Questions About Financing New Vehicles

toyotaken · July 2005

Not legally, no. Go to the DMV and file for a duplicate title before trying to sell it.

Ken

icojones · August 2005

I showed up at my Acura dealer with a NetBank check with a very favorable rate. Honda Financing couldn't match it but the finance manager wanted to check around.

He came back to me with a match from Onyx Financing (an arm of CapOne, i believe), and told me he'd prefer to go with that one because it would save him some paperwork with no financial benefit.

That sounded a little fishy -- why would a dealer possibly go through the hassle of a third-party finance company without any financial upside.

I'm indifferent as long as the rates are the same -- should I be? If he's making a little extra is it enough for me to want a piece of?

Thanks!

wheels4me · August 2005

Hi,
I am about to go back to business school and take on an enormous debt. I need a car at school so I am wondering if I would be better off applying for financing before I leave my current job? Also, I am wondering what my cheapest financing option is an which will reflect the best on my credit report since I don't want to get any school loans denied next year because of a car loan. (current rating 683, sal 58k)

I am not even sure how or if a lease appears on your credit report. If it doesn't I was thinking this might be a preferable option?

Thank you for any insights!

Chris

ksccts · August 2005

I have never heard of anyone getting turned down for a grad school loan. Every loan I have seen inckudes a small amount upfront for insurance which I assume pays for some sort of policy for the issuer in case you turn out to be a dead beat. Some are federally insured as well.

Definitely get the car before you quit your curent job.

CarMan@Edmunds · August 2005

Hi Chris. I completely agree with the previous poster. Definitely purchase your new car while you are still at your current job. You will be much more likely to be approved to finance the new vehicle that you want while you still have income. Leasing may be right for you if you want to keep your car payment down while you are in grad school.

Car_man
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ggsutcli · August 2005

HI, my rate I got from the dealership was 14.5 percent. That is due to some credit problems and debt in college. I am also going to put down 8500 dollars to lower the payment. I want payments around 280 a month for a 21000 Accord, 5 speed with leather. However, whem I take the rate and the money down, and use an Edmunds finance calculator my payments come to around 260 a month and the dealership is telling me 295 a month at 72 months. I do put int he right amount of months in the calculator. Why do I fell as though they are trying to get me to pay more tha I should. Someone help me with this please as I am planning on taking this car sometime next week. What do I ask them?

danf1 · August 2005

Are you figuring in the taxes and plate fees?

ggsutcli · August 2005

I am in New Hampshire and there is no tax on cars, so that is not the problem, the resigtration is something we do on our own. I don't know why the calulations I come up with are lower than what they gave me. I figure it is easy, I am being loaned 12,500 at 14.5 percent over 72 months. The calculator says something like 260 a month and they are telling me I will pay 295 a month?

kyfdx · August 2005

They are most likely adding in dealer fees, doc fees and "my boat payment is due" fees..

Before you go in there, go down to your local bank, and talk to a loan officer.. Tell them what you want to do, and how much money you have to put down.. You never know.. it is possible that they may beat the dealer's rate by 2%-5%..

Even if you take the dealer's financing, read the contract carefully.... They are probably adding in a lot of charges you didn't agree to...

regards,
kyfdx

ggsutcli · August 2005

Yea, I would imagine that you are right, I guess I should show them the rates I have come up with. I don't know the other fees they are adding. I have not found anything suspicious, and I did not agree to any extended warranty. I will have to go back and review the document they gave me.

Thanks

Any more thoughts on this?????

rroyce10 · August 2005

.... **and "my boat payment is due" fees..**

aaaaah, scuse me ..... mines paid for ...

Terry

kyfdx · August 2005

Ya... I forgot.. It is the mechanics that have the boat payments...

Sorry.. .keep getting them mixed up...

fordfool · August 2005

$261.93 monthly payment if you pay any taxes, title, or fees up front.
$295 per month would finance an EXTRA $1632

for the dealer.
Check with a few local banks or credit unions.

Don

damienwg · August 2005

I'm looking for the equation to determine the monthly payment for purchasing a vehicle (not leasing).

I have the total amount to be financed (negotiated car price - cash down + license & fees), APR and number of months.

I know there are plenty of online calculators to determine the monthly payment, but I need to know the equation so I'll be able to create an excel spreadsheet I can take with me to the car dealer.

Also, if the dealer finances me through a local bank (as opposed to BMWFS), is there a legitimate banking/processing/document fee or is that a junk fee? I guess my question is other than government fees, what are legitimate fees in a deal to buy a car, both new and used?

Thanks

steine13 · August 2005

I'm not so sure there is an "equation"... it's more of an iterative process, see...

Just like a mortgage, you pay a certain amount every month.
But every month, the portion for interest is different:
(outstanding balance) * (Interest Rate)/12 goes towards interest.
The rest goes to principal. The whole thing is worked out through a process of magic.

For low interest rates, you can do this:
Total interest is (principal)*(Interest Rate)/2 * # of years. Divide by number of months, and voila, you have the interest portion.

This ignores compounding and is therefore low... so add a 1/4 point or so to half the interest rate, and voila:

$10k over 5 years at 6%:

$10,000 * 0.0325 * 5 = $1,625
Divide by 60 is $27.08 per month.

$10,000/60 = $166.67 per month for the principal.

Together, it comes to a monthly payment of $193.75

Using my credit union's calculator, one gets $193.30

-Mathias

ncmom · August 2005

Here's a link to the formula:
http://mathforum.org/library/drmath/view/54609.html

You could also invest $30 in a TI BA II business calculator which can do all the calculations for you while you are at the car dealership. It's easier than trying to get Excel to handle all the variables and rounding problems, unless you have a module added into your excel to handle basic differential equations. A simple C program might do the trick easier for you. (Do kids today even know how to program from the command prompt?

)

Honestly, I have found it nice when buying a car to have a calculator in hand to verify all the numbers being added, subtracted, calculated, etc.

fordfool · August 2005

> I know there are plenty of online calculators to determine the monthly payment,
> but I need to know the equation so I'll be able to create an excel spreadsheet
> I can take with me to the car dealer.

Download this to your laptop. The Excel calculations have been done for you.

http://www.vertex42.com/ExcelTemplates/excel-amortization-spreadsheet.html

Don

venguy98 · September 2005

Hi, this is my first post in the forums, I've been reading a lot trying to find answer to my question, then decided to post my own;
I'm currently looking to finance a new SUV, more likely a 4runner; but im self employed; credit score is 680, bankrupcy discharged in '02, no debts at the moment, own a 1995 4runner, and I wonder if the dealership can offer no income verification loans? I can put as much as 8000$ for DP, but before I even try to sell my 95 4runner, i need to know i could get appoved for a lona at a dealership showing no proof of income.

thx

ifyoubuildit · September 2005

yes, there are banks they will not req. that stip on some applicants, however, it may depend on your job, your job time and your monthly gross.

anonymousposts · September 2005

Even if you are self-employed you should be able to show them a tax return. Most banks will take that in lieu of a recent paystub.

neeyo · September 2005

"Even if you are self-employed you should be able to show them a tax return. Most banks will take that in lieu of a recent paystub."

He can't verify it with a tax return because he has lied about his income on the application. However, most lenders will not care about this unless your credit is piss-poor since your car payment is usually #2 on your financial list (rent/mortgage being #1).

rroyce10 · September 2005

... ** bankruptcy discharged in '02** ....... that's the killer ........

Obviously I'm not lookin' at your credit report ... but I have a feeling you're going hafta prove your last 3 years because there is going to be some accounts that still show open and probably "unpaid" ..... remember - it's not the dealer that makes the decisions, it's the lender ......

Terry.

bcc · September 2005

Would love to hear about your experiences financing your most recent car purchase.

How did you feel while waiting for the dealer to come back to you with the payment terms? Did you feel suspense? Concern? Excitement? Other emotions? Please be specific.

When you saw the payment terms, were you excited? Disappointed? Unmoved?

Would love to know this since I am currently shopping for my first new car and am interested in what to expect.

hazeleyes25 · September 2005

Can you get financed through GMAC with a credit score of 538?

nistoyonda · September 2005

I finance my new car with the dealer finance service at 5.99% . Now one of my credit card banks offers me a balance tranfer with the rate 3.99 % until paid off. I'm thinking of using the offer and planning to pay the same payment as the dealer's. Doing that I could:
- Save some money (2% Differ.).
- Get the title intead of waiting (Not really important)

Any problem that I don't think of :confuse: ? Your advice, please? Thanks.

danf1 · September 2005

A few potential problems here. First off if you do this don't fall into a minimum payment trap. Yes you will have the title, but you could be paying for it for the next 12 years or so. Discipline yourself to continue making the same payment as you are now and you should come out ahead.

Second, if your water heater blows, Roof needs replaced, kid needs braces etc... do you have enough money in savings to cover these things? If you max out your credit card with a car and use up any rainy day money, you could be setting yourself up for disaster.

Third this will hurt your credit score tremendously. I don't know your situation and you may not need to apply for any credit in the near future, but a high revolving balance will affect you much more than a high installment balance.

nistoyonda · September 2005

Danf1,
Thanks for your advice.
I 'm cleared on your first two. For the third one, I dont understand how carrying high revolving balance is worse than high installment balance ( in affecting your credit score). you owe money either way?
Where should i find this financial lesson?

danf1 · September 2005

Go to bankrate.com. They have pretty good explanations of how credit scoring works. Essentially, the way that it appears is that if you have high revolving balances, then you are spending money that you do not have. Installment balances such as car loans are a necessary evil in a lot of cases, and while they do affect your scoring it is not as drastic as credit card balances.

You are correct that you owe the same amount of money. It is just how the scoring system views what type of debt that you carry. From what I understand, any card that you have more than 40% of its highest balance on is viewed as negative. In English if you have a card with a limit of $10,000 that you have never put more than $5,000 on and your balance is over $2,000 currently, that will lower your score considerably.

crajeec · September 2005

Hey Guys,

I'm in sort of a dilema right now. I'm upside down on my car loan mainly because wells fargo offered to take additional credit card balances and tack them onto the loan.

Here in lies the problem. I'm moving to NYC in January and will not need a car. Can I possible have the bank buy the car and I owe/make payments on the remaining balance? Or do I go to a dealership, have them do a payoff and I owe the remaining balance?

any help is much appreciated!

thanks! :confuse:

danf1 · September 2005

Try to sell it yourself whether to a dealer or private party. If you sell it back to the bank that is a voluntary reposession. You don't want that on your credit report.

newtocarbuying · September 2005

I'm stuck. The only good thing is I have good credit with a FICO of 707. I don't have a job, don't go to school, live with my mother and am collecting $500 a month from unemployment. (I need the car to get a job!) and a couple other hundred from doing odd jobs, but nothing I could prove. A co-signer isn't possible, the only one who would do it is my mother who has horrible credit and already an auto loan under her name. She couldn't even get approved for an easy credit card.

I CAN pay it off each month, that's not the issue. A dealer once asked me if I worked and I told him no and asked if it mattered, he said no as long as I can afford it. But how do you prove that? I've seen financing applications that want you to have an income of at least 2,000.... I don't even need 2,000. It's not like I have other bills. I'm trying to find a used for like $200 a month and have came across a few.

Should I be applying somewhere like a bank loan instead of at a car dealership? I want a Honda and the reputable Honda dealership I'm considering keeps advertising "No credit, low credit..doesn't matter.". I have credit, I don't have enough of an income and never will unless I get a car.

Any suggestions/advice? Do you think I have a chance with Honda Financial? Or anyone else?

neeyo · September 2005

If you don't have a job, forget it. Unemployment benefits don't count, and good or excellent credit won't matter.

You have one option - lie on your application about being employed somewhere, or call yourself employed. Unless you have rock bottom credit, no lender will make you prove this.

Not a single bank will loan you $X to repay in payments of $300 / month when you have no job and no money in the bank. Period.

akangl · September 2005

Ok, you say you have $500 each month from unemployment, so here's a suggestion........How about saving up for 2-3 months and paying cash for a $1000 to $1500 car. It won't be great, it won't be your dream car, but it WILL get you from point A to point B. That way you can get a job and work your way up to a better car. I've been there done that and don't regret it. Otherwise you will continue to live on unemployment, no lender will touch you without a job.

boltguy · September 2005

I just financed my new car (in June) while unemployed. I only had $800 down, and financed 20K for 5 years at 4.45%. I also had no savings to speak of. I did have a very good FICO of 790. I had $1200/month unemployment as my only source of income at the time. Maybe they were the exception to the rule.

I was denied by an online loan company at the same time. Ended up financing through Citizens Auto Finance, out of Rhode Island.

CarMan@Edmunds · September 2005

That is a very good question, hazeleyes25. I suspect that yes GMAC will finance someone who has a credit score like yours, but expect to pay a fairly high interest rate.

Car_man
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nistoyonda · September 2005

Thanks again.
I got to rethink about it.

newtocarbuying · September 2005

Yeah I was actually considering lieing on the application. And even doing it online because it's easier to lie..I wouldn't make the lies that far off from the truth, just enough.

I called a place today and for the hell of it told them I work and make like $1,000 a month just to see what they'd say.. they said they could still make it work. Eh.

Is it better to apply online for financing anyway just so they don't try and screw you with higher rates? I already know my credit scores.

newtocarbuying · September 2005

That's like twice as much as I'm making on unemployment though. Maybe that's why.

What online loan company denied you? So I don't try there. lol. I'm from RI so maybe I'll also try Citizens.

mitzij · September 2005

Try to keep emotions from getting involved. Car buying is BUSINESS, not playing around.
Be sure to research, know what you can afford. Understand every paper presented BEFORE you sign it. Ask questions. The less emotional you get, the better off you'll be. You're spending your hard-earned money, spend it carefully.

That said, buying a car is exciting. When I test drove my 91 lumina back in '98, I was thrilled. It has power, is the right color, and the price wasn't bad. I went to my bank, told the loan officer what I was buying, how much I needed to borrow, and he told me how much it would cost me to borrow that money. It was a straightforward deal.

audia8q · September 2005

You have one option - lie on your application about being employed somewhere, or call yourself employed.

Didn't your parents teach you that fibbing is wrong?? What do you do if they ask for proof of income?? Quite common these days.
What if the bank decided to call your phoney employer to check on the application?? this is common also.
What if the bank finds out the fraud was committed and decides to pursue the issue??

Nothing good comes out of a lie on a legal document like a loan application.

Kirstie_H · September 2005

Yes, let's please stay away from suggesting illegal activity!

blue10 · September 2005

I have a 2005 Honda CRV I have agreed to purchase arriving at the dealership any day now. The financing at the dealership was running 4.9 and my credit union 5.25 so I am going to finance at the dealership. I want to be educated on what additional items I should and should not see or pay for on my contract. I have heard nightmare stories of folks getting charged for additional items they did not know they had to pay. Agreed to pay 20,500.00 for the vehicle $220.00 over invoice and then $515.00 for delivery and of course taxes were in there too. I'd like to go in prepared. Please advise.
In addition, I have asked to get copies of my currently signed paperwork and they are telling me that until they have the actual Vehicle Identification number they can not legally give me copies. I was under the impression you should get any paperwork that you as a customer sign on. Please advise on this too. What are they afraid of by sending me the paperwork?

danf1 · September 2005

If they send you all of the paperwork, then you can go into another dealer and try to get them to beat the deal. If you don't have paperwork, then the next dealer may not believe the numbers that they are giving you. It is not uncommon for someone to tell me that dealer x is selling a car for 10,000, but they end up buying from me fore more money. If you have it in writing then I know the real deal.

As far as what the finance person is going to try to sell you, rest assured you will hear about extended warranty. These can be a good deal in some cases, it just depends upon your willingness to put up with risk. Life and Disability insurance will be discussed. Probably some sort of paint protection and security system will be offered to you. You don't have to buy any of these, but some might make sense for you. Keep an open mind and remember that everything is negotiable.

dario_n · September 2005

Folks:

* background:

I been living in the US since December 2003 (got relocated by my company). We do have a car, which we bought person-to-person October 2004 (Jeep Grand Cherokee Laredo, 1998, 60,000 miles - new tires, AC is busted)

I've checked my credit score with the three bureaus - Equifax is giving me 727, Experian 731 and TransUnion 711. So far, so good

* question:
I want to buy a new Jeep Grand Cherokee Laredo, 2005, from an authorized dealer, and I've two questions:

a) dealer is offering me $ 5,000 for the Jeep. Says 'AC is busted, that will cost at least 1500 to fix'. Says he actually should give me no more than 4,000 - 4,200, but 'he likes me' - am I being screwed here?

b) While I could apply for credit at the dealer, I've been checking both eloans.com and capital one auto financing. I'm looking at a 48-months loan, dealer told me they're going with 12% APR - I'm located in New Jersey. Both online sites quote 5.25% APR for 48-months loan, for customer with 'substantial and excellent credit record'. So, questions: has anyone applied in similar conditions than me (less than two years credit history?). And even if I get quoted a higher APR, but lower than the dealer, would still be better to go with them instead of dealership financing?

Thanks in advance !

kyfdx · September 2005

dario_n ..

I think it is very important that you go to a local bank or credit union (start where you have your checking account), and ask them to pre-approve you for a car loan.. Then, you'll have something solid to compare the other offers to...

Car dealers make money on selling you financing... If they can sell you a loan with a higher interest rate, they make more money.. A bank will usually give you their best offer upfront, especially if you are a current customer..

Once you have the bank's preapproval, then if the dealer can beat the rate, so much the better...

I'm sorry... I have no opinion on the trade-in value of your Jeep..

regards,
kyfdx
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dekorai · September 2005

Read my post in this thread - #1372 of 1427. Your situation might be similar to mine and what I faced in May when I bought my CRV. Hope it helps!

chris333 · September 2005

I want to lease a car, lets say base Corolla for 3 years 15,000 year. I am in NY. I want to trade in my car, which is paid off and has a dealer value of 5,000. Is it possible to get a 2 or 3 year lease with my trade for little or no additional money? I really don't want a car payment, but do want bumper to bumper warranty. Could I lease even a demo or newer used car with full warranty? I know NY just restarted leasing. Thanks for the help.

rroyce10 · September 2005

....... You're always better off (*depending on the vehicle and the miles) to work the deal as 2 different entities ....

1.) the value of the vehicle (real $$) and keeping the vast majority of the money in your pocket ...

2.) and what the best lease deal is with limited money down -- meaning, putting down 1st, security and maybe some small tag and state fee's down ...

Remember, your renting this car for the next 2/3 years ... large amounts of money down do 1 thing and 1 thing only - it reduces the payment ...... it builds no equity, it doesn't change the residual or the pay-off ~ and "if" it gets stolen or totaled, the money evaporates - gone.! ..... if it's a nice, clean $5,000 trade - you might be better off sending it down Retail Rd and forgetting the trade idea ......

Terry :shades:

CarMan@Edmunds · September 2005

Hi chris333. Terry is absolutely right. You would be much better off having the dealer that you get your new car from cut you a check for your trade than use the proceeds as a large down payment on your lease. I always advise consumers against making any sort of down payment at all when leasing. I do so for two main reasons. The first is if your vehicle is totaled in an accident or stolen during your lease, your insurance company pays off the bank that you were leasing it through and your down payment essentially disappears. The second main reason is that down payments on leased vehicles do nothing to reduce their lease-end purchase prices. So your lease-end purchase option price for your Corolla would be exactly the same, regardless of whether you had put the entire proceeds from your trade down, or had made absolutely no down payment at all.

You can lease a demo vehicle, used vehicles do not qualify for manufacturers' new vehicle lease programs. If you have any other specific questions about leasing a Toyota Corolla, make sure to stop by the following discussion: "Toyota Corolla: Lease Questions".

Car_man
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chris333 · September 2005

Thanks, both of you.... I will follow the advice, and go over and check the corolla lease questions.... Thanks.

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