Questions About Financing New Vehicles

stickguy · October 2005

One of the sages has a few good sayings:

"It's expensive to be poor" and "you can't borrow your way out of debt".

climbingfool · October 2005

i appreciate the information, and i appreciate those who want to help... that's why i came here in the first place. the last thing i need, however, are people like ksccts pointing out my problems that i am already aware of. if i wanted to feel judged, i'd go to my local church. whether he believes it or not, bad things happen to good people. there are some things you can't avoid, and people shouldn't start judging and preaching until they know more details. i apologize for my language, however i've got enough on my mind and dealing with someone as narrow-minded and ignorant as ksccts (and some of the others who have posted random comments/baseless accusations) is something i don't need. thanks again for the information, and i would welcome any other ideas/suggestions that are actually helpful and backed up by facts.

manamal · October 2005

When you have the cash to put down, find the inexpensive car. Such as what others have mentioned. I will add a used Taurus to the mix. What you want is a car that drops like a rock on initial purchase. Then, you will probably need to put a lot down (3-4K) to get it financed, and/or pay a huge interest rate. The current repo may kill your ability to get a loan. What that does is warns a lender is that you are likely walk away if the situation gets bad.

You may be able to call the lease holder, let them know your situation, and see if they will work with you. Even if the car is repo'd, you are still legally bound to amount that it is upsidedown. Plus the repo expenses. (though the phrase squeezing blood from a turnip comes to mind).

And, if car loan forgiveness is like houseloan forgiveness (with the repo), if the bank writes it off, then you may have to pay income tax on that amount. IRS treats it (with housing) as ordinary income.

Good luck, lose the attitude, and when you go in to work on the problem, be upfront with the issue. Put your tail betwen your legs, and say something like, with the econonmy the way it is, I messed up. (with that said, wgere I live, I do not seee a bad economy). Remeber, they do not need to do business with you; but right now you need them.

CarMan@Edmunds · October 2005

Hi everyone. While we might not all agree with others' opinions, that's part of the fun of message boards, we need to try to keep things as civil as possible. The last thing someone who has credit problems wants to hear is name calling, especially when they are looking for help. Similarly, even if you feel as though you were insulted by someone please refrain from using four letter words. Thanks and carry on

.

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michaellno · October 2005

One other thought ... you mentioned that your "drop dead" date for the balance you owe is a week or two before you expect to get a decent sized check.

Can you call your current loan company and explain the situation to them? It's possible that they might be willing to work with you. It can't hurt to try.

climbingfool · October 2005

well thanks for the information... i think i got things squared away with my current lender. i need to come up with the past due amount, and they won't repo it, which at first wasn't an option. contrary to popular belief, this is a new situation for me. up until a year ago, i had perfect credit and never had to worry about any of this kind of stuff. i wasn't aware of the implications of walking away from a vehicle, and it has definitely been an eye opener for me. i have about 36 hours to come up with the money, which will be a stretch but at least i have connections to make that somewhat possible. i appreciate the help that some of you offered, and can only ask for future reference that when you guys come in contact with someone in a similar situation, don't automatically assume you know the situation and start hurling the insults of "deadbeat" and soforth. we can all plan to the best of our abilties, but bad things do happen to good people... whether you choose to believe it or not.

Kirstie_H · October 2005

Well, I sure hope it happens for you. You really don't want a repo on your record, and anything you can do to avoid that happening is your better option. Good luck, and let us know how it turns out.

climbingfool · October 2005

thanks for the encouragement... i just got back from settling up with my lender and things are ok for the time being. it will be a struggle for a while, until business picks up again (which it seems as if it is), but i have my head above water again, if only for the time being. i had been given some advice (that i now know was horrible) and led to believe it was no big deal to walk away from a vehicle and that to do so would be my best option. it seemed a little odd to me, but the source seemed reliable as well. i will be more careful who i ask for advice next time i find myself in a bind. thanks again!

phurdnet · October 2005

Do you know anything about USAA? They say they'll negotiate the best deal for me and if I decide to get a loan thru them they'll match the best rate-

digitalgravel · October 2005

I applied for a car loan already 4 times. 2 times at different dealers. Then 2 times on two different eloan companies.
I didnt accept the offers at the dealers because i felt they were playing games with me on the rate. Then the eloan said that i submitted a fradulant claim so they closed my approved loan. Then the 4th loan I applied for online gave me a rate that was double the first 3.

rroyce10 · October 2005

....... Every time you apply for a loan your Fico score takes a hit ..... the only time you can shop rates is when you're bulletproof, and that seems not to be the case here ...... you should have taken the loan the dealers got approved for you instead of trying the ol' "fradulant claim" deal ........ I guess you showed them.

Terry :shades:

achenator · October 2005

I thought all inquiries in a certain amount of time were considered as one?

oh yea Terry good luck w/Wilma.

kdhspyder · October 2005

We are located in a big military area with lots of USAA customers. The do a good job for the time constrained buyer or the buyer not wishing to get involved with the discussions. We as a seller respect what they do for their members and make certain the transaction is done fairly and simply. It's a very good CU. But you knew that already I'd guess.

prosa · October 2005

All car financing applications made within a 15-day period are treated as just one inquiry for credit-scoring purposes. The same is true for mortgages.

rroyce10 · October 2005

... **All car financing applications made within a 15-day period are treated as just one inquiry for credit-scoring purposes. The same is true for mortgages**..

If ~ it's done with the same inquiry company ID numbers .... different numbers, more points shaved ...........

Terry.

davwar · October 2005

I had a question regarding having my wife on our auto loan. I have so so credit, about a 650 but she has poor credit at around 550. If I put us both on the loan application will we get a higher intrest rate due to her score or will they go by mine? Thanks for any insight on this!

mininippon · October 2005

I also have a question about getting a loan. I want to buy a MINI Cooper :shades: ($21,500) in about six months. I'll have about $7,000 to use as a down payment.

The problem is that my credit is not all that great. My credit score hovers around 660. (I have 2 medical collections listed that were both fully paid in 2002.)
Another potential problem is that I currently work and live outside of the USA. So when I apply for my loan I will have a new residence as well as a new job...

So here are my questions......What is the likelihood of me receiving a loan? Is it unrealistic to hope for an interest rate around 7-9%? At first I thought that I would have the most success with an online lender, but perhaps talking one on one with a local banker will be the best bet.
Any suggestions and/or comments would be greatly appreciated.

mininippon · October 2005

I'll be moving to SC in 6 months, and my income will be anywhere from 33k to 38k. My only "bills" will be rent and student loans.

qbrozen · October 2005

660 isn't that bad. I really can't speak to the interest rate you would receive, because who knows where the rates will be in 6 months? But I don't see you having a problem getting a halfway decent loan with that credit rating. (keep in mind, i'm nowhere near being an expert).

dpk99 · October 2005

I am going to get a loa through my credit union, but am not sure if I will by a new car or used car, so I can't apply until I know for sure. They told me that I could get financed through the the dealer and then apply for the new or used auto load and pay it off with the Credit Union's loan.

My question is, does the dealer APR matter if I pay the load off right away? Will I have tp pay any added fees or calculated payments?

qbrozen · October 2005

many times a loan to refinance carries a higher APR than using that loan to actually buy the car in the first place.

Interesting, though ... when i applied for a loan through an online bank, it was for a used car. Then i changed my mind and thought we might get a new car. I called the bank and they said it wasn't a problem and I could use the same blank check they already sent me and they will just adjust the rate to the new loan rate, if I bought a new car with it.

I wonder if a credit union could do the same thing?

dpk99 · October 2005

I'm sorry, but I am confused about the laon to refinance carrying a higher APR. Can you elaborate a little.

Thanks.

bdr127 · October 2005

The problem is that my credit is not all that great. My credit score hovers around 660. (I have 2 medical collections listed that were both fully paid in 2002.)

Just a clarification... Were they really collections that you ended up paying? Or were they something you paid, but they are showing up incorrectly as collections on your credit report?

FWIW, 660 is not really bad. Not great, but not bad. If you have a good history of making payments on time, have good income, and are putting significant money down ($7000), then there is a fairly decent likelyhood that you'd be financed at a prime or near-prime rate....

Of course, I'm not a finance specialist or credit counselor.... but that's just my opinion.

oomeoo · October 2005

I'm a student in my second year of college and my car is breaking down so I'm basically looking for another car and I'm considering the Honda Civic for its reliability and affordability. However, I don't have an extensive credit history. I have one credit card that I had for about 10 months that I paid off full every month, with no late payment. I'm planning to down about 5k and finance the rest for 36 to 60 months. I make about 500-700 monthly.

I went to Bank of America to get an auto loan but they told me I'm better of getting a loan at the dealership but I was told the current rate is 8 something. Is that a little high or is it just me?

Any other place I can get a loan at for a decent rate? I read about CarFinance.com and Capital One somewhere on this forums, has anyone used those that can give me some feedbacks on that? Or some other eLoan? How do I know if they are credible? Should I co-sign with my parents?

I appreciate any feedback or advice I can get. Thanks!

qbrozen · October 2005

If you look online at eloan or capital one auto, you'll see that the rates for refinancing an existing car loan are higher than the rate to actually purchase a car with their money to begin with. I believe this is also true if you go to bankrate.com and look up rates in your area.

mininippon · October 2005

Thanks for the reply. I hope that all goes well...

Yeah, they were collections. When I graduated from college I had to get a physical complete with xrays for my new job. I thought that I'd paid the total bill at the time. It wasn't until over a year later that I was aware that there was a problem. I found additional bills from the doctor's office, and the hospital (that did the xrays) stuffed in a drawer at my mom's house . :mad: By the time I was aware of the problem both accounts had been sent to different collection agencies. It sucks, because both accounts were for less that $100.

How do you think a new address and a new job will affect my chances?

skosuri · November 2005

Hello,

I have a couple of questions related to subprime auto loans. I am working on a research project and would appreciate any help. Thank you for any responses.

Theoritcal Question
==============
In a sub prime auto loan, theorotically, should the interest rate on the
loan decrease proportionately with the increase in the down payment
(therefore decrease in the LTV ratio), up to a certain point?

I would expect so, because the lower the LTV at the time the loan is made,
the lower the Loss-Given-Default (LGD) and lower the Probability-of-default
(POD) because (a) the borrower has less incentive to default, reducing POD
(b) even if the borower defaults the loss will be lower because of lower
LTV, reducing the LGD. This effectively reduces the credit rik of the loan.

After a certain low LTV, the LTV doesn't affect POD anymore and 100% of any
remaining loan balance can be recovered (LGD = 0%) and therefore the rate
doesn't decrease any further.

Is this accurate?

Real-World Question
===============
In the real-world, do sub prime auto lenders allow customers to
proportionately decrease their loan interest rate with increase in down
payment? For example, will the interest rate on a $15,000 loan with LTV
ratio of 30% result in a higher rate than a $15,000 loan with 50% down
payment, assuming other loan parameters are the same?

If not, why not?

Thanks,
Sunil

dekorai · November 2005

Your situation is similar to mine. I had a 660 FICO score when the dealer financed me at 7.9% with $7500 down on a $21K car. Capital One financed me at 10.8% and E-loan rejected me. I am sure you can do better since I found out the dealer padded my rate. After 2 months, I refinanced with a credit union for 4.25%. This was a good rate, considering my credit score dropped to 610 because of the inquiries on my credit report shopping for the auto loan, and having put the $7500 down payment on my credit card (thus maxing out my limits). Also, I got my wife on the auto loan also and she has no credit history and therefore no credit score.
Hope this helps!

davwar · November 2005

I had a question regarding having my wife on our auto loan. I have so so credit, about a 650 but she has poor credit at around 550. If I put us both on the loan application will we get a higher intrest rate due to her score or will they go by mine? Thanks for any insight on this!
------------------------------------------------------------------------------------------- -----------------------------

bump

oldeirish97477 · November 2005

Intrest will start on this potential loan (via dealership) as of the date listed as the loan inception date on your contract. This may or may not be a big deal. If the dealer puts you @ 19% finance rate but your credit union has already approved you for 4.9% then just arrange to have your credit union due the finacing of this loan initially and only (especially if loan is amaturized!!) but not so important if loan is a daily fic charge. If dealer financed (they choose lending institution to use and usually has alot to do with what kick backs the dealership/dealer will get) you will pay aprox one months interest as this is a reasonable and legal time frame for any lending institution to generate and book and contracted car loan.

oldeirish97477 · November 2005

davwar, you do need to get your wife on that loan to build BOTH your credit especially important when buying a home. Here's the deal, in most cases a loan company SHOULD freely ad a second or co-signer to a vehicle contract as it can only strengthen their postition. Just gives them another person to come after in the case of default. Exceptions would be horrible credit (your wife does not qualify as horrible credit) past bankruptcies, DUII's, etc... which may pose other risks of default other than non payment. Regarding the intrest rate this will depend on who you finance with. Many lenders are not banks, such as GMAC and others, and are regulated under separte rules than banks are, partly because there is too much connection between manufacturer and lender. GM ownes GMAC.... Anyways, these types of companies cannot refinance people or write a direct loan so any addtion of a co-signer if you are with these companies cannot yeild any change in interest rate. If it's with a bank, they have the option to do either, raise or lower it, or keep it the same.

oldeirish97477 · November 2005

Got 5K ready for that new car? Couple years left in college? Here's an idea. Don't finance a thing. Buy your little honda if you must but don't finance it! Cheaper insurance too!!! Use those college wits!!! Get the new car after college!!!

oldeirish97477 · November 2005

Sunil, great job and it's correct, but in a text book kinda way. 4 things to consider.

1.Credit history and score
2.Market
3.Risk
4.Debt to income

These four items that are primarly what it looked at and their various ratios etc... is what is plugged into the computer by the lender to generate an interest rate. Further more, this intrest rate is qouted to the dealer. The lender has said "Yes, Mr.Dealer, we will buy this contract for $x.xx if it is at this rate." Let's say the lender says they'll go for 4.9% But Mr.Dealer gave you a good deal on your trade in so he compensates by writing the contract at 8.9%. The dealership keeps the difference in finance charges. As you can see this is a variable of most importance as well as a few other issues. So...please let me know if your researching the lenders end of the buisness and the calculation of their APR or the final APR that the consumer would be paying?? Love to talk more on this!

ifyoubuildit · November 2005

What if "I'm" a student and want to build my credit history? I dont want to be outta luck when "I'm" 25 and my parents won't co-sign for me b/c "I'm an adult now". Did you think of that? :confuse:

If i can budget for the payment than it shouldn't be a porblem....certainly easier then trying to come up with a lump sum to pay a large repair bill......

ifyoubuildit · November 2005

Just a curious question, bu ti know that where i live, dealers cannot mark the rate up that much. It is capped by an amount that is regulated. Does this vary from state to state? Where are you located? Are you in the business?

audia8q · November 2005

In our region most of our lenders cap the rate markup at 2-3 points. Because most lenders require the dealer to 'share' with the bank a portion of the mark up it's not the most effective way to enhance the profitability of the sale.

ifyoubuildit · November 2005

Thats what i thought, but he was talking 4 pt mar-up, so i was like "jez...where?"

asafonov · November 2005

I looked at Bankrate's auto loan rates (http://www.bankrate.com/brm/calculators/autos.asp), and was very surprised to see that the 72 month loan rate was 5.88%, while the 36, 48 and 60 month rates ranged from 6.80 to 6.94%. Bankrate's numbers are not always the most accurate (and these are not localized), but still... very strange.

weather8 · November 2005

I am in desperate need of a new (or used) car. My husband & I separated 18 months ago and my credit has since gone waaay down hill. I also moved into a new apartment and got a new job at that time. Now I've checked my credit reports, and my scores are 541, 519, & 547. (an average of 536!) Any ideas on where I could possibly get financing with such low scores?
Thanks!
:confuse:

isellhondas · November 2005

Is there any way you can get a loan from a family member?

I'm afraid you will otherwise be a candidate for "Special Financing" from one of the stores that offer this.

They, not you, will pick out the cars they want to sell you, and you will be paying a VERY high interest rate.

Not a good thing...I do wish you well.

rroyce10 · November 2005

..... There's always hope .. but a cheap rate will be hard to find ...

Try a lender in the neighborhood .. perhaps the bank you've been doing business with or the credit union down the street - and don't be afraid to explain the situation - and have some $$ DOWN .... don't let false pride get in the way, if the rate is higher then go with it now and refinance in 10/15 months when things get better ..

The sad thing about divorce is, attorneys telling their clients not to pay certain bills because it's not theirs .. in the meantime, both credit historys drop into the toilet ..... maybe that's the reason why attorneys have some of the worst credit historys on the planet ..l.o.l...

Good luck ........

Terry.

anonymousposts · November 2005

It is much better to rebuild your credit by starting out with an inexpensive and reliable vehicle. This will keep repair/maintenance costs down as well as prevent you from spending more in interest than you paid for the car. Maybe a base model used Civic/Corolla/Protege. If you need a larger car then look at an Altima or Mazda6. They are reliable and depreciate faster than the Accord and Camry which makes them better deals as used cars. Once you have established your credit you can sell this vehicle and get the car you really want.

Just my $.02.

byo · November 2005

I was going to purchase a vehicle with personal check without any financing. But dealar said I can not do that.
They said I have to have cashier's check from bank.
And also they asked us to fill out credit application form.
I don't understand why they asked us to fill out that form.
They told me "credit application" is just for thier infomation.
I read article from here that other people could purchase a vehicle with personal check without any hassle. By the way, we(my husband and me) have excellent credit. I just feel that we are not treated well. I want to cancel this purchase. Actually I signed "motor vehicle purchase contract". I paid 2500 by credit card and I have over 25000 balance on that contract. I did not get my vehicle yet. If I cancel this contract, should I have to pay fine?
please answer me

bobst · November 2005

If you signed a conract to buy a car, I think you should buy the car. Simple as that.

If they don't want to accept your personal check, then get a cashiers check.

Do not fill out the 'credit application form' if you don't want to. If they won't sell you the car without filling out the form, then look somewhere else for a car.

bdr127 · November 2005

If it is their policy not to accept personal checks (especially for $25k), then so be it.... The policy is in probably in place to protect their customers and themselves, not to be a pain in the butt. Imagine your horror if someone stole your checkbook and wrote out one of your personal checks for a car. You'd be pretty pissed, I'd imagine!

You shouldn't need to fill out a credit application if you are not applying for credit. They should, however, look to do an OFAC (Office of Foreign Assets Control) search to make sure you aren't funding al-Queda. Some places also try to do a quick criminal background check to make sure they aren't selling to someone convicted of money laudering or something, especially if the customer is paying cash.

As far as the sale goes, I agree with the above post that says if you already signed something that says you will buy, then you should buy, as a matter of standing by your word. Legally, though, you have not taken delivery, so you do not technically have a binding contract yet. You might have a hard time getting the $2500 deposit returned if you back out of the deal... some definite horror stories out there about such things.

aussie3 · November 2005

hi ,
I recently moved here from Australia and are in the process of getting a visa. I don't have a FICO score or SSN.
I am self employed and earn good money. How can i get a loan to buy a car at a good interest rate.

savvyknight · November 2005

A dealer has the right to run a credit report if you are writing a personal check. The reason for this is because it shows the dealer what type of person you are through your credit score (the same reason insurance companies are now running credit reports).

If you pay with a cashier's check, they won't need to run your credit.

If you don't want to have your credit run and insist on paying with a personal check, then the dealer has the right to refuse the sale.

moosedude · November 2005

I purchased my first (and only car) car via cash granted it was a used car for about $6,000... and much like you said, wouldn't take a personal check... and that was a Friday at about 430pm... The salesmen was more then willing to drive me down my local bank which was open till 5 to get a cashiers check...
You'll have to consider the dealership location and or policy, being that there is a high auto theft/property crime rate, I don't blame them for wanting a cashiers check. As for the credit history, I did have to fill one out, at the time I didn't really think twice about it... other then the entire time they kept trying to push me to finance a more costly car. As for canceling contracts, I'm not sure how local laws may apply, or what the breach of contract terms may apply... As for the 'fine' I'm sure if they really want your money, they'll find a way to make that go away.

nycgrrrl · December 2005

hello all!

please help me - i'm about to start applying for car loans, and would like your advice on my predicament:

i'm about to move from nyc to los angeles (and need to buy a car asap)...but do not have a job lined up yet in california. of course,i will be seeking employment as soon as possible in los angeles.

in the meantime, what do i do when i fill out my current employer info on my car loan applications? if i put down my most recent employer (of the last 4 years), is that considered fraud? (he's already agreed to back me up in case anyone calls to verify)

i don't want to lie on my applications, but at the same time, i can't imagine any lender would want to loan money to someone who is currently jobless.

i think my credit is pretty good - 811, 798, and 711. I have zero debt.

Please respond asap, as I must start applying for loans soon!!!

thank you!!!!!

CarMan@Edmunds · December 2005

Hello nycgrrrl. It would be in your best interest to apply for a loan and purchase a new car before you quit your current job. Banks don't like to loan money to people who are unemployed, regardless of how good their credit scores are. If you've already quit your job, it probably is not a good idea to commit fraud and lie on your loan application. If you can't get a loan right now, you can always purchase a inexpensive used vehicle or rent one until you have a new job lined up.

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