Questions About Financing New Vehicles

Kirstie_H · May 2005

Can you re-post your full original question? It will be easier to help you with all of the information in one post. Thanks!

CarMan@Edmunds · May 2005

Hi Ben. Leases and balloon notes are very similar in that they both provide consumers with low monthly payments and an option to purchase their vehicles after a certain period of time for a specific price. The main difference between balloon notes and leases is that with balloon notes your name is on the vehicles' title and with leases yours is. Leases are much more popular than balloon notes. Balloon notes for the most part are only used in the few states that have sales tax laws that make them more attractive than leases or in states that have vicarious liability laws that expose banks that lease vehicles to potential lawsuits. The vast majority of balloon notes today provide consumers with the option to purchase their vehicles at the end of a specific period of time, but do not require them to. Of course, you should make sure that this is the case before signing anything.

Car_man
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sh_maestro · May 2005

[I apologize for cross-posting, but this forum seems more appropriate for this question]

The 1.9% APR that Honda advertises is only for buyers with a good credit rating, right? I'm a first time buyer with a "fair" credit history, I suppose (haven't made any major buys to date - just plane tickets and other small personal expenditures which I've paid off well in time).

In your opinion, what is the APR rate range for a buyer in my position? Is it drastically higher, or somewhat close to 1.9%? I'm not sure if this is vehicle specific, in which case I'm looking at an Accord Coupe.

Thanks in advance.

isellhondas · May 2005

Is for 36 months. Great rate but with only 36 months you'll have a high payment unless you are putting a lot down. For 48 months, it's 2.9 and for 60 months, it's 3.9. All great rates IF you qualify. You don't have to have stellar credit but if you are only "fair" you probably won't.

Even then, the rates are still excellent. Even a 5.9 or 6.9 rate isn't bad at all.

sh_maestro · May 2005

Thanks for the details. After going through some of the posts in various forums, I realize its not going to be easy to get a good finance rate, for someone without much credit history. I'll probably approach my bank to see what they have to offer.

grandtotal · May 2005

Why not approach a dealer and find out if you qualify? What's the worst that can happen? Momentary embarrassment if you don't qualify for the best rate, or who knows you might.

danf1 · May 2005

There is no embarassment in not qualifying for the best programs out there. We see hundreds of people every month. Not everybody is going to qualify. There are programs available for just about everybody's credit. There is nothing to hide from.

michaelt1 · June 2005

I was wondering if it is posible to buy another car or truck if you still owe alot on another. I owe more than the truck is worth. So could any one help me please. :sick: :lemon:

isellhondas · June 2005

You can do one of three things.

1. Write a big check to cover your negative equity and put a decent down payment on the car you are buying.

2. You can bury some if not all of your negative equity in the new car you want so badly. Then you will REALLY be buried!

3. Do the smart thing and keep your present car until it's paid for!

sandman46 · June 2005

Excellent advice there. Better to pay down one's current ride than to roll over more negative equity in a newer ride, unless the out of pocket repair costs are out of control. Why keep putting $ into a bad car that keeps breaking down. The time and money in upkeep and wasted time isn't worth it. But if the ride is trouble free...KEEP IT!

The Sandman :sick:

delange · June 2005

We have two loans to choose from, one with Honda Financing, the other from a company we've always dealt with. However, I've never worked with Honda Financing before. Is there any advantage to going with them when we buy? Does anyone have experience with paying a loan off early with them?

Thanks in advance for feedback.

kyfdx · June 2005

If you think you'll buy or lease Hondas again in the future, having a credit history with AHFC is nice.. You get immediate credibility with the dealership, as someone that can complete a deal..

As far as customer service, etc... No complaints there, either.. I've had one installment loan and four leases through AHFC.. I've terminated leases early (through trade-in), and also paid off the loan early.. No problems or glitches.

regards,
kyfdx

marinemom3 · June 2005

We are about to purchase a 05 Taurus SE. The dealer told us there is an incentive of $1000.00 if we finance. We would like to pay cash. He said that we could pay off the loan in two months and still get the incentive. This sounds to good to be true. Are there any penalties for paying the loan off early? It's with Ford Motor credit company.

Thanks

stickguy · June 2005

Nope, shouldn't be. The 2 months is probably so that the deealer doesn't lose credit for the financing! But, just finance the minimum you can, and the interest won't be much for 2 months (certainly less than the 1K you will save)!

metmdx · June 2005

Isell:
What are the current rates (60mo and 72 mo) thru Honda for top tier credit?

Thanks !
metmdx

anonymousposts · June 2005

which model are you looking at?

midas72 · June 2005

With interest rates continuing to climb, I am on the fence about whether to finance my used car and generate 3.97% interest in my money market or pay cash and only get 3.82%. I was able to sell my house earlier this year after a refinance so I have no debt and 50k in a money market account.

Thanks!

sandman46 · June 2005

Do the math and don't forget to calculate the fees on a car loan. After all the calculations and the time value of money issue and the amount of interest lost or gained if you use cash, you should have your answer.
I personally would do whatever scenario costs you the least out of pocket costs. To gain a small % of interest sometimes is not worth the extra fees and aggrevation of paying a monthly car payment. I would rather pay cash if the difference is a small sum. Don't like to finance anything but want my $ to work for me. It's really a personal decision.
Good luck and let us know.

The Sandman

midas72 · June 2005

What fees for a car loan?

audia8q · June 2005

if the loan is paid off before 90 days the dealer is chargedback the incentive.....

lojacc · June 2005

I've been reading through this site and have gotten virtually all of my new car buying questions answered, save this: if i choose to finance through my credit union, how will that effect my negotiating power at the dealership? more specifically, if i walk into the dealership with two checks, what i can pay cash and my loan from the credit union, will that put me in a better or worse position than going in with my down payment and negotiating for dealer financing? i plan on making a rather large down payment on a 2005 Mustang GT, so i do not want that power i would have in the dealership to go to waste by taking the credit union route. hope that made sense. thanks for any help you can provide.

rroyce10 · June 2005

...... It's meaningless ... your considered a cash buyer ..

it's either "Buy, no Buy ~ or goodbye ......."

Terry.

delange · June 2005

I have a similar question:

So, Terry, are you saying there not any negotiating leverage on my side if we finance through the car dealer? I thought there might be, because they would be making more money off of us through the loan interest. If there's not, then we personally will go through USAA, who has always been a breeeze to work with.

If we go the same route as lojacc, then do we bring a certified (or counter) check for the down payment, or how does that part work? I know how the financing part of the paperwork works, but this is the first time we've ever been able to make a substantial down payment.

Thanks in advance for any opinions.

danf1 · June 2005

Most dealerships will accept a personal check. If you bring a certified check for downpayment and leave your checkbook at home, that takes away one avenue for the dealer to hit your payment. They can't get any more money down. Now if you are shopping price and not payment, that won't matter much but any good dealer is going to try to get a larger down payment than what you say you want to do if you are shopping payment.

It can't hurt to get pre approved from your bank. Let the dealer know what your rate is and see if they can meet or beat it. Either way you will get the best rate available to you whether you use your bank or theirs.

rroyce10 · June 2005

..... Just get pre-approved and then have the dealer meet the rate .. he's happy, your happy and all is well in the world .....................

Terry

cadillacmike · June 2005

USAA will next day a draft to you once they have a VIN and the "numbers" (total amount to be financed along with current payoff, etc.).

cadillacmike · June 2005

Not necessarily so, perhaps the dealer's lender is a PITA to work with, like mailing me insurance demands every six months and even trying to bill me for "lender insurance" one time because I didn't call them back fast enough, whereas my preferred lender, USAA FSB, never sent me such a foolish notice.

Oh yeah, I've had the same insurance company for 21 years.

After that episode, I sanity check my lender to ensure that they are giving me a very good rate, and might even compare the rate with the dealer's rate. But the last time I had the dealer do this they hiballed me on what they said was a "great" rate (great for them, not so good for me).

metmdx · June 2005

Pilot EX-L - No nav or res.
Thx, metmdx

anonymousposts · June 2005

There is a lease deal on the Pilot but no special financing rates for a regular installment loan. Wait until next weekend. Sometimes Honda will run a "for this weekend only" 1.9% special.

janine3 · June 2005

Hope I'm doing this right... never posted to a forum before and the entry page said best results if post to existing question. My question is: how does being a first-time buyer affect getting auto financing? I have established credit in the form of credit cards and student loans and ok FICO (634) that will be much better (close to 700 according to equifax score simulator) in a year after paying revolving credit down to about 20% and not being late on anything. I paid cash for my current car and also for the previous one. I'm planning on financing a brand-new Honda Civic when my credit is close to 700. Just wanting to know if there will be issues with never having financed a car before.

If I should post this question elsewhere, please don't be snippy about it, just direct me to the right place :-). Thanks for any suggestions!

anonymousposts · July 2005

probably need to show good job and residence stability (probably a minimum of 12 months at both) and have about 10-15% down. The other option is to have a co-signer that would give you a lower interest rate but you would have someone else listed on the title (depending on how your state's titling laws work).

ifyoubuildit · July 2005

When banks are considering an amount to finance, for example say $7000, would the $7000 be looked at as the amount before or after finance charges?

thanks

au94 · July 2005

Hi All,

My pay off is listed at 6299 on my most recent payment coupon from the finance company. Can I assume that is not what I would be quoted by a dealer if I went to trade in the car this month? If not why and is this legit? Thanks!!

stickguy · July 2005

Yes, they can offer anything they want. Your payoff is simply what you owe on the loan. The dealer will offer whatever they think the car is worth, which could be higher or lower.

Actually, I think this is your question, but if you mean will that be your actual payoff, maybe not. You have to call the loan company for that, since the $6,299 was as of a specific date. It could be a little higher if you have accrued interest for the month that hasn't been paid yet.

See, 2 answers for the price of one!

Kirstie_H · July 2005

The dealer has nothing to do with your payoff - that's totally between you & the finance company. If your most recent payment coupon stated that your payoff is $6299, it's going to be somewhere in that area. You will probably have some days of extra interest added to that, but you won't find that you go to trade in and your payoff is suddenly $6900.

I can't imagine a dealership unscrupulous enough to try to pull one over on you like that, because it seems like it'd be fraud (read: illegal) to mark down the wrong payoff amount. The dealership has to put in writing the amount that they are going to pay off to your current finance company. There's no good reason for them to say they're going to pay off more than you owe!

Now, your trade-in vehicle might not even be worth $6299, but what your payoff is and what your vehicle is worth on the market are two entirely separate issues.

au94 · July 2005

thanks stick guy. Its clear now re: a few more days of interest accrueing. Wouldn't ya know it, I owe about what the car's worth. Sanity would say to keep it and pay it off or pay it down a little more, but we'll see. thanks again.

brak · July 2005

We bought a new Saturn Vue and picked it up today. The first Vue we ordered came in damaged so they got us a new one.
Original financing was: All current Rebates by Saturn and 4.9% $306 per month
New financing: 0.9% and no rebates $305 per month.
We had a trade-in value of $3500 and financed for 60 months.

As this option was not offered, if it a better deal? The price of the second car was a couple hundred dollars more which I plan to ask why.
Note: The Dealer gave us free mudflaps and a cargo mat for our time.
I have a feeling I may have paid for these extras with the finance change.

fre143ddy · July 2005

I just bought a used 01 Lexus RX300 with about 42,000 miles for about $20,000 with a 14-18% interest rate and traded in for a 99 Grand Cherokee Laredo for it. I've been to about 8 different dealerships and was rejected for financing at all of them but I then go to the dealership that had the Lexus and they gave me the Lexus (after about 5hours), but they had told me financing hasn't been secured but that theres no reason to worry that my chances are good. My score is at 620, I never financed anything, I have one credit card, and I'm 18...is it possible to find a lender who will buy me as a borrower? :confuse:

anonymousposts · July 2005

obviously need a little time to build up your credit why are you trying to buy a $20,000 luxury SUV with fairly expensive maintenance. Have you even signed a contract yet? When you sign the contract there should be a defined interest rate not a range of 14-18%. As a first-time buyer you MIGHT find a lender to finance you IF you have 1 year at your residence, 1 year on the job, and meet their minimum income requirements. However, if they do pick you up most will not finance you on the car you are trying to buy unless you have a sizable (15-20%) down payment.

Why not scale down your taste in cars while you establish your credit history. Then your payment will be less, along with vehicle insurance and maintenance.You have forever to buy that Lexus.

dekorai · July 2005

I was a first-time car buyer in the month of May - a 2005 Honda CRV AWD LX. I emailed 30 dealers through the Honda website and got responses from about 20 of them. In 3 days, I called the dealer with the lowest price and we settled on a price on the phone. I got a great deal (since it was the end of the month) at about $1100 below invoice, (I did my homework!).

I hardly have any credit history in the US since I was an international student here the last 3 years. I had about 665 score average from the 3 CRA's. I applied online with Capital One Finance who financed me at 10.8%; E-Loan rejected my application. The dealer financed me at 7.8% for 36 months through American Honda which I accepted since I was saving 3%. After buying the CRV, I realized the dealer padded my interest rate by 3-4% (despite me making a $7,500 down payment for the car and financing the balance $13,500) even though I was a 'recent graduate'. Though its been just over a month since I bought the car, I refinanced through my credit union for 4.25% last week. I took my statement from American Honda showing I paid off $5000 in a month (courtesy the proceeds from the sale of my wife's Civic) and took a print out of the $7500 charged (and paid off on my credit card for the downpayment for the CRV) to the credit union, and they approved me for their lowest rate. So I don't think its necessary you are stuck with a higher interest rate for 6 months before refinancing. If you show the intent to pay, you should do fine.

Remember - you either qualify or don't for Honda financing. They do not have any tiers so don't let the Honda dealer pull a trick on you. Apply at Honda Financial Services online directly, so that the dealer does not pad the interest rate you qualify for. But first, you should try your credit union and tell them that you intend to make a down payment of 'x' % on the OTD price. Take your salary stubs - that will help.

The beauty of the Internet and forums is sharing experiences so that we are well prepared to avoid the shell games of car salesmen and F&I guys. I educated myself through the forums and I hope my experience will be of help to you and others reading.

isellhondas · July 2005

Sometimes Honda DOES vary their interest rates based on a person's Beacon or FICO score!

Although this drives us nuts sometimes I can certainly see why Honda or any other company granting credit would do this.

hemi14 · July 2005

Hey guys!

I have found that some of the best rates are on the 'net. Has anyone ever done this type of loan (ie, not going through your local bank)? Can I trust these websites (capitol one)? The deals seem good, is it "too good to be true"?

thanks

dekorai · July 2005

Auto loans on the Net are lower than big banks. Stick to the established guys like Capital One and E-Loan. I would avoid the others since I have no idea what their fine print is. Get pre-approved by the 2 online lenders mentioned above, your credit union, and AHFC (American Honda Finance Corp) through their website. Make sure your inquiries are within a 2 week period so that it counts as one inquiry against your credit score. Then finalize the Honda and dealer you want and ask the F&I for his best offer (do not disclose your pre-approved rate to him at the time of negotiation). If the dealer can beat your lowest rate, take it. If he cannot, you don't lose anything.
I am speaking from my recent experience of buying a CRV two months back where I got pre-approved by Capital One, had the dealer beat it, then refinanced through my credit union. This reduced my APR from 10.8% to 4.25% within a 2 month timeframe.

Hope this helps!

barbecuesauce9 · July 2005

I am currently leasing with GMAC and plan to finance next car with capital one or eloan. In NY,leasing company required to provide GAP insurance.
I asked my insurance company about GAP insurance and geico told me they do not provide GAP insurance. Progressive seems to offer.
Anyone financed through capital one or eloan in NY and had to get own GAP insurance or finance company offers or comes with loan?
thanks

borked · July 2005

Hi, I have a pretty serious dilemma. I purchased a 2005 Tacoma base model 2dr reg cab pickup. I was a first time buyer with a trade in and 1k cash down. They told me I was approved for a 48month loan @ 15.5% apr. However it's been almost a month now I haven't received my first bill and my payment is due in a couple days.

So I called the place(Ford Motor Credit) Who is supposedly backing the loan. They have no record of me, I call the dealership and all I get is "we'll get back to you." So I finally go down there, and they say "Sorry somehow you fell through the cracks, your contract was declined from toyota and ford motor credit." They got on the phone with ford motor credit and said they can give me the loan but it'll be at a higher APR so they want me to sign a new contract which is 18% apr. Considering I've had this new truck for a month already and I signed a contract with a 15.5% APR, does anyone know what I should in this situation? The contract says they're not allowed to change the APR, but it does say the dealer has the right to rescind the contract.

So options I was thinking about were, A: Canceling the deal and asking for my money/car back. However I was told they can charge me docking fees etc.. for my trade in? B: I tell them to take the difference in interest off the price of the truck? ANY help would be most appreciated, cause i'm quite clueless about my rights in this situation. These laws are always funny with loopholes, and I life in CALIFORNIA if that makes a difference.

CarMan@Edmunds · July 2005

Hi borked. I am sorry to hear about your tough situation. If you had purchased your truck without making a large down payment or trading anything in, you could just tell the dealer that you are working with to honor your original interest rate or you will walk away from the deal. However, since you seem to have paid a down payment and traded in your old vehicle they have some leverage over you. Prior to going back to the dealer to see what can be done, it would be a good idea to speak with a couple of local banks or credit unions to see if you can get approved to finance this truck on your own. Doing so may result in a better interest rate than the one that the dealer that you are working with is trying to get you to agree to. If you have the ability to make a larger down payment, it will definitely help your chances of getting approved.

Car_man
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ifyoubuildit · July 2005

I understand what SPOT deliveries are, but is is common for dealerships to "lose" paperwork, or "let deals fall through the cracks" like that?

stickguy · July 2005

not common I wouldn't think. Since, if they really did forget to put the deal through, they don't get paid (by the lendor), so there is certainly a penalty to the dealer.

ifyoubuildit · July 2005

makes sense, but is it often that F&I managers let it get to that point before they notice the issue?

Thanks

michaelt1 · July 2005

I WAS WONDERING IS IT POSSIBLE TO SELL A CAR WITH OUT HAVING THE TITLE.

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