. it can affect the warranty if there is any left.

gregjohnson · February 2005

Anonymousposts -

Long long ago in a galaxy far, far away, you mentioned an Atlanta collision shop that did superlative work... Perchance could you tell me which one that might be?

Thanks,

-Greg

Voice: four 0 four three91 twentyone fiftythree

HotMail: BitSink

(Sorry for the anti-spam stuff, I had upwards of 1000 spams a day at one point)

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