Questions About Financing New Vehicles

danf1 · April 2005

The idea behind using a cosigner is to help with limited credit, not to erase bad credit. Most banks that I use do not accept a cosigner if that person is not a relative.

usmc_jeep · April 2005

danf1,

Thanks for the comments.

Mike

tapyouout · May 2005

I have alot of credit trouble as my credit score is at a 605 and I am in need of purchasing either a new or used car bad. (current car problems) I wanna finance about 20,000 and I could put 20% of the purchase price down too. My income is about 55,000 a year and have been at the job for only 6 months. I have no debts as of now other than rent, cost of living and utilities. Early credit years has haunted me! At a credit score of 605 could I still get financed and at a somewhat reasonable rate?? Or should I just bite the bullet and hold off as long as possible and try and maybe rebuild credit somehow someway...lol Thanks for all the info and comments.... I really appreciate them...

isellhondas · May 2005

Isn't good by any means but I've seen a lot worse. The lender will look at more than the score itself before making a decision and, no, you won't qualify for a great rate.

Why a 20,000 car? I think under the circumstances you may want to consider somthing less.

CarMan@Edmunds · May 2005

Hi tapyouout. Interest rates are still reasonably low. I definitely think that you will be able to find a bank that will lend you money to finance a $20,000 vehicle with 20% down at a rate that's not too outrageous. Having said this, the previous poster is completely right. You should be able to get a very reliable used vehicle for much less than $20,000, or even a new one for that matter. You may want to consider going with something that is a little less expensive until you improve your credit situation.

The first thing that I would do if I was in your situation is make a concerted effort to improve my credit score. Start by getting a copy of your credit report from Experian, TransUnion, or Equifax. Once you have a copy of your report, make sure that it does not contain any errors. It often turns out that one's score should be even higher than it is because their credit report contains errors that are unnecessarily bringing it down. For more information on how to get financed at a reasonable rate, check out the following informative article that is available here at Edmunds.com: Tips For Subprime Borrowers - Making the Best of Blemished Credit.

Car_man
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sandman46 · May 2005

There are plenty of excellent cars under your $20k price ceiling. It's much better to start out with a less expensive car and get your financial situation under control. Raise that score up by paying down any outstanding debt and making every car payment on time, maybe even pay an extra payment at least twice a year to pay the loan off quicker.
In hind sight, you will be happier that you took a more financially smarter route so when you find that 1 car that you must have a few years from now, your score will be at a much higher level where you can qualify for the best rate available. Also, if you ever plan to purchase any real estate instead of renting, you'll be in a much better financial situation.
Just my $.02 here so do what you have to do. I know it's hard to get "what you need" over "getting what you want", but maybe this should be the path taken at this junture in your life!
Good luck and let us know what happens. Like Terry says..."Buy and drive what you like", but don't get into a financial mess to achieve that goal. You have plenty of time to follow Terry's advice.

The Sandman

gwest1 · May 2005

I am thinking about buying a new car and was wondering what to look out for in terms of financing. I have heard that dealers who offer 0% financing usually have to pay the MSRP on a new car which can be thousands more than dealer invoice. Also, I have heard that credit unions usually give better deals on financing. Any suggestions on what to look for in terms of financing deals would be much appreciated.

CarMan@Edmunds · May 2005

Hi gwest1. The low special financing rates, such as 0.0%, that are available on new vehicles are almost always paid for by the vehicle's manufacturer and have absolutely nothing to do with individual dealers. As a result, the fact that there is zero percent financing on the ar or truck that you want should not have any impact whatsoever upon the price that you pay for it. In fact, manufacturers offer incentives like low finance rates for a reason - the vehicle that they are giving the rate on it not selling as well as they would like it to. This means that you will usually be able to negotiate a very attractive selling price on vehicles that have this sort of incentive available on them.

Credit unions definitely often offer very attractive finance rates on new vehicles. Their rates usually aren't better than manufacturers' supported finance rates, but it would be in your best interest to get pre-approved to finance the new vehicle that you are interested in through a credit union or bank prior to discussing financing with dealers. Doing so will give you an idea of what sort of interest rate you should be paying and often motivates dealers to beat the rate that you have already been approved at.

Car_man
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grandtotal · May 2005

As a result, the fact that there is zero percent financing on the ar or truck that you want should not have any impact whatsoever upon the price that you pay for it.

Obviously you're the expert here Car_man, but I wonder if your statement is correct. I live in Canada where it is an "either or" deal. If you take the 0% financing then you are not eligible for certain incentives and that directly affects the price you pay. I realise it could be different in the U.S.

alphawolf · May 2005

On Edmunds it shows special low APR of 3.9% APR on the Accord with "no restrictions" for this month.

Yet, that isn't listed on Honda's own website on incentives.

Is Honda offering this or not?

Thx

Dean

ellusionz21 · May 2005

I never bought a car before so trying to research it a bit... Would it be better to get a loan thru my credit union bank so I go there with the cash as I think of it. Or to work thru the car dealerships financing? Is there a pro/con to either way? I would think going with the money straight up would get you a better deal or something... but would working with them give you some benefits?

Kirstie_H · May 2005

I'm not an expert, but what I would do is go to my bank or credit union and get approved for a loan first. Let's they offer you 5%. Well, you know this is your worst case scenario. This will also help you determine what you can afford to buy.

When you're at the dealership, go ahead an apply for financing there too. They may be able to get you a better rate, especially if you have good credit and they have a promotional rate. If it's not better, you can always use the financing from your bank or credit union.

stickguy · May 2005

keep in mind that the dealer gets (or can get) a slice of the financiing if they do it. SO, in some cases, you can get a better deal (price on the car) if you finance thru the dealer. Getting a big discount for showing up with a wad of cash seems to be an urban legend at this point.

achenator · May 2005

I made some late CC payments in '99. Okay I made some REALLY late payments in 99. Some 120's. Fortunately I have been really good with my credit since then. I have been able to piggyback on my wife since then and my score has gone to 677. It seems to be stuck. After 7 years can I expect my score to shoot up when these late payments start falling off my record? :confuse:

CarMan@Edmunds · May 2005

You're absolutely correct, grandtotal. I should clarify my earlier statement. What I meant was that the fact that there is a special financing rate on a car or truck, such as 0%, should not have any impact upon one's ability to negotiate an attractive selling price, other than the fact that many cash incentives cannot be used in conjunction with the low rates. I think that gwest1 was under the impression that many dealers tried to give consumers when GM first introduced zero percent financing in 2001 that in order to get it one has to pay full MSRP. This is absolutely not the case. Sorry that I didn't make myself clearer earlier.

Car_man
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rroyce10 · May 2005

..**After 7 years can I expect my score to shoot up when these late payments start falling off my record?** ..

This is kind of an Urban Legend or an "ol' wife's tale" .... nothing "falls off" in 7 years or 8 or even 10 ... it's kinda like that commercial on TV about Vegas - "what happens in Vegas, stays in Vegas" .... Well, what happens on your credit report, stay's on your credit report .. unless you take action to have it removed ..

I've seen probably 20,000/25,000 credit reports in my life .. some from folks that make $1,500 a month and some that make $50,000 a month .. some bureau's might show that bad student loan from 1992 or that Circuit City credit card that was late 6 times in 1995 ..

Now, some of the info is correct and some of it isn't, some bureau's report mortgages and some don't, some will only report late dates or a pay-off depending on the length of the loan .. 3 different bureau's with 3 different set's of info .... that's why it's very important for --you-- to be checking it out at least once a year, and correcting any mistakes .....

Terry.

CarMan@Edmunds · May 2005

Hi Dean. Honda only mentions the 1.9% rate that it is offering for 3 year loans on its site because that is the lowest rate that it is offering on the 2005 Accord, however it is also providing 2.9% for 4 years and 3.9% for 5 years. When negotiating your deal on the Accord that you want, keep in mind that Honda is running a dealer stairstep program on this car in May that provides dealers with the opportunity to earn up to $900 dealer cash per unit. The exact amount of money that they receive depends upon what percentage of their predetermined sales goal they achieve. Most dealers will probably earn around $400 per car through this program.

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achenator · May 2005

I definately have enough credit now to get any thing I could need or want within reason. I would like to get my score up though. It would be nice to not have to depend on my wife for the best rate on a new car or the like. We have a new home and by contracting it ourselves and a gift of a free lot from my parents we have about 35% equity already. Unfortunately, I did make these late payments in college now have to pay for my past. I check my report regularly and there are no mistakes, only red x's that remind me of past lapses of judgement. Can I request that these be removed after a certain period of time?

On a side note Terry, I asked you on the Trade in values board last week about trading in my accord for a g35 coupe in N'awlins. The DW and I went back to test drivr the G and it was gone. Oh well TTTTIIIIIMMMMMEEE is on my side.

michaelt1 · May 2005

I HAVE A TRUCK I BROUGTH BUT I'M NOT TO HAPPY WITH, BUT I STILL OWE TO MUCH ON. HOW DO I GET OUT OF THIS AND INTO ANEW TRUCK.

Kirstie_H · May 2005

Well, first we need more details about your current vehicle (year? make/model? how much do you owe?), and what it is you're wanting to purchase instead.

PS - Please don't type in ALL CAPS. It's hard to read, and it's like shouting at us.

wizardofwoz99 · May 2005

I currently drive a 1999 jeep Cherokee classic. It has 24*255 payments left until it is paid off. ( my mom bought the car for me and said she will continue to pay the payments until it is paid off.) Car is in her name...

What I want to do.

Sell the Jeep privately and get enough to pay off the remainder of her loan. ($6120) I think I would be able to get that.. ( Is this method of transaction possible)

I would then Like to finance a 2002 jeep grand cherokee with no money down. but she would continue to pay 255 for the first 2 years. My payment would then be 100 for the first 2 years and 355 for the remaining 3. ( does this seem feasible)

My reasoning, the 1999 cherokee is uncomfortable to drive, and will need tires and brakes in the next 2 years, if i complete this swap I will lose the trade in value of the cherokee in 2 years, but I will be able to drive a nicer vechicle and skip the maintenence costs of the 1999.

Is this feasible. especially selling the vechicle to a private person.

Thanks in advance..

ksccts · May 2005

Comfort is always a personal decision but a set of tire and brakes is always cheaper than a new car. Is there a large difference in maintenance costs between a 1999 and a 2002 Jeep. I think probably not. Plus, once again, it is usually cheaper to do maintenance on your current vehicle than to sell it and buy something else.

I think what's really going on is that you want a new car and you are trying to justify your decision financially. If you want a new car, then buy it but realize that in the long run, a new car almost always sucks more money out of your pocket than just keeping your current ride. :shades:

wizardofwoz99 · May 2005

is what I suggested feasible

kyfdx · May 2005

Assuming your car will bring enough to pay off the loan, then yes, it is feasible..

I assume the current loan is in your mother's name? Do you have a credit history that will allow you to get a loan on a new vehicle? Or will your mother have to take out the new loan? If so, is she willing to do that?

I know she has committed to making the payments on your current car, but she might not be so willing to commit to payments on another car that you will be partially responsible for... and completely responsible for after two years..

I don't think you are going to see the savings you think you will, from not doing the maintenance on your current Jeep... the Grand Cherokee will need repairs and maintenance as well... it is not a new car..

You are basically driving a free car right now.... I'd at least keep it until your mother finishes the payments... then, see what you can afford at that time.. Cherokees hold their value fairly well once they are past the five year mark... If it has 4WD, it will always be worth $3K, as long as it runs...

regards,
kyfdx

wizardofwoz99 · May 2005

the new loan would be in my name, and the current loan is in her name..

How would I go about selling the loaned 1999 to a private seller?

kyfdx · May 2005

You meet at the bank which has the current loan... they take his cashier's check, give you a release of lien or the unencumbered title (depending on where you live), then you both head down to the courthouse or DMV to make the transfer... Your mother will probably have to come along, since the car is in her name..

Make sure you can qualify for a new loan before you do this... Like the other poster above, I don't think this sounds like a smart move...

Two years of no payments, vs. two years of $100 payments, plus three more years of $355 payments...

I'd keep that Cherokee until Mom has it paid off...

regards,
kyfdx

isellhondas · May 2005

Good advise, however I've learned that once a person tires of a car, they will come up with all kinds of reasons to make the move.

Heck, I've done this myself.

I will say, a JGC is a lot more complicated and troublesome than a regular, simpler Cherokee. Neither has a stellar repair record but the JGC's are much worse. Just something to think about when figuring expenses.

And, they use a LOT of gas!

sandman46 · May 2005

Once that new car fever hits, it can make someone do stupid things financially that in hind sight would have been better left undone. You have a great situation here and a heck of a nice mom to boot! Finish out the 2 years and then see where you're at. Who knows what the price of gas will be by then or what your current situation will be then...i.e. marriage, divorce, new job, no job. If the car runs perfectly well now, keep up the maintenance and save your money.
Just an opinion from a little older and wiser 50 year old. My passion is cars...pure and simple. But I have reined (?) in my wants of a car for cars that are affordable, reliable and get me to and from where I need to go. As long as it has tunes, and is efficinet (?) and reliable, I'm satisfied.
I have what I need and maybe someday I will get what I want, but I'm willing to wait till that day comes, and with G-ds help...it'll come!

The Sandman

rroyce10 · May 2005

.. **Once that new car fever hits, it can make someone do stupid things financially
--------> that in hind sight would have been better left undone** ...

Very well said .........................!

Terry.

sandman46 · May 2005

That is why we drive boring cars...Altima and Sentra and always pay cash. They still get us where we have to go...maybe not as comfortably or fashionably as a Lexus or Mercedes...but we all still end up at the same place.
We would rather...and did, pay off our home back in '96 after buying it with 3 kids under the age of 4 in '87. We decided what our priorities were...and the piece of mind of having one's house free and clear is...let's say...PRICELESS!
And again, our Altima and Sentra get us where we need to go affordably and reliably. Maybe 1 day I'll have my Acura...but I'm willing to wait till the kids are done with college.

The Sandman

rroyce10 · May 2005

..... Cash is King .!

Your a smart boy Charley Brown, unfortunately your a small minority .... most are too busy with interest only mortgages or refinancing 110% LTV on their homes and leasing vehicles they can't afford and pounding these boards with: "the dealer screwed me, and they're making me pay an extra $3,000 just because I drove an 25,000 miles ...l.o.l...... oooookay .........

My hat is off to you ............................ :shades:

Terry.

lmarta · May 2005

On 5/9/05 I purchased a brand new 05 Armada LE. All the sales paperwork shows 2% financing which is what the sales person said was the special. We traded our old vehicle, signed all the paperwork and all was great until yesterday 5/16 when they call and said they made a mistake on the APR. The 2 % was only for 36 months. Since we financed for 60 months our interest rate will be higher. Is this legal? I think it is a bad business practice but I don't know who to ask. Any experts on this?

grandtotal · May 2005

Had the dealer made an error in his favour would he have mailed you a cheque for the difference? I think the answer to that question should guide you in deciding how to handle this. Failing that, offer to unwind the deal completely and return the vehicle to the dealer (once you have obtained a replacement) if the dealer prefers that.

michaelt1 · May 2005

Mercury mounatneer, 2000, [135695] is whats owed.

I would like to buy an 2005 gmc envoy with all the toys.

:shades:

sandman46 · May 2005

I had the good fortune to marry a CPA and a very level headed woman she is. She set me straight on credit once we were married and paid off my '79 B210 and never ever would she let me finance anything, except the condo and then the house.
Wasn't trying to brag in my earlier post about smart money management either, just trying to share some knowledge gained over these past years. Bet you see so many folks mortgaged up to their eyeballs. Work with a few peope who declared bankruptcy and think it's the coolest thing that they got 1 over on their creditors. Really want to go over and smack 'em silly, why would people laugh about and be proud of such bad money management?
I think the high schools should make a mandatory money and credit course during senior year so when these kids get out into the "real world", they will really understand about insurance and late payments and why one must always try to make smart decisions with money and credit, as it will follow you and haunt you later on if not done responsibly and with some forethought!
Will be getting off my soapbox now. But with 2 kids in college and 1 about to become a high school senior, we have tried and are still trying to teach financial responsibilty eventhough my son thinks we're "cheap" that we won't go out and buy him a new car to drive to his upcoming summer job!

The Sandman

sandman46 · May 2005

I've been seeing this alot on car commercials now, mostly with the American brands. How can they afford to do this, and secondly, does this really result in more new car buyers?

The Sandman

rroyce10 · May 2005

...... It's hard to say because I'm not looking at the deal ....

But, if there is 2% for 60 months via NMAC and you qualify for it .. then you should be able to get it .... it sounds like a paper mistake, they can't give you what's not there .....

Terry.

rroyce10 · May 2005

... **Bet you see so many folks mortgaged up to their eyeballs** ...

You .. have .. no .. idea ...........................

The "new" expense, is the $400 a month cell phone bills .... what the heck does a 6 and a 8 year old "kid" have to have cell phones for.? .. how about some parents instead.?? Gheeeeez ................................

Terry.

akangl · May 2005

The "new" expense, is the $400 a month cell phone bills .... what the heck does a 6 and a 8 year old "kid" have to have cell phones for.? .. how about some parents instead.?? Gheeeeez ................................

$400/mo for a cell phone???? I *think* we spend maybe $100/mo for 3 cell phones, one for me, one for hubby, and one for my mom. My kids don't need a cell phone and even if they did they would get a prepaid, when the minutes are gone they are done for a while.

Heck, $400/mo almost covers our mortgage payment ($535).

CarMan@Edmunds · May 2005

I am sorry to hear about your unpleasant situation, lmarta. Unfortunately your dealer is right. Nissan's special financing rate on the 2005 Armada is currently 2.0% for up to 3 years and 3.0% for 4 to 5 years. Through May 2nd, Nissan's special rate was 2.0% for up to 5 years on this model, so this is probably why your salesperson was confused. Nissan Motor Acceptance Corp. will not allow you to finance this truck for 5 years at the 2% rate. As a result, you will have to sign a new finance contract. I am sure that this is a very annoying situation for you. It would be nice if your dealer at least provided you with some free oil changes or a little additional money off of the selling price of your truck to make up for the hassle that they have caused you.

Car_man
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CarMan@Edmunds · May 2005

Hey sandman46. 0% financing has been around since late 2001. Rates this low are usually offered by domestic automakers, but a number of import brands offer it on select vehicles as well. The exact cost of offering such a low rate depends upon how long it is for, the cost of the vehicle being financed, and the cost of money to the company that is offering it. As you suspect, this often ends up being a very expensive program for automakers to offer. When automakers initially began offering 0% financing on vehicles it was extremely effective in attracting new buyers, but consumers have since become accustom to such offers and while it still attracts some buyers it is not nearly as effective as it once was.

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blueiedgod · May 2005

Mercury mounatneer, 2000, [135695] is whats owed. I would like to buy an 2005 gmc envoy with all the toys.

With you owing $135,695 on a 2000 Mercury Moutaneer, I think you are in the deepest hole anyone has ever seen a person to be in. We are talking mortage territory here. I guess it is a good thing that bankrupcy laws have been changed, you can't just unload a $136,000 Mercury onto the lender, who will in-turn pass the loss onto me in form of increased interest rates of fees. You better pray that that Mountaneer runs for another 30 years, you can forget about buying a new truck anytime soon.

michaelt1 · May 2005

I OWE 13,555 :mad:

sandman46 · May 2005

I guess this does make sense if you can get a somewhat nice car and just make monthly payments, as even passbook savings accounts and money markets are paying about 1.5% to 3% or even higher, the other half is the brains of the outfit and handles the finances. Guess I'm a bit out of touch, as my last car payment was 23 years ago and we now put money into a special new car account and purchase every 5 to 6 years, if not longer. This way, we always have the cash when we hit the F&I office and don't buy any of their add ons. But the only down side of this method is that we drive pretty mundane boring economy cars.
Maybe once the college years are paid for and the kids are out on their own, I will be able to buy a car that I really do want. But for right now, they have to come 1st, as it should be.

The Sandman

cadillacmike · May 2005

Kirstie, you were much too nice with your notation about the caps.

I would have done it a lot better:

1: Press the little button that says "Caps Lock"
2. ensure that the little light that says Caps Lock is not lit.
3. type your message in the correct thread (the upside down thread)
4. Read the bold faced comments in the most recent few posts on that thread.

but you're too nice.

Kirstie_H · May 2005

We have to remember that not everyone's experienced with the message board format & etiquette. My father just started visiting a (fly fishing) message board at age 65, and I'm sure that since his first post, he's had to be shown the door to paragraph school, CAPS LOCK de-tox, and spelling purgatory.

If we can gently teach new members, then perhaps they'll stick around and participate!

rover06 · May 2005

What can be expected for residual value on 2006 Range Rover (36mo/15k) in Washington State? MSRP is $74,950.

cti · May 2005

Cruise on over to the Lease Questions forum and Car_Man will have all the answers for you.

Jason

michaelt1 · May 2005

I only owe 13,555, not what was typed in era . so can you help with advise please.

benzben · May 2005

Hello,
I am in the market for leasing a new vehicle, however I saw several ads in the newspaper for cars with a final balloon payment option. Specially, the vehicle was a 2005 Honda Accord Value Package going for $199 per month, with $1300 Down excluding TT&L. The term was for 23 months, with an optional 24 payment of about $8,000. What is the difference between a lease and a final ballon payment option? I am liable for lower than expected residual value (as with an open ended lease)? Are there any risks with this method? Should I try to find my own financing? Sorry, I am pretty new to the world of auto leasing, and would appreciate all the assistance I can get. Thanks!!

Ben

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