Questions About Financing New Vehicles

lrguy44 · June 2010

Since not everybody has the ability to pay cash, get preapproved. It may be your credit will carry the rater and wife's income will carry the debt. If the dealer can beat the preapproved rate then so much the better. Please, buy within a budget. Do not overbuy.

Kirstie_H · June 2010

In the market for a new car? Want an Edmunds.com expert to go shopping with you and help you get the best possible price? A national television reporter is looking for consumers in the Washington DC area who would like to participate in a car shopping strategy story. If you are interested, please send your daytime phone number to ctalati@edmunds.com by July 9, 2010.

biancar · June 2010

How cool! I would have done this if they were doing their story a couple months ago.

Kirstie_H · June 2010

Well, if you know anyone shopping, let them know. The person doesn't HAVE to be participating in the forums now, though it'd be cool if they share their experience afterward.

biancar · June 2010

A friend of mine will be shopping for a Volvo (hers is going on 15 years old, and she thinks it's time for a new one), but probably not until fall. That would be too late for this reporter, no doubt. Pity because she HATES car shopping and could really use the help.

stevenix1 · June 2010

The dealer appraised my car without seeing it or it being with me at time of new car purchase. I signed all papers, they paid my trade in off, NEVER asked for the car NEVER saw the car. I still have the trade in AND the new car.
Will they ever figure this out???

Kirstie_H · June 2010

Well, that's odd. Never heard of that situation before.
Why not just do the right thing and take your trade to them? They did pay it off, after all. Their incompetence doesn't excuse unethical behavior, IMO, and it could come back to bite you.

qbrozen · June 2010

If they paid it off, that means they received the title. So they own it and you are providing free storage.

Kirstie_H · June 2010

That's a nice, succinct way to put it!
Yes, the car has no value to you, steve - you can't sell it because the dealership has the title, and you won't be able to renew the plates upon expiration, so you would only be able to drive it for a limited time.
Even though someone at the dealership dropped the ball in a pretty careless way, they could (if they were so inclined) be real jerks about it and claim that you're in possession of a stolen vehicle. It'd be pretty difficult to explain to law enforcement that you didn't know that the vehicle legally belongs to the dealership.

Kirstie_H · July 2010

A reporter is hoping to interview people who want to buy a car but are hesitant because of the economy. Please email pr@edmunds.com before 6pm Eastern today, July 1, 2010, with your daytime contact info and a few words about your situation.
Thanks,
Jeannine Fallon
Corporate Communications
Edmunds.com

BobL242 · July 2010

Can someone answer this question for me? I just purchased a new car. The amount that I am financing is $37,966.00 @ 3.90% for 72 months. What would the total finance charge add up to over the course of this loan? I believe I know the answer but just want to double check to make sure. Thanks in advance!

tidester · July 2010

The interest works out to $4,676.48.

tidester, host
SUVs and Smart Shopper

rbar01s · July 2010

if my APR on a 5 year loan of $18,150 is 6.99 percent, why is it that when i make a payment of $400, 100 of it goes to interest? that looks like 25% to me lol...thanks and any help is appreciated.

tidester · July 2010

The starting balance on your loan is $18,150 and if the apr is 6.99% then the interest on your first payment should be $18,150×0.0699÷12 = $105.72.

tidester, host
SUVs and Smart Shopper

kyfdx · July 2010

The interest is on the loan balance, not the payment.... And, it's an annual rate, not monthly..

Every month, you'll pay less interest, because the loan balance is being paid down..

venky_rk · August 2010

Hi,

I'm in the market for buying an Honda Accord LX. Went ot delaer with 0.9 % APR in mind and got into discussion on the price.

He offred two options and was confused:

1. Vehicle price: $19100 with Honda finance 0.9% APR for 60 months.

2. Vehicle price: $17900 with another bank's loan: APR: 2.45 % for 60 months.
Dealer was giving the low price due to cash incentive offered by Honda, if you don't go to low 0.9% APR.

My dilemma:

1. The monthly payment for 2.45% is lower than option 1 and getting a discounte immediately.

2. He is not revealing the bank untill I commit to buy and he says all the contract clauses are the same with the second "unknown" bank.
Is there any fineprint, I'm not able to read?

Can you please guide me what I need to ask and confirm before I go forward?

thanks
venky

stickguy · August 2010

well, not sure it matters what bank it is (or why they won't tell you), but as long as you see the printed terms and read them (and they have to supply) it really should not matter.

the situation here though is pretty common. Honda offers a choice of low APR, or a rebate (but you can't have both).

2.45% is still very low. I would jump on that deal.

as you noted, you are paying less over the term of the loan. And, you will always have a lower loan balance, which is good for you if you sell (or wreck) the car before it is paid off.

venky_rk · August 2010

Thanks. I jsut read somewhere in the forum that there is a chance that APR rate can be raised after couple of months by a dealer financed bank.

If there is any such risk, I really want to go to Honda finance and stay away from the "unknown" bank..

Kirstie_H · August 2010

If the rate CAN be raised, the terms under which they can raise the rate must be disclosed to you. This is why you would need to read the finance contract thoroughly before signing it. I have never had a finance company raise my rate after the finance deal was sealed.

Here's another thing to think about: If the payment is lower on the 2.45% loan, check to make sure there is no pre-payment penalty on the loan. If there isn't, you can pay extra on the loan to pay your car off more quickly and reduce the overall amount of interest you pay. If you can afford the payment presented at 0%, it might make sense to pay THAT amount on the 2.45% loan every month.

shoalhaven · September 2010

If I pay cash for the car (trade-in plus a check) and have proof of insurance, why does the Dealer require me to sign an 'interim' finance application?

kyfdx · September 2010

A check isn't cash.... until it clears..

shoalhaven · September 2010

Granted, what about giving them a Cashiers check?

kyfdx · September 2010

I'll tell you a little secret about banks... They don't consider cashier checks the same as cash, either... The check still has to go to the bank, and be cleared. All it takes is an allegation of fraud to gum up the works (legitimate or not).

If you really don't want to fill out a credit app, pay for the car, and wait for the check to clear.

Personally, if I'm dealing with a reputable business (and, I would consider a new car dealer reputable.. ), then I'm not going to go to all that trouble. The credit app is a backup, in case it turns out you don't have the funds (for whatever reason).

Of course, you could always tell the dealer that you won't do the deal, if you have to fill out a credit app, and see what they say? Maybe the rules change, if they know you'll walk.

regards,
kyfdx

shoalhaven · September 2010

Thanks for your help. I may be making a mountain out of an ant hill.

grandtotal · September 2010

I may be making a mountain out of an ant hill.

No, not really, I would not fill out an application for credit that I have no intention of using either. I've never had a problem showing up with a cheque.

deltheking · September 2010

Nope. Frankly,no need to fill out a credit application. I would not. Why should I? I am paying for the car by cash. So,no need for a credit check. If the dealer is not confident that I dont have funds-- he should wait till the funds clear.

Also , I have done wire transfers too. So that way, it`s instant and goes directly to the dealer's account along with proof of the fund transfer.. Dont know why many dealers or buyers dont do it. For me,wire transfer seems very convenient.. :shades:

Or maybe,you can withdraw the cash from the bank,put it in a suitcase and go directly to the dealer and pay him instant cash right then and there !! :P

lrguy44 · October 2010

I realize I am late into this thread, but I can speak from experience. We once took a $75k check from an individual. The next day, they stopped payment. The car was later found 2000 miles from the dealership. Turned out, we were not the only dealership they had pulled this on. Since then, we do one of 4 things (customer choice) with new customers.
Back up contract
Go with them to the bank and get a counter check. (cashier checks are easy to fake).
Have them wire funds.
Wait for funds to clear to deliver the car.
We do not get complains ever as customers understand our exposure.
Previous customers can write us a check- we know who they are.

grmile · March 2011

My mother wants to sell her car to a friend who lives in MD. I also live in MD, and can deliver documents such as the notarized signed title and bill of sale (a MD-required item). The car is owned outright by my mother, but the friend wants to get a loan from her credit union. The friend's credit union is insisting that in order for the loan to be finalized, the owner (my mother) must be present. Is this a common practice, or is this policy out of the ordinary?

Thanks in advance for any replies or information.

tallman1 · March 2011

That's a new one on me. The banking world is a bit different now though.

renchjjj · June 2011

This is remedied by having your mother give you a limited powerof attorney authorizing you to sell the vehichle representing her interest. Military members use this all the time.

indigo1 · December 2011

With a credit score of 700, would that be considered a good score to get a lower finance rate?

allen1076 · April 2012

Here is the short version, I purchased a car from a dealer in AZ. They told me I was approved thru Ally, when 30 days came and went I still didn't have my new tags and no statement from Ally. I kept calling them and Ally said they had no record of myself or the VIN. Come to find out the dealer didn't secure financing and they were having trouble. It wasn't until April 24th I got a phone call from a company who wanted to verify the info for the car loan. I told her I was told Ally was the company and she said no they are the ones who took the loan. That my payment would be due May 5th and I should be recieveing a statement from them shortly. Now today I got a call from that company's collection Dept saying our payment was due April 5th and we are almost 30 days past due. I explained the situation and he could care less, he said they can back track it to the date on the contractt even though they just acquired the loan. I told him the lady told me May 5th and since I didn't have her name, even though I had the number she called from he said I'm past due. That a payment needs to be made and another due on May 5th. Are they allowed to back track for a payment when they just took the loan? It turns out Ally obviously didn't pick us up but this company did. I don't mind making a payment but how do they expect two payments back to back. I just want to make sure this is allowed for them to ask for a payment when we weren't even with them until just last week??? Thanks for any help.

kyfdx · April 2012

If you bought the car on March 5th, then one payment is past due.. no matter how long it took them to finalize the financing.. (granted, no penalty, since no one asked for it, until now). The 2nd payment would be due May 5th.

To be frank, you should have the April 5th payment set aside, since you didn't make it, then.... You've been allowed to hold on to that payment for an extra three weeks. (you didn't spend it, did you? lol)

regards,
kyfdx

allen1076 · April 2012

Thanks

lol, no I didn't spend it, I had it waiting to give to whoever picked up the loan. Just didn't think that they would have another due date right around the corner, I thought I would give them the payment and sometime at the end of May would be my next one. Plus how can we be in collections with them if the loan just got funded on 4/24. It was just rude, I felt the way they handled it on their end. Plus someone from their own company said the payment will be due on May 5th, nothing about a past due when she called to verify our info. Just seems weird. Plus, I'm not just going to give money over the phone to someone calling me when I don't have anything as far as a loan #. So I will just verify things on Monday by searching the net to find a customer service #. I just want to protect myself. He told me the dealer in this situation usually pays the first payment when its messed up like this. I do appreciate what you had to say. It just bothered me about the whole collections thing when we only been with them for a few days.

stickguy · April 2012

it is all based on what the computer spits out and tells the guy who makes the calls. If you really have an issue, get to a supervisor and be polite, and they should take care of the situation after looking at the details.

allen1076 · April 2012

I will be calling on Mon. I did ask the guy to tallk to the supervisor and of course I got, "I am the supervisor"

Maybe I will have better luck on Monday

stever · May 2012

A reporter would like to speak to anyone between the age of 20 and 30 who needed financial help from a parent to buy a new car. If you fit this description  or if you are a parent who has helped a 20-something son or daughter buy a new car - and youd like to share your story, please send your daytime contact information to PR@edmunds.com no later than 3 p.m. Pacific/6 p.m. Eastern on Thursday, May 3, 2012.

jeannepaul · May 2012

I purchased a 2012 Prius on Apr. 23, 2012, everything was signed and I drove away and they have my trade in. they call me a few days later telling me I need a letter from my mortgage company stating that I am current with my mortgage. The mortgage company will not fax customer sensitive information and I am getting irritated at all of the phone calls and texts I am receiving.

Shouldn't they have asked for this information BEFORE the contract was signed? Am I obligated to run around and get this information and what can they do if I do not do it?

thanks.

robr2 · May 2012

It sounds like you drove away with the car the same day. That's called a spot delivery. I presume you financed your car.

The problem with a spot delivery is that the financing often isn't fully sorted out. The bank probably gave a conditional approval based on quick information and somewhere in your loan documents it says the financing may not be final. Since they can't get proof from your mortgage company that you are current with your loan, the bank won't fund the loan - which means the dealer can't get paid.

Are you obligated to do this? There's no clear cut answer. IMHO, get the letter and forward it along.

stickguy · May 2012

best as I understand, the dealer accepts the risk on a spot delivery. So, your option is to try and get what they want, or if they aren't happy, bring the car back and walk away. Of course, unless your trade in is still sitting there untouched, that could get a bit messy!

kyfdx · May 2012

All they want is some documentation... I certainly wouldn't bring a car back, over that..

Not really up on car financing, but if you close a real estate loan, you usually sign a form that says you will assist the lender or their agent in correcting or obtaining paperwork that they need to close the loan... Guessing there is something like that in the fine print of the retail installment contract that was signed..

I'd guess they are having trouble placing the financing... the credit report would show a mortgage problem.... so, this might be a sub-prime lender..

steine13 · May 2012

I don't get this... I just pulled my own credit report, and was astounded to find out how much information is on those things.

They knew to the nearest dollar how much my last payment on my credit card was, what the balances were, and even the size of my car payment. In 2003!

And next to every account, there was this little heart-warming statement:
"Pays as agreed."

Something here isn't adding up. Showing that someone is "current on their mortgage" is exactly what the credit report does.

Rather than jump through hoops and run around after documentation, I'd try to figure out what's _really_ going on here.

Cheers -Mathias

indian20 · May 2012

Hi all,

I do understand that any score in the excellent category 750 and above can always qualify for whatever car they want.
I work for a large financial company, with over 120K annual salary, however due to some unforseen events my credit score dipped over last few years, and everything is back on track, and i have cleared all my past debts. And the score is gradually rising.

For me to qualify for a BMW X5 suv, whats a good downpayment and a good score? currently the credit score is 650. How much more?

kyfdx · May 2012

700+ will usually get you top tier credit on a lease with BMWFS..

I'm not sure how it works with lower than that...

wacarbuyer · May 2012

So I know I need to shop around for the best loan rates, but what exactly do I need to bring to the dealership when I do this?

Can I just look at a bunch of banks websites, or do I need to get pre-approved from a bank?

Let's say I'm going with another bank, and not being financed by the dealership, how does that work? Ex: Let's say I've agreed on a price of a car and the F&I guys tell me they can't get me a better rate. At that point do I leave the dealership and go to the bank to get the actual loan before returning to the delearship? Will I be guaranteed to still get the car?

stever · July 2012

A reporter is interested in talking to someone who had trouble getting a car loan but finally had success within the last couple of months. If you fit this description, please contact pr@edmunds.com with a brief description of your experience and your preferred contact information by the end of day Tuesday, July 17, 2012.

sibsoner · July 2012

I have a auto loan with chase Morgan. I Paid 29 days late on my 3rd and 4th payment. after 15 days I start to get calls. Lady tells me that even after the first day late I start adding more money to my loan!!!! I thought that was the late fee $15. She tells me that for the last 2 months I put on $480 more on my Loan! what is this? I had a loan with Ford credit and it was not like this.

qbrozen · July 2012

Hmmm... well, maybe I'm wrong here, but I think what she may be referring to is the fact that your daily interest is increased when you don't pay on time. So, for instance, 1 day after your payment is due, you'll gain, let's say, $2.50 interest rather than the $2.45 interest you'd gain if you had paid on time.

In any case, $480 sounds REALLY excessive for 2 late payments if that is in fact what she is referring to.

sibsoner · July 2012

Yes! that is somewhat what she said. She said it like if I paid early or something. but she said i put on $8 a day and that was $240 a month. This is insane to me.

sibsoner · July 2012

I don't understand how this happen to me Am I that dumb? I can't get caught up and now I ad on $240 a month paying 30 days late each month I will never pay this off. Ford credit loan I took was not at all like this. I don't know what to do!

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