Sjf2fd, you will find varying opinions about whether it is better to lease or to buy. I actually prefer to lease my vehicles, provided that the manufacturer is providing enough lease support on it, or it has a very high residual value. Others feel as though financing is always the way to go. There is not really a right or wrong answer to this question. Rather it varies depending upon the vehicle that you are interested in and upon your personal preferences. You didn't mention the model name of the Toyota that you want, but I believe that Corolla is the only Toyota vehicle that has a VE trim level. If you are interested in the 2000 Corolla VE, I can tell you that there is lease support on it in most of Toyota's regions. Although it varies from place to place you should be able to get a lease rate that is equivalent to about 6% on this car, which isn't bad given the rising interest rates that we have been experiencing lately. Here in the Northeastern U.S. Toyota is advertising a lease on the 2000 Corolla VE with automatic transmission for $189 per month over 36 months with $1,085 down and 12,000 miles per year. That's a pretty decent deal in my opinion.
I was offered special financing by a dealer. What does this mean and why different rates for people?Also, is it better to tell dealer about my credit union rate and ask if he can beat it or just keep quiet and see what he offers?
I've read that this will expire soon. Is that true or a come on? Will it begin again soon do you know? I will be ready to buy during the summer. Thank you. RPEsse
Stix1, the term "special" is extremely vague and can mean anything the dealership wants it to. Many manufacturers offer their consumers special financing programs that provide interest rates as low as 0% in some instances. You can find out which manufacturers have programs like this by visiting the Edmunds.com Incentives page. Click here to go there: Edmunds.com Current Incentives.
The finance rates that dealerships provide their customers will vary for several reasons. The main reason is the customers with good credit ratings will qualify for lower interest rates than those with poor credit.
I suggest that you wait and see what sort of interest rate the dealership that you are dealing with offers you. If it is not as good as the rate that your credit union quoted you, then say so and see if they are willing to beat your credit union's rate.
Dicke1, many manufacturers have special financing programs available at this time. If you let me know exactly which vehicle you are interested in, I would be glad to fill you in on what I think they will do with their future incentives. Keep in mind though that it is very difficult to predict exactly what manufacturers will do with their incentives in the future with 100% accuracy. In many instances, the manufacturers themselves don't even know yet.
Hi sedfet. Let me begin by saying that there probably is not much that you can do to alter a signed lease contract at this point. Now let's take a look at the various questions that you had. Don't worry about the Chase acquisition fee of $595. This value is correct. About a year ago Chase increased this fee from $495 to $595 and began to waive a lot of its lease-end wear and tear charges. On the other hand, looking at the gross capitalized cost of your car as it appears on your contract, it appears to me as though the dealership charged you more for your car than they originally said they were going to. This is why it is extremely important to look at lease papers very closely prior to signing them. Also, the doc fee of $199 really is nothing more than additional profit that the dealership tacked onto your deal.
As I mentioned in the beginning of this post, I don't think that there is much that you can do to get out of your legally binding lease contract at this point. Chase probably does not care how much money you paid the dealership for your car, they will just want the money that you have agreed to pay them. I suggest that you make some phone calls prior to just dropping your car back off at the dealership. If I was in your situation I would try calling my local Department of Motor Vehicles and perhaps Chase themselves before I called my salesperson that I dealt with back. Good Luck, make sure to let us know how everything turns out.
you're better off buying than leasing-- leasing is for those who have expensive tastes and can't afford to buy-- they have a $15000 budget but $25000 tastes--- or else they just have to have something new every two years -- or they drive less than 15000 miles and watch the odometer--- a shame you had to get an automatic tho-- why not the 5 speed?
My girlfriend and I are looking to lease a new VW Cabrio GLS manual transmission. We signed a piece of paper with dealership heading on it. The salesman did not sign. The paper had the price, miles allowed, and length of lease. I assumed the signing of the paper was a receipt for the $1000 we had put down and to say we were serious. They did not have the color we wanted, and subsequently found what we wanted elsewhere and did a swap or a trade or something. So the car is here. ARE WE LEGALLY BOUND TO BUY THIS CAR NOW? And if so, at the price on the signed piece of paper or can we still haggle the price and some fees? I did get a faxed copy of the finance agreement today (which we have not signed), and it looks a little different than the original paper we signed. For instance, the down payment is more (from $837 to $951). The total is more (from $23850 to $24490). I've heard I should not be paying original sticker price to lease anyways--what do you think is a fair price when the invoice is $21804 (with 6 disc changer)? Also not on the original piece of paper we signed- Acquisition fee: $490 Refundable security deposit: $400 Turn-in fee: $250. Are those fees I can get around? Also what is the "Depreciation and any Amortized Amounts" $13010 and "Rent Charge" $4523.19 all about? Sorry I jumped around so much, but as you can see, I am a bit confused. Thanks Car-Man in advance. Chris Van Timmeren
I don't think I made it clear that the piece of paper that we signed--the salesman said it was not binding-but the rules on the back of the sheet said it was if both parties sign (again, he did not), or if the car was delivered. While they did not have the color of car we wanted, THEY did find it elsewhere and had it shipped over. Does this constitute "delivery"?
Chris, it's hard for me to say exactly what the piece of paper that you signed was without actually seeing it. Chances are though that if you already agreed to a price in writing for the vehicle that you are interested and they went through the trouble of swapping for the one that you want they are going to try to hold you to your agreement. I'm not a lawyer, but I do not believe that you are legally bound to purchase the vehicle at the agreed upon price until you physically take delivery of it and drive it off the dealer's lot. Still, if you back out of your agreement at this point there is a very good chance that the dealership is going to try to keep your $1,000 deposit, even if it was supposed to be fully refundable. I have found that it is usually very very difficult to get deposit money back from many dealerships under any circumstances.
You definitely should not pay full MSRP for anything that you lease, unless its a vehicle that is in high demand or a Saturn or Mercedes-Benz. $24,490 sounds a little on the high side for this car, even though it is convertible season.
You will not be able to lease this car without paying the security deposit, acquisition fee, and termination fee. They are all legitimate charges that anyone who was leasing a VW would have to pay.
You are definitely THE man, car man. Thank you. The $1000 at this point, I am not to worried about getting back. You see, the honest salesman told us that he would hold the check until we purchased the car, this was the Saturday before Easter. We received from our bank today a notice that a certain $1000 check had bounced!! If I got that notice today, how long ago do you think the honest salesman waited to cash the check, and for how long do you think he has KNOWN about the check not clearing and not said a word? Even up till now, I have not said anything about not buying the car, just I was not comfortable with the price or the possible excess wear and tear charges...So of course 2 other checks bounced and now we have 3 bounce fees at the bank...good luck getting those back huh? I think I saw you give advice to another about checking into my state's dept. of motor vehicles for the legality of our so called agreement. Is that correct? Either way, Jen and I will still probably get a Cabrio, certainly not ever from that dealership, but at least with new found insights and wisdom and knowledge from a good guy. Thanks again Car_Man. Chris Van Timmeren-Grand Rapids, Michigan
You're welcome, chrisvant. Thank you for the compliments. Even though it's no fun bouncing checks, you are probably lucky that this particular check did bounce or you would have been out $1,000. I really wouldn't worry about checking into the legality of the agreement that you signed. I seriously doubt that they dealership that you were dealing with would go through all of the trouble of trying to hold you to it even if it was legally binding, which it probably isn't. Take your time and shop around a little bit. Chances are you will be able to find a Cabrio that you like, for less money than this one, and at a better dealership. Good Luck.
Car_Man Smart Shoppers / FWI Co-Host
P.S. In the future if you feel as though you have to make a deposit on a vehicle, do so with your credit card. That way if you begin to have problems with the dealership and they won't refund your money you can often get your credit card company to reverse the charge.
I am purchasing a 2000 Windstar and just went in yesterday for my final test drive. They have had "0.9% up to 60 months" financing advertisements inside the vehicles and I was under the impression that this was still the ARP - until today. I was negotiating the sale and found out that Ford recently changed the APR to 2.9% and now I am being asked to pay this new APR. Do you think I have any options to negotiate this further, or should I just "bite the bullet" and go with the 2.9%? I made a deal "out the door" for $885 under MSRP. Any insights?
Hi minivanmomma. I am sorry to say that the 0.9% financing for up to 60 months that Ford had available on the Windstar last month is no longer in effect. If you decide to finance a Windstar at this point you will have to pay .9% for up to 36 months, 1.9% for 48 months, and 2.9% for 60 months. Even though it was very irresponsible for the dealership to have not taken those signs down yet, you are not going to be able to get them to give you the 0.9% rate for 60 months no matter how much you complain. At least you can still take advantage of the 2.9% financing. That's still an excellent rate. As far as the price of the van goes, I suggest that you shop around a little bit. You never know what the market price for a vehicle is in your part of the country without visiting 2 or 3 dealerships. I have a feeling that there may still be some room to negotiate on this van. Good Luck.
Maximum2, this topic is really for community members who want to discuss the financing of their vehicles. I think that the question that you are asking would be more appropriate for either the Smart Shoppers or Sedans Conferences. Having said that, since you already posted your question here I will take a shot at it. How good a price this is will depend upon what sort of options the vehicle that you are interested in has. Still, I think that $23,000 would be a good price for any 2000 Nissan Maxima SE if you could actually get one for that.
Are there alternatives to financing through a dealership that is offering 16.95 financing for 60 months with a 800.00 charge by the bank to buy the new Honda Civic. In the past lost job and couldn't pay bills. No bankruptcy, no charge-offs. My income now is 50k. Is there any help for this?
Babe1953, given your late payments in the past you are definitely going to have to pay a higher interest rate for a new car loan than someone whose credit is in good shape. Still, you shouldn't leave the financing of your vehicle entirely in the hands of your dealership. You should at least see if you are able to get an auto loan through your regular bank first. You may find that the interest rate that they are able to give you is a little more reasonable.
I just ordered a 2000 Mercury Sable LS Premium through a dealer after negotiating what I thought was a really good deal on a car with lots of options- $21,388 including tax and tags. I did this by faxing my specifications to 24 dealers and inviting them to send me their best price.
All this time I have been quietly calculating my monthly payment amount based on the Edmunds info that I can get 3.9% rate on a Sable. Well, right after I signed the paper, I mentioned this and the salesman said that to get that rate they will have to "add back in any dealer incentives or cash from the manufacturer" so I will be financing a greater amount. That is, I cannot benefit from both the dealer incentive and the low finance rate.
Yes. This is true. Generally, you have to choose either the special financing rate OR the cash back option. However, the dealer will still get the dealer incentive money regardless of which option you choose. If you've factored that into your price, you should be able to keep it.
Had settled on a fair leasing price for new 2000 Chrysler Concorde LX. The hitch was the specific color car (Inferno Red) I wanted with the agreed features was not available in the entire State of Forida. The dealer said my option was to order the car but would be 6-8 weeks in delivery. If ordering he could not guarantee the lease price because the residuals and interest rate may vary. I asked if there was any historic info that could project the price increase. He said no! I will not buy a car without an agreed price. My question is; 1) How far will dealers go to locate the car you want; 2) Is the information he is relaying accurate and is there anybody or anyway to project those June figures. I called the nearest Chrysler Financial Center (Orlando) and they of course would not tell me anything except it was a formula calculation that could not be released. Any comment will help my next move. I am really happy with the price the dealer is giving me and I hate to lose the opportunity.
1)A dealer will go as far as the profit he's making on the sale. The larger the profit, the further he can go to find what you want. Dealer's do go out-of-state, but the further it is, the more expensive it is to bring the vehicle back.
2)It is true that NOONE can predict what interest rates will do. There probably is a general feeling that interest rates are headed up, but a single report on a slower economy can change that in a minute. He ought to be able to make some sort of a projection however, even if its a worst case scenario. You just won't be able to hold him to it. It might ease your mind however.
You should go to additional dealers. Another might find what this one has not. Also, it sounds like you can agree on a price, its just the uncertainty of the financing 6 to 8 weeks from now that you fear. Find out if he'll accept earnest money (to make the order) that he gets to keep if you decide that, upon arrival, the financing terms are unacceptable to you and you walk away from the deal.
Rainville, bblaha is right. There is absolutely no way to accurately predict exactly what a particular manufacturer will do with their current lease program once it expires. In most instances, the manufacturers themselves don't even know for certain what they will do with their lease program on a given vehicle until the very last moment. If I had to guess, given the fact that interest rates will almost certainly increase at 2:15 this afternoon and the fact that a vehicle's residual values will naturally fall as the model year progresses, I would say that there is a very good chance that the Chrysler Concorde that you are interested in will be more expensive to lease than it is today if you don't take delivery of it prior to July 5th.
I am looking to lease/purchase a SUV. I seem to change my mind every month as to what I want. I'm looking at 3 vehicles....4Runner SR5, 2000 Pathfinder SE or LE or the Passport EX.
My questions are:
When should I go looking for the best deals. I've heard it is best to go around Aug-Sep since the 2001 will be on the lots and the left over 2000 will be hard to move.
Will I have problems leasing? I've had some credit problems during 95-96 due to divorce. I've paid off all the past debt and I am current on my new loans (R1 status).
You didn't say what your payment would be, but this basically sounds just like a lease! Are you sure the dealer isn't just playing a name game?
If you are able to pay cash, and intend to keep the vehicle longer than 35 months (ie you WOULD make that "balloon" payment) then you're probably better off doing that.
The more complicated the loan is structured, the more likely the dealer wins. Pay cash.
Hi mother2. You really need to decide whether or not you want to purchase or lease your next vehicle before you decide when to go shopping. Even though one can often find very good deals on left-over vehicles at the end of the model-year, this really is only true if you want to purchase. As the model year progresses, it often becomes increasingly expensive to lease a car or truck because their residual values naturally fall as time passes. Furthermore, the fact that interest rates on leases are probably going to increase in the very near future will make leases more expensive as well down the road. Probably right now is the best time to lease most 2000 vehicles.
It is very difficult for me to say what sort of interest rate you will be approved at. If you have had credit problems in the recent past it is very possible that you will not qualify for a bank's best interest rate. Assuming that your credit is in good shape now, you should be able to lease a vehicle though.
I'm glad there's someone out there like you to give advice. I really appreciate your help.
I couldn't make up my mind whether to lease or purchase. I figure what I'll do is try to lease now and if I can't I'll just go ahead and purchase. My credit union is pretty good about giving people second chances when it comes to loans. I just have to write a letter explaining my situation.
Anyhow, there was something else I wanted to ask you..... Am I calculating wrong or are SUVs pretty steep? It seems as if the minimum monthly payment for a SUV is around $400. I even went as low as 3.9% on a CR-V.
Carman, I was interested in leasing a 2000 Solara, but am currently only 21 payments into a 60 month lease on a 98 explorer sport. A couple of the toyota dealers in town are offering great deals towards trade-ins. since my vehicle only has 18K miles on it, with half the warranty still remaining, I was hoping to have some chance of getting out of it. Any advice? My current payments are 381 per month.
Mother2, it is difficult to generalize about how much a monthly payment would be on SUVs, given the fact that there are so many variables that go into calculating a monthly payment, i.e. the vehicle's price, the length of the lease, the amount of money down, etc. Still, you are right when you said that most of these trucks are pretty expensive.
Shayes1, it's hard to say how much money it will cost you to get out of your Explorer lease at this point. However, I am going to guess that it will be very expensive to try to terminate a 60 month lease on an Explorer only 21 months into it.
Car_Man, thanks for your reply. I figure I would be about 4-5K upside down with trade-in value on my truck. But, what if I opted for a less expensive vehicle? This way I could possibly keep my payments where they are? I think the residual on the Sport is around 9K. I never bothered to dicker the total price of the truck, and instead went by monthly payment. After reading this entire forum, I could have easily gotten this thing for a lot less. Gas mileage is a killer though. It didnt matter when fuel was 80cents per gallon.
I have lack of credit (3 years with credit card $3000 limit, no late pays and dept store CC with low limit for one year that I used once), single in 30s, high income (over 60k), no other debt. Credit score was 688. Nissan dealership said best could offer was 13.5% with my offer of putting $8000 down (1/3 of price). Is this best in your opinion? He also said I would be able to refinance after 1 year (due to more credit and capital in the car cause of high down payment). Does this sound right to those who know? Have not tried other sources. Also one more question, I read on a post in this forum that all credit checks in 14 day period affiliated with mortgage or new car purchase counts as one inquiry on credit report. NIssan finance manager says not true. Anyone know final answer to this. Thanks!
Mlb4, it is hard for me to say for certain, but I would think that you should be able to get a lower interest rate than 13.5%. That sounds a little on the high side to me. Specifically which Nissan are you interested in? Many Nissan models have special financing programs available on them right now that would probably qualify you for a much better rate than the one that you were already quoted.
Furthermore, I suggest that you pay a visit to the bank that you normally do business with. It's usually a good idea to be pre-approved to finance the vehicle that you are interested in prior to meeting with a dealership's F & I Manager. That way you will already have a good idea of what sort of rate you will qualify for and also it often turns out that the dealership will be able to beat your pre-approved rate if they are motivated to do so.
Hey Car_Man, thanks for getting back! These forums are really great.
I was interested in a Quest, but actually have changed mind and am now leaning toward Toyota Sienna or Honda Odyssey. Do you mean special financing like the ads say 0.9 percent or 3.9 percent, etc. I thought they required better credit than what I had.
Also, do you agree with Nissan finance manager that I will be able to refinance after a year for (much?) better rate (if I don't qualify for nice one) due to more experience and the high down payment, and do you know the answer to the credit report inquiry question?
I believe Car_man should have punctuated his first sentence with several exclamation points. Unless there is something that you haven't revealed, you do not sound like a credit risk at all! You have an excellent income and a modest history of making payments. Why do you feel you don't have good credit?
I would reiterate what Car_man has said. Before you visit another dealer, visit your bank or credit union and get pre-qualified for a loan. A pre-qual loan is basically a blank check valid for any amount up to whatever you are approved for. For the vehicle's you are interested in and the amount you intend to put down, I would suggest asking the bank/CU what terms you qualify for on a $25000 loan. Unless there is actually something negative in your credit report, I would be shocked if it was anything much higher than market (~8%). With a score of 688, you ought to qualify for standard rates (the score itself is meaningless and it depends on individual lenders as to what they will lend you, but yours is above average).
Do this before you visit another dealer and talk to their finance guy. If he starts blathering about rates as high as 13.5%, just tell him "Never mind. All I need is the out-the-door price since I have this here blank check!". He might then offer something better. He might not. But at least with a pre-qual you know what the worst finance terms you'll have are.
Yes, "special financing" means the below market rates (0.9, 1.9, 3.9% etc) you here in advertisements. Not too sure about multiple credit checks within 14 days counting a a single check. Is this meaningful to you for some reason?
The Nissan finance mgr said why my credit history fell short to loan grantors was under five years experience (my credit card account has been for 3), under five credit accounts, under $15,000 revolving credit, by your 30s should have multiple credit accounts.
I was concered about inquiries because the more inquiries you have on your credit report your score gets lowered. I guess because it is assumed you're being turned down and need to ask multiple sources and/or perhaps you are in "desperate need" of credit.
Actually, I spoke to customer service rep at Experian (credit reporting agency) today and posed the question to him. He said that the credit scores are personally configurable by credit grantors. So for example they may configure their credit score calculator to count multiple inquiries of a certain type within a certain as one inquiry. It is up to the individual in how they calculate the score, but in general multiple inquiries will likely lower your score.
Mlb4, as I mentioned previously it's difficult for me to say for certain but I personally don't think that you would have a problem qualifying for a manufacturer's special financing program (i.e. 0.9% financing, 2.9% financing, etc...). Having said that, neither the Honda Odyssey nor the Toyota Sienna have special financing programs available on them right now and I don't anticipate that they will at any point in the immediate future.
The F & I manager's job is to make money for his dealership. This usually means that he will try to get you to sign a loan with the highest interest rate that he can without having you walk. This is especially true in today's marketplace where consumers constantly beat up dealerships on new vehicle prices. You really need to make sure that you are pre-approved to finance the vehicle that you decide to purchase prior to finalizing anything with the dealership that you are dealing with. Otherwise, you are at the finance manager's mercy.
I just wanted to drop a line regarding the multiple credit query situation that you (and many others) are facing.
Regarding you info about all queries in a 14 day period being consolidated as one: well, yes and no. But generally yes. Let me explain.
The vast majority of big name financial institutions assess the credit worthiness of consumers using what are called FICO (Fair Isaccs Co). This is a proprietary risk analysis model that some finance companies use as is and a few (real bigshots like Citigroup, Chase etc) modify to suit their own preferences.
What you have heard about "14 day reports being consolidated etc" is actually that the FICO credit score model uses this as one of the principles in evaluating your worthiness. And that is all that it means: that you FICO score is unaffected by whether you had 1 or 100 queries during a 14 day period, all of which must have correctly identified AUTO LOAN as the reason for the report.
Now if your institution either does not use the FICO scores (true for many small thrifts, credit unions etc.), or uses the score but still chooses to look at your credit report and give you discredit for multiple queries, that is perfectly legal.
So the 14 day thing is basically true in a somewhat limited context than widely believed.
Hi Mother2. I'm always glad to help. The two trucks that you are interested in are actually fairly similar. This is because the Acura SLX really isn't much more than a rebadged Isuzu Trooper. I haven't seen much actual data on Acura SLX reliability, but I can imagine that it is very similar to that of the Trooper. Of the two vehicles, the Rodeo or the Trooper, I would definitely say that the Trooper would be more reliable. Therefore it is likely that the SLX is more reliable than the Rodeo. I personally feel as though the SLX is probably the better purchase of the two, but keep in mind that it is probably going to be several thousand dollars more expensive as well. The vehicle's higher mileage is the reason why these two trucks are similarly priced. Even with the extra 30,000 miles I still think that the SLX is probably the better buy (assuming that its in good shape).
I went to Carmax yesterday to have my vehicle appraised. They also ran a credit app. The guy told me that my credit is in a "C" status. Not good enough for a lease which requires an A or B.
Oh well, I'll try my credit union next. I've should've tried them first but he convinced me in trying them.
Would like to know if it's better to lease or purchase a new car. I've heard that it's better to lease a new car but purchase a used car. Is that true?
Fair Isaac is a quiet little company that wields a lot of influence in the lending process. Here's how they work.
When you apply for credit, the lender pulls a credit report from a credit reporting agency (CRA). The credit report lists information about you from public documents and from other lenders you've done business with in the past.
The lender needs to evaluate how much of a credit risk you are so they can decide whether to lend you money, how much, and at what price (interest rate). Many (most?) lenders do this as follows: they take your credit report and run it through some "credit scoring formula" to come up with a score. Then they use this score as a major factor in their decision.
Anybody can get into the business of developing and selling credit scoring formulas. It so happens that Fair Isaac & Company, a California company, dominates this market. Most lenders who use a scoring formula use a FICO score.
Fair Isaac has a lot of behind-the-scenes information at their web site. Go to a search engine, look for "Fair Isaac", and then look around their web site.
Here are the five major classes of factors in one of Fair Isaac's formulas:
Past Payment History (35%): this includes bankruptcies, collections, past due items, amount and severity of late pays.
Amount of Credit Owing (30%): this includes how much $$$ you already owe on loans and revolving credit, as well as the number of different accounts you have balances on.
Length of Credit History (15%): how long you have had accounts. Longer is better.
New Credit (10%): newly opened accounts and inquiries for new accounts. This is where you get dinged for applying for credit. Note that customer-initiated inquiries (you order your own credit report) and promotional inquiries (all that pre-approved credit card junk mail) don't count.
Types of Credit (10%): home mortgage good; finance company bad.
Note that these factors and weighting are for just one of Fair Isaac's formulas. Fair Isaac has several different formulas (an auto lender cares more about whether you have an existing auto loan than a home mortgage lender would). There are several other companies besides Fair Isaac that sell credit scores. And finally, a lender is free to interpret your credit report with their own formula, or to put some humans in the loop and make decisions beyond simply looking at a FICO score.
I spent some more time at fairisaac.com and found the following information:
(1) Fair Isaac has found that people who make few inquiries tend to have fewer payment problems than people who make many inquiries. So they build that into their formulas, and they will give you a lower score if you make lots of inquiries.
(2) "Consumer disclosure" inquiries do not count. If you obtain your own credit report, either by paying for it or by getting a free copy after you are turned down for credit, that doesn't make you a riskier borrower.
(3) "Promotional" inquiries do not count either. These are inquiries that credit card companies and insurance companies make without your consent (yes, they can obtain a limited credit history without your consent). You know you're the subject of promotional inquiries when you open your mailbox and it's got those junk mail credit card offers in it.
(4) "Shopping for a loan" inquiries do not count either. All home mortgage and auto loan inquiries in the immediate past 30 days don't count. Those inquiries don't make you a riskier borrower: they just mean you are shopping! (On the other hand, if you apply for a department store card or a bank credit card at the same time you are buying a car, that means you are borrowing a lot in one month and are riskier).
(5) "Shopping for a loan" also includes prior activity. If you have multiple mortgage and auto loan inquiries in a 14-day period that is older than a month, they count the same as one inquiry. Again, the theory here is that if you apply at 8 different places for car loans, you were likely shopping for one car, not 8 different cars.
As a previous poster said, the lender is not obligated to use a FICO formula, or any formula at all. They're entitled to look at your raw credit report and use whatever formula they want, or make up their own criteria, provided they stay away from certain legally forbidden factors such as race.
So here's how to work within the system: when you are shopping for a car, do not let anyone run a credit inquiry or credit report on you until you know what you want to buy!
Once the first inquiry is run, you have 14 days to run all the applications you want without getting dinged (they will be scored the same as one inquiry later).
If you can't get a deal done in 14 days, you have additional time: you have 30 days from the first inquiry to make all the applications you want without any of them showing up. But, a year from now, all those applications will show up as 2 or 3 "14 day periods" instead of 1.
So it's a little better for you to get the last inquiry made within 14 days of the first inquiry. And it's significantly better to get the last inquiry made within 30 days of the first inquiry!
Finally, inquiries are only 10% of your credit score anyways, and the credit reporting agencies keep track of inquiries for only two years.
Chiumar, there is not really a right or a wrong answer to your question. Whether it is better to purchase or lease depends upon quite a few variables and varies from person to person and from vehicle to vehicle. At this point the vast majority of competitive leases are only available on new vehicles. For the most part used vehicle leases still do not receive enough manufacturer support to warrant getting one in my opinion.
If you are a person who enjoys getting a new vehicle every two or three years and only drives between 12,000 and 15,000 or so miles per year then leasing may be in your best interest. Certain vehicles have quite a bit of lease support available on them while others have absolutely none at all. The trick is to only lease vehicles with favorable terms. If you would like, I can tell you what sort of lease deals are available on the vehicles that you're interested in. All I need from you is a list of the cars or trucks that you are considering getting.
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Car_Man
Smart Shoppers / FWI Co-Host
Car_Man
Smart Shoppers / FWI Co-Host
The finance rates that dealerships provide their customers will vary for several reasons. The main reason is the customers with good credit ratings will qualify for lower interest rates than those with poor credit.
I suggest that you wait and see what sort of interest rate the dealership that you are dealing with offers you. If it is not as good as the rate that your credit union quoted you, then say so and see if they are willing to beat your credit union's rate.
Car_Man
Smart Shoppers / FWI Co-Host
Car_Man
Smart Shoppers / FWI Co-Host
As I mentioned in the beginning of this post, I don't think that there is much that you can do to get out of your legally binding lease contract at this point. Chase probably does not care how much money you paid the dealership for your car, they will just want the money that you have agreed to pay them. I suggest that you make some phone calls prior to just dropping your car back off at the dealership. If I was in your situation I would try calling my local Department of Motor Vehicles and perhaps Chase themselves before I called my salesperson that I dealt with back. Good Luck, make sure to let us know how everything turns out.
Car_Man
Smart Shoppers / FWI Co-Host
Car_Man
Smart Shoppers / FWI Co-Host
My girlfriend and I are looking to lease a new VW Cabrio GLS manual transmission. We signed a piece of paper with dealership heading on it. The salesman did not sign. The paper had the price, miles allowed, and length of lease. I assumed the signing of the paper was a receipt for the $1000 we had put down and to say we were serious. They did not have the color we wanted, and subsequently found what we wanted elsewhere and did a swap or a trade or something. So the car is here. ARE WE LEGALLY BOUND TO BUY THIS CAR NOW? And if so, at the price on the signed piece of paper or can we still haggle the price and some fees? I did get a faxed copy of the finance agreement today (which we have not signed), and it looks a little different than the original paper we signed. For instance, the down payment is more (from $837 to $951). The total is more (from $23850 to $24490). I've heard I should not be paying original sticker price to lease anyways--what do you think is a fair price when the invoice is $21804 (with 6 disc changer)? Also not on the original piece of paper we signed- Acquisition fee: $490 Refundable security deposit: $400 Turn-in fee: $250. Are those fees I can get around? Also what is the "Depreciation and any Amortized Amounts" $13010 and "Rent Charge" $4523.19 all about? Sorry I jumped around so much, but as you can see, I am a bit confused. Thanks Car-Man in advance. Chris Van Timmeren
You definitely should not pay full MSRP for anything that you lease, unless its a vehicle that is in high demand or a Saturn or Mercedes-Benz. $24,490 sounds a little on the high side for this car, even though it is convertible season.
You will not be able to lease this car without paying the security deposit, acquisition fee, and termination fee. They are all legitimate charges that anyone who was leasing a VW would have to pay.
Car_Man
Smart Shoppers / FWI Co-Host
Car_Man
Smart Shoppers / FWI Co-Host
P.S. In the future if you feel as though you have to make a deposit on a vehicle, do so with your credit card. That way if you begin to have problems with the dealership and they won't refund your money you can often get your credit card company to reverse the charge.
Car_Man
Smart Shoppers / FWI Co-Host
Car_Man
Smart Shoppers / FWI Co-Host
Car_Man
Smart Shoppers / FWI Co-Host
I just ordered a 2000 Mercury Sable LS Premium through a dealer after negotiating what I thought was a really good deal on a car with lots of options- $21,388 including tax and tags. I did this by faxing my specifications to 24 dealers and inviting them to send me their best price.
All this time I have been quietly calculating my monthly payment amount based on the Edmunds info that I can get 3.9% rate on a Sable. Well, right after I signed the paper, I mentioned this and the salesman said that to get that rate they will have to "add back in any dealer incentives or cash from the manufacturer" so I will be financing a greater amount. That is, I cannot benefit from both the dealer incentive and the low finance rate.
Is this true?? Help!!
malissa
2)It is true that NOONE can predict what interest rates will do. There probably is a general feeling that interest rates are headed up, but a single report on a slower economy can change that in a minute. He ought to be able to make some sort of a projection however, even if its a worst case scenario. You just won't be able to hold him to it. It might ease your mind however.
You should go to additional dealers. Another might find what this one has not. Also, it sounds like you can agree on a price, its just the uncertainty of the financing 6 to 8 weeks from now that you fear. Find out if he'll accept earnest money (to make the order) that he gets to keep if you decide that, upon arrival, the financing terms are unacceptable to you and you walk away from the deal.
Car_man
Smart Shoppers / FWI Host
My questions are:
When should I go looking for the best deals. I've heard it is best to go around Aug-Sep since the 2001 will be on the lots and the left over 2000 will be hard to move.
Will I have problems leasing? I've had some credit problems during 95-96 due to divorce. I've paid off all the past debt and I am current on my new loans (R1 status).
If you are able to pay cash, and intend to keep the vehicle longer than 35 months (ie you WOULD make that "balloon" payment) then you're probably better off doing that.
The more complicated the loan is structured, the more likely the dealer wins. Pay cash.
It is very difficult for me to say what sort of interest rate you will be approved at. If you have had credit problems in the recent past it is very possible that you will not qualify for a bank's best interest rate. Assuming that your credit is in good shape now, you should be able to lease a vehicle though.
Car_Man
Smart Shoppers / FWI Co-Host
I couldn't make up my mind whether to lease or purchase. I figure what I'll do is try to lease now and if I can't I'll just go ahead and purchase. My credit union is pretty good about giving people second chances when it comes to loans. I just have to write a letter explaining my situation.
Anyhow, there was something else I wanted to ask you..... Am I calculating wrong or are SUVs pretty steep? It seems as if the minimum monthly payment for a SUV is around $400. I even went as low as 3.9% on a CR-V.
but am currently only 21 payments into a 60 month lease on a 98 explorer sport. A couple of the
toyota dealers in town are offering great deals
towards trade-ins. since my vehicle only has
18K miles on it, with half the warranty still remaining, I was hoping to have some chance of getting out of it. Any advice? My current payments are 381 per month.
Thanks for any help.
scott
Car_Man
Smart Shoppers / FWI Co-Host
Car_Man
Smart Shoppers / FWI Co-Host
dicker the total price of the truck, and instead went by monthly payment. After reading this entire forum, I could have easily gotten this thing for a lot less. Gas mileage is a killer though. It didnt matter when fuel was 80cents per gallon.
Scott
Furthermore, I suggest that you pay a visit to the bank that you normally do business with. It's usually a good idea to be pre-approved to finance the vehicle that you are interested in prior to meeting with a dealership's F & I Manager. That way you will already have a good idea of what sort of rate you will qualify for and also it often turns out that the dealership will be able to beat your pre-approved rate if they are motivated to do so.
Car_Man
Smart Shoppers / FWI Co-Host
I was interested in a Quest, but actually have changed mind and am now leaning toward Toyota Sienna or Honda Odyssey. Do you mean special financing like the ads say 0.9 percent or 3.9 percent, etc. I thought they required better credit than what I had.
Also, do you agree with Nissan finance manager that I will be able to refinance after a year for (much?) better rate (if I don't qualify for nice one) due to more experience and the high down payment, and do you know the answer to the credit report inquiry question?
Thanks again.
I would reiterate what Car_man has said. Before you visit another dealer, visit your bank or credit union and get pre-qualified for a loan. A pre-qual loan is basically a blank check valid for any amount up to whatever you are approved for. For the vehicle's you are interested in and the amount you intend to put down, I would suggest asking the bank/CU what terms you qualify for on a $25000 loan. Unless there is actually something negative in your credit report, I would be shocked if it was anything much higher than market (~8%). With a score of 688, you ought to qualify for standard rates (the score itself is meaningless and it depends on individual lenders as to what they will lend you, but yours is above average).
Do this before you visit another dealer and talk to their finance guy. If he starts blathering about rates as high as 13.5%, just tell him "Never mind. All I need is the out-the-door price since I have this here blank check!". He might then offer something better. He might not. But at least with a pre-qual you know what the worst finance terms you'll have are.
Yes, "special financing" means the below market rates (0.9, 1.9, 3.9% etc) you here in advertisements. Not too sure about multiple credit checks within 14 days counting a a single check. Is this meaningful to you for some reason?
I was concered about inquiries because the more inquiries you have on your credit report your score gets lowered. I guess because it is assumed you're being turned down and need to ask multiple sources and/or perhaps you are in "desperate need" of credit.
Actually, I spoke to customer service rep at Experian (credit reporting agency) today and posed the question to him. He said that the credit scores are personally configurable by credit grantors. So for example they may configure their credit score calculator to count multiple inquiries of a certain type within a certain as one inquiry. It is up to the individual in how they calculate the score, but in general multiple inquiries will likely lower your score.
The F & I manager's job is to make money for his dealership. This usually means that he will try to get you to sign a loan with the highest interest rate that he can without having you walk. This is especially true in today's marketplace where consumers constantly beat up dealerships on new vehicle prices. You really need to make sure that you are pre-approved to finance the vehicle that you decide to purchase prior to finalizing anything with the dealership that you are dealing with. Otherwise, you are at the finance manager's mercy.
Car_Man
Smart Shoppers / FWI Co-Host
Regarding you info about all queries in a 14 day period being consolidated as one: well, yes and no. But generally yes. Let me explain.
The vast majority of big name financial institutions assess the credit worthiness of consumers using what are called FICO (Fair Isaccs Co). This is a proprietary risk analysis model that some finance companies use as is and a few (real bigshots like Citigroup, Chase etc) modify to suit their own preferences.
What you have heard about "14 day reports being consolidated etc" is actually that the FICO credit score model uses this as one of the principles in evaluating your worthiness. And that is all that it means: that you FICO score is unaffected by whether you had 1 or 100 queries during a 14 day period, all of which must have correctly identified AUTO LOAN as the reason for the report.
Now if your institution either does not use the FICO scores (true for many small thrifts, credit unions etc.), or uses the score but still chooses to look at your credit report and give you discredit for multiple queries, that is perfectly legal.
So the 14 day thing is basically true in a somewhat limited context than widely believed.
Car_Man
Smart Shoppers / FWI Co-Host
Oh well, I'll try my credit union next. I've should've tried them first but he convinced me in trying them.
Car_Man
Smart Shoppers / FWI Co-Host
When you apply for credit, the lender pulls a credit report from a credit reporting agency (CRA). The credit report lists information about you from public documents and from other lenders you've done business with in the past.
The lender needs to evaluate how much of a credit risk you are so they can decide whether to lend you money, how much, and at what price (interest rate). Many (most?) lenders do this as follows: they take your credit report and run it through some "credit scoring formula" to come up with a score. Then they use this score as a major factor in their decision.
Anybody can get into the business of developing and selling credit scoring formulas. It so happens that Fair Isaac & Company, a California company, dominates this market. Most lenders who use a scoring formula use a FICO score.
Fair Isaac has a lot of behind-the-scenes information at their web site. Go to a search engine, look for "Fair Isaac", and then look around their web site.
Here are the five major classes of factors in one of Fair Isaac's formulas:
Past Payment History (35%): this includes bankruptcies, collections, past due items, amount and severity of late pays.
Amount of Credit Owing (30%): this includes how much $$$ you already owe on loans and revolving credit, as well as the number of different accounts you have balances on.
Length of Credit History (15%): how long you have had accounts. Longer is better.
New Credit (10%): newly opened accounts and inquiries for new accounts. This is where you get dinged for applying for credit. Note that customer-initiated inquiries (you order your own credit report) and promotional inquiries (all that pre-approved credit card junk mail) don't count.
Types of Credit (10%): home mortgage good; finance company bad.
Note that these factors and weighting are for just one of Fair Isaac's formulas. Fair Isaac has several different formulas (an auto lender cares more about whether you have an existing auto loan than a home mortgage lender would). There are several other companies besides Fair Isaac that sell credit scores. And finally, a lender is free to interpret your credit report with their own formula, or to put some humans in the loop and make decisions beyond simply looking at a FICO score.
(1) Fair Isaac has found that people who make few inquiries tend to have fewer payment problems than people who make many inquiries. So they build that into their formulas, and they will give you a lower score if you make lots of inquiries.
(2) "Consumer disclosure" inquiries do not count. If you obtain your own credit report, either by paying for it or by getting a free copy after you are turned down for credit, that doesn't make you a riskier borrower.
(3) "Promotional" inquiries do not count either. These are inquiries that credit card companies and insurance companies make without your consent (yes, they can obtain a limited credit history without your consent). You know you're the subject of promotional inquiries when you open your mailbox and it's got those junk mail credit card offers in it.
(4) "Shopping for a loan" inquiries do not count either. All home mortgage and auto loan inquiries in the immediate past 30 days don't count. Those inquiries don't make you a riskier borrower: they just mean you are shopping! (On the other hand, if you apply for a department store card or a bank credit card at the same time you are buying a car, that means you are borrowing a lot in one month and are riskier).
(5) "Shopping for a loan" also includes prior activity. If you have multiple mortgage and auto loan inquiries in a 14-day period that is older than a month, they count the same as one inquiry. Again, the theory here is that if you apply at 8 different places for car loans, you were likely shopping for one car, not 8 different cars.
As a previous poster said, the lender is not obligated to use a FICO formula, or any formula at all. They're entitled to look at your raw credit report and use whatever formula they want, or make up their own criteria, provided they stay away from certain legally forbidden factors such as race.
So here's how to work within the system: when you are shopping for a car, do not let anyone run a credit inquiry or credit report on you until you know what you want to buy!
Once the first inquiry is run, you have 14 days to run all the applications you want without getting dinged (they will be scored the same as one inquiry later).
If you can't get a deal done in 14 days, you have additional time: you have 30 days from the first inquiry to make all the applications you want without any of them showing up. But, a year from now, all those applications will show up as 2 or 3 "14 day periods" instead of 1.
So it's a little better for you to get the last inquiry made within 14 days of the first inquiry. And it's significantly better to get the last inquiry made within 30 days of the first inquiry!
Finally, inquiries are only 10% of your credit score anyways, and the credit reporting agencies keep track of inquiries for only two years.
If you are a person who enjoys getting a new vehicle every two or three years and only drives between 12,000 and 15,000 or so miles per year then leasing may be in your best interest. Certain vehicles have quite a bit of lease support available on them while others have absolutely none at all. The trick is to only lease vehicles with favorable terms. If you would like, I can tell you what sort of lease deals are available on the vehicles that you're interested in. All I need from you is a list of the cars or trucks that you are considering getting.
Car_Man
Smart Shoppers / FWI Co-Host
Car_Man
Smart Shoppers / FWI Co-Host