Questions About Financing New Vehicles

blerner2 · December 2001

Carman,

Yesterday I ordered a Ford Focus. I understand the current incentives (low rates or $500 customer cash back) expire on Jan 14th (ie. must take delivery by then).

I couldn't find a dealer in my area with something in stock or coming in equipped the way I wanted. That is why I ordered.

Based on the fact that Ford shuts down for 2 weeks around Christmas, I wouldn't expect to see this vehicle until early-mid February.

My question is: Do you believe that Ford will renew the present incentive beyond Jan 14th. My dealer seemed to think that they would extend the customer cash, if not raise it, to $750 or $1,000. I take any words from them with a grain of salt.

I got a great deal even if the $500 customer cash goes away, but just wanted to get your opinion on where you believe Ford's incentives on the Focus will go in the next 1-2 months.

CarMan@Edmunds · December 2001

Blerner2, interestingly enough I completely agree with the dealership that you are purchasing your focus from. Ford definitely will not end the $500 Consumer Cash program that they currently have running on the Focus without replacing it. At the very least there should still be $500 on this car after the current program expires and this amount may increase to $750 or $1,000 because vehicles' incentives often increase as the model year progresses. I personally don't think that you have anything to worry about.

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lemko · December 2001

...on a 2002 Mercury Grand Marquis?

CarMan@Edmunds · December 2001

Hi lemko. Yes, Ford is offering incentives on the 2002 Mercury Grand Marquis right now. Through January 14th, they have $1,000 Consumer Cash or special financing rates of 0.0% for up to 36 months, 3.9% for 48 months, and 5.9% for 60 months. Ford is also offering $1,000 Lease Cash and $500 Owner Loyalty Cash on this particular model at this time.

Happy New Years,

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mark0824 · February 2002

Hi,

I have a 1996 Explorer with 98,000 miles. I have had it since 1998. I had poor credit at the time and got a 12.95 interest rate over 5years. I still owe $8500. I can get $7000 through Carmax and dealer (looking at a 2000 Acura TL) will make up $500-$1000 difference.

MMy wife and i just bought a 2002 Civic with 4.9 (my credit has improved int othe 700's now)and could get a 6-6.5 and the Acura. I know that I will be trading the Explorer in this year. Wife wants to wait until we have positive equity maybe $1000 or so by late this year, Sept-Nov. I say, if we are going tp be trading it in, why keep paying. We can afford to put 3000k down. Car would be about 22k walk ou the door.

What makes more sense? and why?

Thanks,

Mark

suvshopper4 · February 2002

Sounds like if you trade the Explorer in now, and roll the negative equity into the new loan, you will be paying the negative equity off at the new, lower rate (6.5 v. 12.95).

I don't know if there is an upside to holding onto the Explorer until you have positive equity in it. Unless it starts snowing.

zoomzoom79 · February 2002

I would get rid of the Explorer before it hits 100,000 miles. Once you hit that magic mark your value will take another hit.

dtownfb · February 2002

98,000 vs. 100,000 miles or even 105,000 miles. It's all the same to the dealers eyes.

I would trade it in now and put the negative equity into the new loan esp. at that low rate. Do a simple cost analysis. Compare:
1) Cost of trading the Explorer in now and putting the negative equity into the Acura loan.
and
2) cost of payig the Explorer for another 6 months. Plus the equity of $1000(deposit) into the Acura loan.

To compare apples to apples, make sure you include the $3000 downpayment in each case as well as keep the same loan terms. This shoud show the clear picture. Plus you have to consider that the Acura may not be there in 6 months.

Good luck.

zoomzoom79 · February 2002

I work at a car dealer and I know that once you hit that magic 100,000 mile mark you will take another hit. It's the same as hitting 36,000 miles.

mark0824 · February 2002

The main questions are

1.I will have to pay $1500 to Ford if I go to Carmax (they will give me 7000)and sell my car. But, I will save $840 worth of interest if I sell it now instead of waiting until September. Plus, no negative rollover to new loan.

2.Will a car dealer match my carmax price or do better then $7000. But, if they do then then I rollover 1500 into new loan but at least at the 6.5 rate

We have already semi-agreed that September is the month to really look but, why keep puttting money into a vehicle that you will be trading in withing a few months?

Help me sell this to my wife.

Thanks,

Mark

zoomzoom79 · February 2002

The dealer may match the price by Carmax. It looks like either way you are going to pay off the negative equity so one thing to consider would be do you get a sales tax credit in your state? For example if you are buying a $20,000 car and your trade is valued at $8000 you only pay sales tax on the $12,000 as long as you trade the car in at the dealer you are buying one from.

mark0824 · February 2002

My Explorer still has 8500 left to pay. If I trade it in an I get 7000 on a 20k vehicle, then I would only paay sales tax on $13,000 instead of the 20k plus have the negative equity, 1500 roll into the new loan. Is this correct? My sales taxe on a car is 5% where I live. We are talkin $13650 or $21,000. As you can see the difference between the price with and without the taxes between the 2 is only $350. I need to look at how much money the $1500 rolled into the loan will effect the interest and payment.

I think the best thing to do is sell to Carmax, and then sned the remaining $1500 to Ford. Then pust about 1500-2500 dowwn on the Acura.

Thisway I can get the price down to 19-20K put 2k down for a price of 18.5k with taxe and title.

Thanks,

Mark

zoomzoom79 · February 2002

You've got it. Using $20,000 and $7,000 as the trade value at 5% tax you would save $350 in tax. If you sell it to Carmax you will lose the $350 but you won't have to hassle with the dealer to get them to match Carmax's offer. You would have to roll the negative equity in but with a down payment of $3000 you would really be paying it off up front.

One more thing, if you do sell it to Carmax they will send Ford the entire payoff. You will have to pay them the $1500 up front in cash or certified funds.

dtownfb · February 2002

If you haven't already, find out what the dealer is willing ot give you for the car. maybe they may give you more. If they are willing to match it, I would arrange this through them. Less hassle for you and all the paper work is done is one place at the same time.

mookie14 · March 2002

simple question im getting out of this exploder im looking at a 2003 or 2002 altima.which i live in oh is 19800 also a corrolla is 16400.now with the miles that will be on the exploder something like 56to58000 but in good condition.all maintenance kept up on it.will they take it as a trade? and how much will i get for it now its early i know im dealing in 12-02 can you or someone give me a preview id be thankful thanks.

fredvh · March 2002

Can anyone tell me how much of a new-car purchase can be put on a credit card? Is this amount negotiable?

suvshopper4 · March 2002

fredvh: I had a sales rep tell me last week that $1,500 is the max that could be put on a charge card. Could be a dealership rule, I don't know. Could be flexible, I don't know.

dtownfb · March 2002

fredvh: How much yu put on your credit card may also depend on the state you live in as well. Safest bet is to check with the dealer. I doubt it is negotiable.

mookie14: If I remember right, your mileage limit for your lease was 36,000 miles. So you will be hit with that penalty when you return the vehicle regardless of the condition. What is your residual? Meaning what is the estimated worth of the vehicle according to the bank at the end of the lease. I would check the value of the Explorer here on Edmunds site. That will give you an idea of what the car is worth now. You might be able to turn the vehicle in now and get the Corolla or Altima but not unless the dealer sells Fords as well as one of these two vehicles, I seriously doubt they will be willing to work with you. It's not in their best interest to take the Explorer as a trade esp. if you are over the mileage limits and it's worth less then the residual. Yes they want you to buy a Corolla or Altima but not on those terms.

I could be wrong. The best thing to do is go to a Toyota or Nissan dealership and talk to them about your situation. Also talk to your Ford dealer (or whoever you have the lease through) about turning the Explorer in early. But for now, check Edmunds and Kelly blue book (www.kbb.com) for the value of the Explorer. And also check the mileage penalty in the lease contract. Also check if there are any early termination penalty.

Unfortunatley mookie, you are not in a good position any way you look at it. Hopefully i helped you some.

mookie14 · March 2002

ok thanks thats all i needed

jelhz43n · March 2002

In New Jersey last year (April 2001) when I bought my van (Sienna) the sales rep told me that I can charge the full value of the van on my credit card.
I charged only 4K as down payment on it.

John

agreenberg · March 2002

I have a BMW that I am currently leasing, and I want to get out early. My local Honda dealer told me that if he takes in my leased BMW and I buy (not lease, but purchase) a Honda from him, then I won't have to pay sales tax on the Honda because the value of my BMW is greater than the value of the Honda by about $8,000. (Note: I have not yet payed sales tax on my leased BMW, and the Honda dealer also said that I will not have to pay that either if he takes it in).

I am also considering a Passat, and the VW dealer told me that the Honda dealership is wrong, and I must pay sales tax on the purchase of a new car, regardless of how my current lease is disposed. But he did agree that I won't owe the tax on my current lease if he takes the car in.

Who is correct?

zoomzoom79 · March 2002

Let's say your trade is worth $18,000 and the car you are buying is only $15,000 you would not pay sales tax. Vice versa if the car you are buying is $18,000 and your trade is worth $15,000 you will only pay sales tax on $3000.

And both dealers are right in saying that if you turn your lease in you will not have to pay sales tax on it. If you sold it to an individual they would have to pay sales tax.

edchen · April 2002

zoomzoom79: Most states I believe allow you to go to the Tax Collector and claim a sales tax refund if you sell your used car on your own or at a different dealership.

agreenberg: Sales tax has never been paid on the remainder of the BMW so I don't think you should be able to get a discount for it.

edchen · April 2002

Credit card companies charge a certain amount for their services(1-3%?) so depending on how much the dealer is making off of you in other places you may or may not have a limit.

shued · April 2002

I heard that 0% financial is provided
by the manufactory, just like a reback,
does there still have $500 financial charge
for this? I think it should not have charge.
At least not at $500 level. It is reasonable
to charge $50 for credit report check.

zoomzoom79 · April 2002

I got 0.0% through Mazda Credit and didn't pay any fees. I'm not sure about the other finance companies.

CarMan@Edmunds · April 2002

Shued, all banks charge some sort of acquisition fee or bank fee on leases, but no banks that I am aware of have any sort of charge for consumers who just finance the car or truck that they are getting. This even goes for the special financing programs, like the 0.0% ones that many manufacturers are running right now.

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mookie14 · April 2002

its mookie well anyway i know we have talked on many times bout the explorer but nuff said bout that its all taken care of. here is my questions i know what im trying find out i want a 2002 or 2001 intrigue oldsmobile or honda minivan mainly the oldsmobile. this fall im wondering will they be much lower? like nov and if i get a used one or new one what will the pymts be like with a buy. instead of leasing which i will NOT DO ANYMORE seeing that i have id say close to good credit car credit that is. and everything else working on it things comes off my report this yr so thats all i got look for your response thanks.

CarMan@Edmunds · April 2002

Hi again mookie. I see that you are interested in getting a 2002 model Oldsmobile Intrigue or Honda Odyssey. As the model year progresses, pricing for these models will gradually decline, especially when the 2003 versions of these vehicles hit showrooms. By waiting you definitely put yourself in a stronger position to negotiate a low price, but if you wait too long you risk not being able to find the exact model in the exact color with the exact options that you are looking for.

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mookie14 · April 2002

well that bout does it car-man um you say not wait to long. would that mean not to wait until jan- 03 or not to wait til dec 02? just curious i wont but just need your opinion other than that thats it thanks car-man.

CarMan@Edmunds · April 2002

Mookie14, how long 2002 models stay around will vary from manufacturer to manufacturer depending upon when they introduce their 2003 models. You are probably correct though when you said that you are better off not waiting until January or December to make your purchase.

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dtownfb · April 2002

I believe this is the last model year for the INtrigue (car man can confirm this). So there are plenty of deals to be had. The problem with this is Olds is probalby onl making so many of these vehicles. But if you can find one, there are giving good deals on them.

As far as the Odyssey, I think Honda is selling them as quick as they can make them. So they are still selling at close to MSRP.

protege_fan · April 2002

Hi all,
Didn't know where else to ask this, so I hope somebody here can help or at least point me in the right direction.

If you've signed a contract/offer, can you still back out of buying a car? I'm not talking the bill of sale here...just the offer...financing has been approved through the dealership. Thanks.

suvshopper4 · April 2002

You might try asking that question on the thread, "Any Questions for a Car Dealer?" I think it might be in Town Hall's "Smart Shopper".

rudy2000 · April 2002

once told me "A fool and his money are soon parted". By reading this tread, I believe no truer words were spoken. By the way, my 2000 Rav4 was financed for a short time, now paid off. My 2001 Sienna is financed @ 1.9% and payoff in 2003.

mookie14 · May 2002

i have yr and 2 mths left on a lease me & my wife have been dislocated after 9-11 employment wise that is. now we are are starting back over and now im wondering do we have to be at a job at least a yr? or is it that we need to get our fica scores up there at 590&578. or will they go up next yr have been paying the lease like clock work. plus credit cards so what can i do ???????????? we have the income so ??? also we want a car different from the one we leased which we r not leasing again so thats all.

dtwleungnyc · May 2002

Personally, I would shoot for at least a 650 in the fica score. But that's just me. 8)

I am not sure what you are leasing right now or what your current situation is. But if I am in your situation, I would keep the current lease vehicle in the best condition possible and keep the mileage within the ranges stated in the contract. If you have no desire to keep it at the end of the lease, then you can turn it in with minimum penalty if any.

Then for your next car, maybe get a late model used car to keep the expense down while still having a late model car in good condition for transportation needs.

mookie14 · May 2002

the thing i ask is how do i get to 650 or we if you can help on this id really be thankful thanks mook.

dtwleungnyc · May 2002

If you get your report from www.myfico.com and run a report check on yourself, once you get the scores, they will explain to you how you receive your current score. And suggestions on how to improve it. But, to put the whole thing in a simple term. Keep your expense and liability down. Pay off all your credit card debt as soon as possible and avoid late payment at all cost.

mookie14 · May 2002

i guess thats the the way to put it. would it be best to do it now or when or before i go car shopping well not shopping i know what i want. i will be trying to get a car in 6-03 so what do you think? its no problem paying things off im just wondering now or nxt yr etc. thanks.

dtwleungnyc · May 2002

Personally, IMHO. Try to always maintain a good credit rating at all time if possible. Don't just try to clean it up or repair it for 6 months and hoping your score will improve and then let it slip again. It does require certain level of self control and discipline.

mookie14 · May 2002

i guesss thats the way to put it. well it has started so ill do it asap and after next yr thanks.

bornyesterday · May 2002

I took possession of a new car a couple of weeks ago. I know now that I did just about everything wrong, I'll admit, BUT I would have still been a happy idiot and none the wiser if the dealership hadn't asked me a week later to start over with a new purchase order and a different financing company (my own source) at a higher interest rate than the original financing that they were securing.

I didn't re-sign any new agreements, but they said that it was okay, that we'd then just go with the original deal and finance company.

Now they want me to come in AGAIN to sign another financing agreement. I also had ANOTHER loan approval on my own with a great rate..much better than either of the previous ones..but they originally refused to use it. Now they say they will,

What is up??? And by the way, I was charged "finance fees" of nearly $1000 on the first loan agreement, 400 on the second, and this is a purchase, not a lease. I was a little upset because they just included it into the price of the unit and I then had to pay sales tax on that too!

I'm getting really tired of doing this deal over and over as my time is very limited. I'd be happy to return the car at this point. In fact I'm surprised I'm still driving it if there is not a done deal. What's up?

dtownfb · May 2002

I'm having a hard time following this. You bought the car and the dealer refused your financing and you used their's instead.

First I don't know why they refused your financing. That doesn't make sense. But why did you agree to their financing esp. if it were a higher interest rate when you had already secured financing? And the finance fees? Never heard of that before. If you already signed all the paper work and have the car, why do they want you to sign another purchase agreement?

If I were in your shoes (this is based only what I can decifer from your post), is go in sign the new purchase agreement but use your own financing. The purchase agreement should have the price of the car, deposit, document fees (make sure they are reasonable), tax. If you are financing on your own, there should be no 'fiance fees'. make sure the price of the car is what you agreed upon. Be prepared that if things are not going well, to hand them the keys and walk away.

It sounds like maybe you weren't approved through their finance company and they have to re-do the deal. The more information you can give the better we can answer your questions.

sf10 · May 2002

Carman--

I have a question that maybe you can help me with. I placed $500 as a deposit to an auto dealership in Maryland to have them special order an Audi for me. But now, I don't want the Audi, I'm getting a VW. The car still hasn't arrived yet; it's slated to arrive in about 2 weeks. I signed no papers at all. All I did was give them my credit card number. If I don't want this Audi, can I still get my deposit back? I mean, I didn't purchase anything. Do I have any legal recourse of gettinb my money? Can I inspect the car, and say that I don't want it, and they legally have to refund it?

Thank you.

dtwleungnyc · May 2002

I am no expert. But really depends on what you ordered. If its an Audi with regular equipments and regular color, maybe I guess. But if you ordered some strange combos, like manual transmission, no sunroof, cloth interior and purple color, doubt it. Maybe other can comment?

CarMan@Edmunds · May 2002

Hi sf10. Dtwleungnyc, made a very good point in the previous post. If the vehicle that you ordered is relatively normal, meaning that it is not an extremely unusual combination of options that the dealership that you ordered it through would have a difficult time selling on their lot then you should be able to get your deposit back. Was the deposit that you left supposed to be completely refundable if you chose not to take delivery of your ordered vehicle? If so, your chances of getting your money back increase dramatically. Regardless of whether your deposit was supposed to be refundable or not, many dealerships give consumers a very very hard time when they try to get their deposits back. As long as you are polite, yet firm and persistent you eventually should be able to get your deposit refunded. Fortunately for your sake, you paid this deposit on your credit card rather than by cash or check. By doing so, you can always protest their charge with your credit card company as a last resort. By doing so, consumers are usually to get their deposits back, even when their dealership is not cooperating with them.

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sf10 · May 2002

Carman--

Thanks for that info. That's great to hear.

CarMan@Edmunds · May 2002

You're welcome, sf10. I am glad that we were able to help you out.

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carbonni · June 2002

I am a recent college graduate and I am thinking about purchasing a new Sentra. Right now there is a special financing offer for 2002 Sentra: 4.9% for 60 months. I have a reasonably good credit score (>700) and I wonder if I could finance at the 4.9% AND get the $500 college grad cash. I am afraid that the $500 incentive only comes with a higher interest rate. Can anyone shed a light on this?

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