I don't think there isn't any problem with your question being posted here. Interest rates are a fundamental part of financing.
In order to know which is a better deal, you have to give more details. How often can the variable rate be raised? Is there a limit on much it can go up each year? A ceiling on how high it can go up over the life of the loan?
Variable rate loans were invented to unload the risk of rising interest rates onto the borrower. If you take the fixed interest rate, and suddenly the Fed raises rates a bunch (they won't, but if they did) then suddenly the bank is losing money by loaning it to you at a fixed, relatively low rate.
But lets suppose the rate can only go up .5% per year. And you have decided to pay the whole 19k off in one year. The you would be better off with the variable rate loan.
All in all, I don't think the difference between the variable and fixed rates is high enough to warrant you taking the risk of the variable rate loan. I'd go with the fixed rate.
I will call my bank either tonight or tomorrow and get more details on my loan. I thought I asked all the questions when I went thru the loan process, but after referring to this site and others I guess I need to ask a few more.
I believe the person I talked to on the phone said that my variable rate (8.65%) could never go higher than the fixed rate they offered me (9.35%), but I'm not 100% sure now. If this is the case I may take my chances with the variable rate interest, but if it's not the case, I think you are right, I should try to switch to the fixed rate as the difference is indeed not worth the risk.
Currently my vehicle is on ordered but I wanted information on how to proceed when I am at the dealership The loan officer that pre-approved my loan stated that all would need to do was to have the sales person fax them a copy of the buyers order with the vin number listed and it would be approved. Provided of course that it is during their business hours. I have read in several car buying guides that I should only take the vehicle off the lot when the loan has been received and I am assured that it was approved, in my case, by my credit union. This is to prevent any unnecessary games by the dealerships finance dept.. Is this accurate?
I was test driving a RangeRover the other day, and the dealer mentioned to me that he has very few in stock, specifically because of the year end rush where people try to buy cards, because of the tax benefit they are able to get.
I assume this is some sort of expedited depreciation or something, but I am not sure.
I am planning on starting a small company myself, and I am wondering if anyone can tell me if there are any benefits to buying a car in your company's name.
3 days ago I bought a car from a finance company. I now realise it was a big mistake. I phoned the company and they say there is no cancellation period and for no reason can I cancel my agreement. Is this right and is there any way out of this?
In this case, when you purchase a vehicle there is no such thing as a '3 day right of rescession'...the only time this fall's into play is "if" ..someone is selling - In home products - at the residence, like books, pool's , furniture, etc...and in some State's, vehicle's( insurance in most states is 10 day's )...but everything, has to be done at the home sight.
But, have your contract looked at by profesionals...you never know when someone has forgot to dot an I.
I am trying to buy a SAAB which currently has a 2.9 APR financing and also an un-published dealership rebate of 5000 ( to the dealer , not to the buyer ). I told the sales I know the cut and want him to cut down the price. He told me he will 'work with me', but then I cannot get my 2.9 APR financing. I think he should have nothing to do w/ the fina.dept. & he is just pulling my legs and trying to keep the neg. price higher. Anyone has any idea out there? Thx in adv.
It frequently is the case that manufacturers will not allow their special financing programs to be combined with any available cash incentives. Although certain cash programs may be combined with special finance rates, the majority of manufacturers do not allow enhanced rates to be combined with cash because it would simply be too expensive for them to do so. It costs Saab a lot of money to allow someone to finance a car for 5 years at 2.9%, I can only imagine how much money it would cost them if they did this and provided $5,000 dealer cash as well. I do not believe that Saab's special finance program may be used in conjunction with the dealer cash that they have out there at this time.
Even though your salesperson is not directly involved in the dealership's finance department, he/she must let consumers know that they are not entitled to both the cash and the special financing. If he/she hadn't you would have been very angry when you agreed to a price and then realized in the finance department that you can't take advantage of the 2.9% as well.
I can't comment on Peoplefirst selling information, but did apply for an auto loan through them. We were approved within 15 minutes and I got a personal call from them telling me of the approval. They sent me a check via Fedex the next day, I bought the car that night. No problems, the dealer got their money (the check cleared) in less than 3 days. I got 7.39%apr for 60 months on a new car purchase--a full point better than any local bank.
Peoplefirst and Eloan both use credit scoring, and rely on it heavily. Factors such as your total number of credit accounts, their age, debt to income ratio, late payments, etc. all contribute to your score.
As the Chief Privacy Officer (CPO) for PeopleFirst.com, I am disturbed by the "the hawkman's" comments and feel compelled to respond. Our customers are our most important assets. And as part of PeopleFirst.com's dedication to providing people with unmatched customer service, we keep all of our consumer's personal information strictly confidential. We do not sell this information to anyone. Our entire business model is about empowering the consumer and providing each one with a hassle-free environment every time they buy a vehicle. We consistently strive to put people first, especially when it comes to privacy. If there are other questions regarding our privacy policy, any consumer may read our privacy and security policy, which is easily found on our Web site (http://www.peoplefirst.com/pff/site_privacy_policy.cfm) or may e-mail me at privacy@peoplefirst.com. Signed: Alan Amico, Chief Privacy Officer, PeopleFirst.com
I recently ordered a vehicle and gave a check for a "refundable" deposit of $1000. However, during the negotiations, I forgot to tell them that I am going to pay them a .com draft.
My question, therefore, is: If they refuse the .com draft, is it enough (legal)reason to walk out of a deal and get my deposit back? I am not going to take the vehicle if my other option is more than 0.25% more than my .com rate. That is, of course, if I can waklk away from it.
Toyotatoys, if the deposit that you placed for the vehicle that you ordered was supposed to be fully refundable, and you have that fact in writing, then I certainly think that you would legally be able to walk away from this deal and get your money back for any reason. Of course, the dealership telling you that your deposit is refundable and actually getting them to give your money back are two completely different things. Many dealers tend to drag their feet when it comes to giving people their money back. I know several people who had a heck of a time getting their deposits returned. If you do decide to walk away from this deal, keep after them for your money. From my experience, the squeaky wheel gets the grease and the more you call them and stop by to get your money the more likely it is that they will give in and issue you a refund.
I don't actually intend to walk away from this deal because I've already waited for so long (5 weeks) for this build-to-order vehicle, and I really want it. I just forgot to tell them that I was going to pay with a .com draft. For all I know, it might actually be perfectly fine with them. My only worry is that they will give me a hard time about the .com draft and force me into their "alternative" financing at a HIGHER rate. The only 'escape clause" in the contract is if the vehicle "does not conform to the specifications as ordered."
I agree, walking out and actually getting your money are two different things.
I will soon be moving from New York City to Cleveland, Ohio as my company is closing it's New York office. As part of the deal to get me to go there, my salary will increase from $39K and change to a hair under $50,000. (Yes, it's in writing.)
One thing I will have to do out there is buy a car, and I am somewhat concerned about getting approved for an auto loan. The reason is that I have a very high credit card bill, and consequently limited cash assets. However, I have never missed any payments and other than that bill my credit should be excellent. (Got a copy from Equifax.) Can anyone give me any feedback as to whether I might have trouble getting a loan, what questions financial institutions might ask, how to deal with them, etc.
I am in the market to buy my first brand new car. Mine has recently been totalled in a rear end collision. The problem is that a good friend of mine said he could get me a 2001 RAV 4 with a ton of options for $21,000. This is a great price (only about $500 over what the dealer pays). However, I am a law student that won't graduate until the end of the month. I also don't have a job lined up. The payments that I could possibly afford would have to be extended overa 60 or even 72 month finance period, which he said he could do. I would be able to buy the car out at any time without a penalty, and could refinance at any time. I guess I am just leary of buying a car over 5 or 6 years, but I don't want to pass up this good of a deal on a car that I really like. What would any of you do in this situation?
Gfreyberger, the shorter the length of the loan that you take out is the less likely it is that you will be upside down when you go to trade in your truck at some point down the road if you do so before you have paid it off completely. Furthermore, the longer your loan the more interest you end up paying over the years. Still, 5 year loans are very common today. According to a study released by the Federal Reserve on March 7th, in January of this year (their most recent data) the average length of consumer loans from auto finance companies was 54.3 months. I certainly don't think that taking out a loan of this length is a problem, but generally speaking the shorter your note the better.
I have posted this message in other message boards but did not get any response so I repost it here. My wife and I just bought a new 2001 Honda Accord 2 days ago. The total cost of the car is $24,456.61. We put down $9,456.61 for down payment and financed with American Honda Finance Corportation for the amount of $15,000. The interest rate that they gave us is 8% (we didn't qualify for the special 3.9% financing that Honda is offering right now). I called PeopleFirst Yesterday and they gave us 6.95% for refinancing with them. We refinanced with PeopleFirst for the amount of $10,000. My brother is also lending us $5,000. My question is, am I just sending the check that PeopleFirst is going to send to me($10,000) and write another check of $5,000 to the American Honda Finance Corporation? How does it work? Is there any fee or penalty that I have to pay? Thanks.
seen a topic below regarding people paying outright cash for their cars. this won't be an option for me as I'll need to finance at least part of car. what guidelines do you set for loan length? it seems common to finance cars for five years.
beachboy: How is the check you are recieving PF being made out? I presume its made out to AHFC? If that's the case, then ask AHFC what your payoff amount if, and include the PF check, the check from your brother, plus any extra amount you have to chip in so the sum equals the payoff.
You'll have to check with AHFC (or carefully read your contract) to see what (if any) early payment fees you may have to pay.
Leo: That's a complicated question. I personally don't like any loan longer than 3 years, but cars can cost alot and many people can only get the monthly payment down to something they can handle by extending the loan out to 60 or even 72 months.
It depends on alot of factors, including what sort of factory incentive exists for the vehicle you want. Usually, you get better rates for shorter periods of time, but if the factory is offering 0.9% (for example) on a 60 month loan, I would take that. If they were offering 0.9% on 36 months and 3.9% on 48 months and 5.9% on 60 month, I'd probably go with the 36 month. Others would do differently.
I wouldn't want a market rate loan (8% say) for 60 months. I'd be looking for a smaller car before I did that.
I was looking at the Subaru Foresters. Subaru doesn't usually offer any rebates on these cars, maybe $500 at most. Their financing isn't anything special 5.9% for 36&48 months and 6.9% for 60 months. I like the S trim on the Forester but would need to take out the loan for 60 months to get the payments down. I could step down to the lower L trim and take the loan out for 48 months at the highest monthly payment I would want to go. The other option is to look at a different category of car---the Hatchbacks, which would consist of the Mazda Protege 5, Subura Impreza OBS, or the Toyota Matrix/Pontiac Vibe. All three of these would be easily handle on 4 year payment. Perhaps go down to 3 years at max payemnts I would want if the deal went well. I typically keep my cars for 8 years and put 200,000 miles on them in that time peroid. I need something reliable, not expensive to maintain or fix, plus be verstatile enough to carry passengers and cargo/stuff that typically doesn't fit in trunks of sedans. Any opinions?
Thank you for your response. The check that I am receiving from PF is a blank check. My dealer sent my loan application to AHFC 2 days ago and my account hasn't been set up yet. I'll wait for my account to be set up with AHFC before I can check with them.
I think 5.9 and 6.9 are actually a little special, as market rates right now for a new car loan are closer to 8%.
My $.02 is to buy the least options you can live with for as long as possible. For ex, if you take the Forester S and drive it for 8 years that is cheaper in the long run than getting a cheaper car and trading it in after 4 years.
Now if you will be happy with the cheaper car for 8 years, buy that and put the extra money into savings for car repairs or for your next car.
If you trade in a car that is worth less than what you owe on it, you still owe the difference. The dealer will add this difference to what you are borrowing for the new car.
Many people around here (myself included) would tell you to keep driving your current car until what you owe equals trade value. Even better, drive it until you pay it off.
If he is adding in the total you owe, then he should be subtracting what he is giving you for your trade. In the end, what you borrow should be the cost of the new car plus your negative equity on your current car. You can ask them to show you the computation of the amount financed.
The only other advice I can give you with a trade is to watch out for reconditioning charges. What they do is give you credit for your trade, say $10000, and then they charge you maybe $500 to recondition your car so it can be resold. In effect, this means you are getting $9500 for your trade. But again, if you can follow the computation of the amount financed you will see what they are doing. If they can't show you how the numbers add up, you are probably better off going somewhere else.
the problem is sometimes you let your emotions get the better of you when it comes to new cars. For example, those Hatchbacks I mentioned earlier--all of those would comfortably fit my budget for a four year loan. Then what happens, I see the Forester L for 2 grand more. That would definitely stretch the budget to the max on a four year loan (I'm trying to stay away from a 5 year car loan). The S trim is even nicer but cost another 2 grand more. That would require a 5 year payment loan. What happened? Started within my budget but started looking and then tried to see if you can stretch it another two, then another two. The first stretch one might be able to make but the other stretch would be getting yourself into financial trouble. Now you can play devil's advocate very easily and justify the more expensive car with: 'but I keep my cars for 8 years and put 200,000 miles on them, buy the car you really like'. Then there the other side that realizes that cars depreciate and there are other things to save for like a houses, or starting a family. Ah, cars and women can be a dangerous thing
You reminded me of a column I read in a newspaper...the writer's friend had told him how he spent his money--one third he spent on women, another third he spent drinking, and the last third he just wasted
But you are right about stretching car budgets. The less you spend on the car the more you'll have for other stuff later.
by 6 POINTS on a 60 month term. This is only the second time I have run into a customer that was pre approved thru e-loan and the rate was 14.99. Shopped them to 5 banks and the lowest was 8.99. Now these folks had a BK a few years back but luckily they did not have on the blinders when I offered to secure lower interest money for them. I understand that e-loan did not have any idea on collateral when they pre approved these folks but 6 POINTS seems like gouging to me.
It seems that the only thing that drops is the interest rate on Money Market and CD yield. What happens to the savings passed to the consumer in auto leasing/finance, mortgage rate?
Before I begin, Edmunds and all of you that view this board have my eternal gratitude, and maybe my firstborn if things work out
I'm looking to by my first new car at the end of this year/beginning of next year (thank you, thank you. You're too kind with your applause and congrats ). Anyhoo I'm planning to get a 2001 coupe, either a Mustang or Celica (don't know yet). Question 1 is this, does anyone know how much of a break the dealers will give (if any) on financing during that time frame?
Also, I currently have an '89 LeBaron Convertible (I appreciate your sympathy). According to Kelly's I should be able to get $1-$2K for it (it has roughly 83K on it). The car is slightly beat up, so what I'll be able to get will be on the low end of the scale. Which brings me to Question 2, which would I be better off doing? Trading it in or selling it myself?
Question 3: Anyone got any ideas on how to go about getting a good deal on financing? Aside from student loans, this will be the first I will be going into.
Thank you to all of my new best friends in advance!!
May 7 2001,I leased a new car,I was very pleased w/the apr and monthly payment set. Now three weeks later the bank is telling my delaership that they are not satisfied w/my credit teir and my dealership is asking me to accept a new lease under a differnt bank at a higher monthly rate or i can return my car. I feel that the dealership is obligated to grant me the monthly payment they promised as i would not have agreed to go above for fear of starving. Any advice here, do i have a case to plead. I like my new car, but i feel the bank and dealership should have known this before they let me drive away. Im so confused.
Please e-mail me w/any feedback as this is an urgent matter and i have to decide if i should accept this bogus deal or give the car back and take my business elsewhere.
I suspect that the terms are conditional upon acceptance of the leasing company; in which case you have no recourse because they didn't accept it. Returning the vehicle is the most favorable option for you.
Hi jusdreamin. Many manufacturers offer special low interest rates on certain models through their captive finance companies. For instance, one of the cars that you are interested in right now, the Ford Mustang Coupe, currently has 4.9% financing for up to 36 months, 6.9% for 48 months, and 7.9% for 60 months available on it through Ford Motor Credit. It is difficult to say exactly what sort of special financing programs will be available on the cars that you are interested in at the end of this year or the beginning of next year, but if there is a special financing program available on the one that you want it is definitely something that you should look into. I personally think that interest rates on new car loans have no place to go but down given the competitiveness of today's marketplace, the recent slow down in auto sales, and the general decline in interest rates over the past several months. Many manufacturers have special programs that allow recent college graduates to qualify for their best interest rates even if they don't have much of a credit history. If you qualify for one of these programs, you should be able to get an attractive rate.
Thanks for the advice. I'll have to look into the special financing. I know some of the manufacturers offer a rebate for college grads. The problem is that all of the offers I've seen is that you have to have graduated within the last two years in order to qualify for the offer. I graduated in 5/00, so I probably won't qualify (especially if I'm looking to buy at the end of this year).
Feel free to correct me if I'm wrong (wink, wink, nudge, nudge).
PS: Cooltibby, bblaha is right. Check you leasing contract first before you do anything. Contracts like that usually take into account all possible scenarios (however improbable) and the only loopholes there are will probably be for the dealership's benefit. Also check with the Better Buisness Bureau, they may be able to give you some advice. Good Luck!!
Only affects short-term rates, like Money Market and CD's. Longer term rates are affected by the bond market, which generally does pretty well when the stock market is down.
OK I saw that Ford is currently having a special on their cars: 2.9% APR for 24 months or $1000 rebate. Which is the better deal and how can you calculate it?
mmcbride1: It's official, I have premature Alzheimer's (either that or I REALLY must have had a good time in college!). I graduated in May 1999 with a BS in Engineering (go figure...). Sorry 'bout that! For some reason Ford still thinks I'm eligible for a rebate. 8)
Jusdreamin, in order to calculate which offer is better I would calculate how much money you would save by financing the vehicle that you want at 2.9% instead of the rate that you would have qualified for and then compare that to the future value of $1,000. There are many ways to look at this sort of calculation, but a quick and easy way would be to use a loan calculator, like the one available right here at Edmunds.com: Edmunds.com Auto Loan Calculator, to calculate your monthly payments using the 2.9% and the rate that you would have to pay if you do not take advantage of this program. Once you have done that, you will be able to figure out how much the lower rate will save you over the length of your loan.
Thanks for the tip. I apologize for not posting earlier, this is the first time I've checked this board in a while.
I played with the Calculator, and assuming that I would get 6.9% with the $1K rebate, turns out I could save $20/month.
Would taking the rebate almost always result in a lesser payment, and if so why? I realize that the answer to the latter part of the question has something to do with a lesser loan amount, but why would there be such a significant difference?
No, the rebate isn't always the better choice. In your example, the reason the rebate is better is because of the very short loan period.
Try repeating the example only using 48 months, and you'll find you'd be better to go with the lower rate.
That basically is an ok generalism: The longer the loan period, the more important the low rate; the shorter the loan period, the more important the rebate.
If you are looking for a VERY rough estimate of which is better (the kind of estimate you can just almost do in your head), try this.
- Estimate the total interest paid for each case by multiplying the interest rate by the "average loan balance" (= loan amount divided by 2), and then multiplying by the number of years.
- If the interst you pay for the high rate loan (which includes the rebate) exceeds the interest you'd pay on the low rate by more than the rebate, then you should go for the low rate deal. If its less, take the rebate.
So for example, a $20K vehicle at either 2.9% no rebate, or 6.9% $1K rebate, each for 2 years becomes:
The editors here at Edmunds.com just added an interesting article to the site that I think visitors of this Message Board will find very informative. The new article is titled "Avoid Credit Hassles at the Dealership." Like everything else at the dealership, your interest rate can be negotiated. Knowing your credit score, and current interest rates, will help you get a better deal on your next car loan. For your convenience, feel free to use the following link, or the one that I have added in the "Additional Resources" box on the left side of the screen to check this article out: Avoid Credit Hassles at the Dealership. Thanks.
Carman, Do you know of any special financing, rebates or incentives on the Nissan Maxima, Infinty I30 or Acura TL in OHIO? I will be purchasing this month. Thanks.
I went car shopping on Saturday. There was a car that I wanted to buy but the dealership didn't have any with the exact options I wanted on the lot, but they said there was one coming in in about 4-6 weeks. I didn't mind waiting (apparently not too many people want the anti-lock brakes and side air bags that this model offers) but the dealership said I would have to pay for the whole car then (rather than having me put a deposit and doing the rest of the payment or financing when the car arrives). I financed the car through the dealership but it turns out the first payment will be due on August 15 and I might not even have the car by then. Is this normal - to HAVE to complete the payment (or financing) on the day you order car that's not on the lot? I told the dealer I'm not making a payment on a car that I don't even have yet - and I will cancel the deal if I have to - but perhaps this is a normal arrangement? Other than that one thing, I was treated reasonably well and I feel I got a very good price (I did a lot of research through Consumer Reports and Edmunds). Has this happened to anyone? Thanks.
No, this is NOT normal, nor should you shop there any further.
If you complete the purchase on a vehicle sight-unseen, you own it when it comes in. If there's anythig about the car that you don't like, you have no recourse - it's your car, lock stock and barrel.
You may wish to check the BBB in your area and see if similar complaints have been filed. If so, add yours. The more people this has happened to, the better chance that an investigation and regulatory action can be taken against the dealer.
Booboo9, the June incentives programs for all of the brands that you mentioned have already expired or are just about to expire. As a result, I don't know what their July special financing programs will be like yet. Please feel free to check back with me next week and I should have a better idea of what they are offering for July. If things play out like I think they will, the only car out of the three that you mentioned that will have special financing rates on it in July is the Nissan Maxima.
kcram, thanks for answering. I called the finance guy at the dealership and voiced my concerns. He said that the reasons they wrote the loan that way was so that I could get the $1,000 rebate offered by Ford, which was due to end on July 2, and would normally be given only to someone taking delivery from dealer stock. I asked what would happen if the car arrives and there's something wrong with it (not simply that I decided I don't like it); he said that if it arrived damaged or otherwise "not brand-new," they would reverse the deal and return all my money. He also said that they gave me a 45-day delay until the first payment is due instead of the normal 30-day delay to make up for my having to wait for the car to arrive.
Still sound not on the up-and-up? Like I said, I think I got a good price and a good loan - 7.99%, which appears about right based on some other research I have done, so other than this weird financing thing I am relatively happy with my experience. Any other comments?
Hector, I still wouldn't do it either. Any vehicle that arrives physically damaged in transit will usually revoke a sales contract. And I would be suspect of the "rebate" excuse as well. We're coming up on the end of the model year. Incentives will get better, not worse, between now and October on what would be considered a "leftover".
Rather than trying to be "beneficial to you", it almost sounds like the dealer is trying to move merchandise to make their own quotas. If you pay in full today, that's now a car "sold and delivered" in July, even if it won't show until August.
I'd check to see what the new or renewed incentives are later this week before making any deals.
Hector, when did you commit to this deal? The salesperson who you are working with should have known that Ford extended all of its July incentives until July 9th last week and that they do not end on the 2nd any more. Furthermore, I highly doubt that Ford will discontinue any of its incentives that it currently has available on its cars, especially given the fact that they announced today that their June car sales were down 15.5% versus the same period a year ago. If anything, I would think that there is a good chance that they will enhance their current incentives on certain models.
I absolutely agree with KC, it sounds like the dealership that you are working with is more concerned about adding a car to their June sales total than you as a consumer. I definitely would not pay for a new car or truck until I actually saw it.
Comments
In order to know which is a better deal, you have to give more details. How often can the variable rate be raised? Is there a limit on much it can go up each year? A ceiling on how high it can go up over the life of the loan?
Variable rate loans were invented to unload the risk of rising interest rates onto the borrower. If you take the fixed interest rate, and suddenly the Fed raises rates a bunch (they won't, but if they did) then suddenly the bank is losing money by loaning it to you at a fixed, relatively low rate.
But lets suppose the rate can only go up .5% per year. And you have decided to pay the whole 19k off in one year. The you would be better off with the variable rate loan.
All in all, I don't think the difference between the variable and fixed rates is high enough to warrant you taking the risk of the variable rate loan. I'd go with the fixed rate.
I believe the person I talked to on the phone said that my variable rate (8.65%) could never go higher than the fixed rate they offered me (9.35%), but I'm not 100% sure now. If this is the case I may take my chances with the variable rate interest, but if it's not the case, I think you are right, I should try to switch to the fixed rate as the difference is indeed not worth the risk.
Thanks for your help!
Mike
I have read in several car buying guides that I should only take the vehicle off the lot when the loan has been received and I am assured that it was approved, in my case, by my credit union. This is to prevent any unnecessary games by the dealerships finance dept.. Is this accurate?
I assume this is some sort of expedited depreciation or something, but I am not sure.
I am planning on starting a small company myself, and I am wondering if anyone can tell me if there are any benefits to buying a car in your company's name.
Thanks.
Jeff in Salt Lake.
done at the home sight.
But, have your contract looked at by profesionals...you never know when someone has forgot to dot an I.
Good luck.
Thx in adv.
Even though your salesperson is not directly involved in the dealership's finance department, he/she must let consumers know that they are not entitled to both the cash and the special financing. If he/she hadn't you would have been very angry when you agreed to a price and then realized in the finance department that you can't take advantage of the 2.9% as well.
Car_Man
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Peoplefirst and Eloan both use credit scoring, and rely on it heavily. Factors such as your total number of credit accounts, their age, debt to income ratio, late payments, etc. all contribute to your score.
Signed: Alan Amico, Chief Privacy Officer, PeopleFirst.com
My question, therefore, is: If they refuse the .com draft, is it enough (legal)reason to walk out of a deal and get my deposit back? I am not going to take the vehicle if my other option is more than 0.25% more than my .com rate. That is, of course, if I can waklk away from it.
Thanks for your advice.
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I don't actually intend to walk away from this deal because I've already waited for so long (5 weeks) for this build-to-order vehicle, and I really want it. I just forgot to tell them that I was going to pay with a .com draft. For all I know, it might actually be perfectly fine with them. My only worry is that they will give me a hard time about the .com draft and force me into their "alternative" financing at a HIGHER rate. The only 'escape clause" in the contract is if the vehicle "does not conform to the specifications as ordered."
I agree, walking out and actually getting your money are two different things.
One thing I will have to do out there is buy a car, and I am somewhat concerned about getting approved for an auto loan. The reason is that I have a very high credit card bill, and consequently limited cash assets. However, I have never missed any payments and other than that bill my credit should be excellent. (Got a copy from Equifax.) Can anyone give me any feedback as to whether I might have trouble getting a loan, what questions financial institutions might ask, how to deal with them, etc.
Thanks in advance.
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My wife and I just bought a new 2001 Honda Accord 2 days ago. The total cost of the car is $24,456.61. We put down $9,456.61 for down payment and financed with American Honda Finance Corportation for the amount of $15,000. The interest rate that they gave us is 8% (we didn't qualify for the special 3.9% financing that Honda is offering right now). I called PeopleFirst Yesterday and they gave us 6.95% for refinancing with them. We refinanced with PeopleFirst for the amount of $10,000. My brother is also lending us $5,000. My question is, am I just sending the check that PeopleFirst is going to send to me($10,000) and write
another check of $5,000 to the American Honda Finance Corporation? How does it work? Is there any fee or penalty that I have to pay? Thanks.
Leo
How is the check you are recieving PF being made out? I presume its made out to AHFC? If that's the case, then ask AHFC what your payoff amount if, and include the PF check, the check from your brother, plus any extra amount you have to chip in so the sum equals the payoff.
You'll have to check with AHFC (or carefully read your contract) to see what (if any) early payment fees you may have to pay.
Leo:
That's a complicated question. I personally don't like any loan longer than 3 years, but cars can cost alot and many people can only get the monthly payment down to something they can handle by extending the loan out to 60 or even 72 months.
It depends on alot of factors, including what sort of factory incentive exists for the vehicle you want. Usually, you get better rates for shorter periods of time, but if the factory is offering 0.9% (for example) on a 60 month loan, I would take that. If they were offering 0.9% on 36 months and 3.9% on 48 months and 5.9% on 60 month, I'd probably go with the 36 month. Others would do differently.
I wouldn't want a market rate loan (8% say) for 60 months. I'd be looking for a smaller car before I did that.
I was looking at the Subaru Foresters. Subaru doesn't usually offer any rebates on these cars, maybe $500 at most. Their financing isn't anything special 5.9% for 36&48 months and 6.9% for 60 months. I like the S trim on the Forester but would need to take out the loan for 60 months to get the payments down. I could step down to the lower L trim and take the loan out for 48 months at the highest monthly payment I would want to go.
The other option is to look at a different category of car---the Hatchbacks, which would consist of the Mazda Protege 5, Subura Impreza OBS, or the Toyota Matrix/Pontiac Vibe. All three of these would be easily handle on 4 year payment. Perhaps go down to 3 years at max payemnts I would want if the deal went well.
I typically keep my cars for 8 years and put 200,000 miles on them in that time peroid. I need something reliable, not expensive to maintain or fix, plus be verstatile enough to carry passengers and cargo/stuff that typically doesn't fit in trunks of sedans. Any opinions?
Thanks,
Leo
Thank you for your response. The check that I am receiving from PF is a blank check. My dealer sent my loan application to AHFC 2 days ago and my account hasn't been set up yet. I'll wait for my account to be set up with AHFC before I can check with them.
My $.02 is to buy the least options you can live with for as long as possible. For ex, if you take the Forester S and drive it for 8 years that is cheaper in the long run than getting a cheaper car and trading it in after 4 years.
Now if you will be happy with the cheaper car for 8 years, buy that and put the extra money into savings for car repairs or for your next car.
Good luck whatever you get.
Many people around here (myself included) would tell you to keep driving your current car until what you owe equals trade value. Even better, drive it until you pay it off.
The only other advice I can give you with a trade is to watch out for reconditioning charges. What they do is give you credit for your trade, say $10000, and then they charge you maybe $500 to recondition your car so it can be resold. In effect, this means you are getting $9500 for your trade. But again, if you can follow the computation of the amount financed you will see what they are doing. If they can't show you how the numbers add up, you are probably better off going somewhere else.
the problem is sometimes you let your emotions get the better of you when it comes to new cars. For example, those Hatchbacks I mentioned earlier--all of those would comfortably fit my budget for a four year loan. Then what happens, I see the Forester L for 2 grand more. That would definitely stretch the budget to the max on a four year loan (I'm trying to stay away from a 5 year car loan). The S trim is even nicer but cost another 2 grand more. That would require a 5 year payment loan. What happened? Started within my budget but started looking and then tried to see if you can stretch it another two, then another two. The first stretch one might be able to make but the other stretch would be getting yourself into financial trouble.
Now you can play devil's advocate very easily and justify the more expensive car with: 'but I keep my cars for 8 years and put 200,000 miles on them, buy the car you really like'. Then there the other side that realizes that cars depreciate and there are other things to save for like a houses, or starting a family.
Ah, cars and women can be a dangerous thing
Leo
You reminded me of a column I read in a newspaper...the writer's friend had told him how he spent his money--one third he spent on women, another third he spent drinking, and the last third he just wasted
But you are right about stretching car budgets. The less you spend on the car the more you'll have for other stuff later.
Leo
I'm looking to by my first new car at the end of this year/beginning of next year (thank you, thank you. You're too kind with your applause and congrats
Also, I currently have an '89 LeBaron Convertible (I appreciate your sympathy). According to Kelly's I should be able to get $1-$2K for it (it has roughly 83K on it). The car is slightly beat up, so what I'll be able to get will be on the low end of the scale. Which brings me to Question 2, which would I be better off doing? Trading it in or selling it myself?
Question 3: Anyone got any ideas on how to go about getting a good deal on financing? Aside from student loans, this will be the first I will be going into.
Thank you to all of my new best friends in advance!!
May 7 2001,I leased a new car,I was very pleased w/the apr and monthly payment set. Now three weeks later the bank is telling my delaership that they are not satisfied w/my credit teir and my dealership is asking me to accept a new lease under a differnt bank at a higher monthly rate or i can return my car. I feel that the dealership is obligated to grant me the monthly payment they promised as i would not have agreed to go above for fear of starving. Any advice here, do i have a case to plead. I like my new car, but i feel the bank and dealership should have known this before they let me drive away. Im so confused.
Please e-mail me w/any feedback as this is an urgent matter and i have to decide if i should accept this bogus deal or give the car back and take my business elsewhere.
Lauri7823@Aol.com
Thanks
Lauri
I suspect that the terms are conditional upon acceptance of the leasing company; in which case you have no recourse because they didn't accept it. Returning the vehicle is the most favorable option for you.
Car_Man
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Feel free to correct me if I'm wrong (wink, wink, nudge, nudge).
PS: Cooltibby, bblaha is right. Check you leasing contract first before you do anything. Contracts like that usually take into account all possible scenarios (however improbable) and the only loopholes there are will probably be for the dealership's benefit. Also check with the Better Buisness Bureau, they may be able to give you some advice. Good Luck!!
mmcbride1: It's official, I have premature Alzheimer's (either that or I REALLY must have had a good time in college!). I graduated in May 1999 with a BS in Engineering (go figure...). Sorry 'bout that! For some reason Ford still thinks I'm eligible for a rebate. 8)
Car_Man
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I played with the Calculator, and assuming that I would get 6.9% with the $1K rebate, turns out I could save $20/month.
Would taking the rebate almost always result in a lesser payment, and if so why? I realize that the answer to the latter part of the question has something to do with a lesser loan amount, but why would there be such a significant difference?
Try repeating the example only using 48 months, and you'll find you'd be better to go with the lower rate.
That basically is an ok generalism: The longer the loan period, the more important the low rate; the shorter the loan period, the more important the rebate.
If you are looking for a VERY rough estimate of which is better (the kind of estimate you can just almost do in your head), try this.
- Estimate the total interest paid for each case by multiplying the interest rate by the "average loan balance" (= loan amount divided by 2), and then multiplying by the number of years.
- If the interst you pay for the high rate loan (which includes the rebate) exceeds the interest you'd pay on the low rate by more than the rebate, then you should go for the low rate deal. If its less, take the rebate.
So for example, a $20K vehicle at either 2.9% no rebate, or 6.9% $1K rebate, each for 2 years becomes:
2.9%/0 rebate
Interest paid estimate = (0.029)*(2)*(20000/2) =$580
6.9%, $1000 rebate
Interest paid est = (0.069)*(2)*(19000/2) = $1311.
Since the difference is only $731, you should go with the rebate.
Repeating for 4 years:
2.9%/0 rebate
Interest paid est = (0.029)*(4)*(20000/2) = $1160
6.9%/1000 rebate
= (0.069)*(4)*(19000/2) = $2622
Difference is $1462, so you should take the low rate.
Hope this is helpful...
I hope others are reading this because it is a good thing to keep in mind.
Car_Man
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No, this is NOT normal, nor should you shop there any further.
If you complete the purchase on a vehicle sight-unseen, you own it when it comes in. If there's anythig about the car that you don't like, you have no recourse - it's your car, lock stock and barrel.
You may wish to check the BBB in your area and see if similar complaints have been filed. If so, add yours. The more people this has happened to, the better chance that an investigation and regulatory action can be taken against the dealer.
kcram
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Car_Man
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Still sound not on the up-and-up? Like I said, I think I got a good price and a good loan - 7.99%, which appears about right based on some other research I have done, so other than this weird financing thing I am relatively happy with my experience. Any other comments?
Rather than trying to be "beneficial to you", it almost sounds like the dealer is trying to move merchandise to make their own quotas. If you pay in full today, that's now a car "sold and delivered" in July, even if it won't show until August.
I'd check to see what the new or renewed incentives are later this week before making any deals.
kcram
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I absolutely agree with KC, it sounds like the dealership that you are working with is more concerned about adding a car to their June sales total than you as a consumer. I definitely would not pay for a new car or truck until I actually saw it.
Car_Man
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