Hi fozy. It definitely is in your best interest to improve your credit score prior to even getting an auto loan. The following is an excerpt on this subject from Experian's Web Site:
"Improve your credit score
If your credit report is less than squeaky clean, don't despair. Regardless of how creditors may make you feel, it is not a judgment on you as a person, but simply a report on how you've handled your credit related financial obligations. You will need to take a few active steps to set the record straight for the future. Here are a few ways that may help you improve your credit standing.
Improve your credit: Tip 1 Pay your bills on time. Many creditors will consider lending to someone with some late payments, if recent records show that you've mended your ways. However, apart from extreme circumstances like bankruptcy or tax liens, nothing has a greater negative impact than late payments. The due date for a payment is when it has to be in the hands of the creditor, not postmarked. Anything more than 30 days late will hurt your credit standing, often seriously. Never let a payment of any kind get 90 days past due. Keep in mind that one day past the due date is considered 30 days late.
Improve your credit: Tip 2 Fewer credit cards is generally better. When it comes to the number of credit cards you should have, fewer is generally better. However, lenders usually prefer you to have at least 3 credit cards. Having a few clean, active credit card accounts will also boost your credit score.
Improve your credit: Tip 3 Minimize your outstanding debt. Even if your debt is relatively small and your monthly payments are manageable, having outstanding debt is always a negative score factor. Try to pay down your existing debt as quickly as possible within your budget limitations.
Improve your credit: Tip 4 Time is sometimes your best ally. Although you may have late payments or other derogatory information on your credit report, the more time you can put between such negative information and a better record of on-time payments and low debt, the more favorable your credit profile will appear in the eyes of lenders. Although negative information can stay on your credit report between seven and ten years, every month that passes where you exhibit responsible credit behavior is a positive step toward improving your credit.
Improve your credit: Tip 5 Correct any inaccuracies on your credit report. Credit reporting companies rely on the accuracy of the reports they receive from creditors and public records. Credit bureaus are committed to reporting accurate information and must resolve any mistakes on your credit report. However, with more than 190 million individual credit files, even a small percentage of errors can mean thousands of files that contain mistakes. Make sure to write legibly when filling out credit applications. People who have a common name, move, change jobs often or have many different credit lines are more likely to have errors on their credit reports because there are so many details that might be misreported. If you have a common name or share a similar name with someone in your family, get in the habit of using your middle initial on credit applications. It is absolutely essential for you to check your credit report at least once a year to be sure all the information on it is accurate, particularly before you expect it to be reviewed as part of a mortgage loan, refinancing, auto loan, or employment application."
You can get your credit score (often called FICO score) from myfico.com - costs $30 or so. Generally, if your score is >700, you'll qualify for the top-tier of the automakers credit offerings (i.e. the 0.0% financing, etc.).
Hi wco81. Credit scores are available online from each of the three credit bureaus: Trans Union, Experian and Equifax. These bureaus charge a small fee for allowing you to access your score, but it is definitely a good idea to know what your score is. Here are links to these companies sites:
For more information about what credit scores mean and how they are calculated, make sure to check out the following article that is available right here at Edmunds.com: Credit Scores Demystified.
I have decided to make due with my good old 96 stratus and work on improving my credit score. My worry is however by the time my credit (now about 610) is good, interest rates will go through the roof and I will lose what ever I am looking to gain..... oh what a mess!! They should have a class on this stuff in school and skip gym, art, and all that goofy stuff... my economic future is ruined... who cares that I know how to play a mean game of dodge ball!!!! Bad credit kills you all around,from horrible interest rate, kills your dickering power and high insurance rates. It seems if you can put it all together what you get for your trouble is a car you are not happy with, a huge monthly payment and then of course your insurance goes up. Sorry for my rant....I do know that I put myself in this position. It is just that I have been out shopping for a couple of weeks and it is a frustrating position.
determine what you should do right now and let the future go.
Remember, your credit rating affects the lending rate you qualify for. True, there are some good rates out there, but not everyone qualifies for them. To get the best rates, you need to have a good credit rating. What you can do right now is make do with the car you have for now and work on improving your credit rating. When it IS improved, as long as you maintain your good rating it will serve you well for your next purchase and long into your future.
"They should have a class on this stuff in school and skip gym, art, and all that goofy stuff... my economic future is ruined... who cares that I know how to play a mean game of dodge ball!!!!"
A family member tried teaching about credit to his high school life-skills class. Most of them didn't realize at the time how important it is, and probably got nothing out of it.
Hey, you know where most kids' heads are at that age!
I am hoping someone will be kind enough to shed a bit of light on our situation and how we should proceed. First a bit of backstory. My wife and I are filmmakers with sporadic income. We went through a MAJOR bankruptcy which was discharged in Nov. of 2002. We are also in the process of paying off our two cars, a 1999 Ford Explorer XLT, and a 1999 Ford Escort ZX2 Hot Coupe. Finally, we just came through a year-long ordeal with cancer which left us financially destroyed and forced to move in wiht relatives to avoid becoming homeless. We are both working, teaching theater arts, but the work is not steady and currently is not covering our expenses.
That said, we owe approximately $9000 on the two cars (total, not each), but the payments and gas are eating us alive. We are contemplating trading them both in on a hybrid. We are both bright people but have never truly understood the whole car buying thing. So, I guess, for starters, does it make sense for us to trade the cars in to the dealer with what we owe on them? According to the Kelly Blue Book, the Explorer is valued around $6000-$8000 and the Escort around $3000-$4500.
Does trading in a vehicle that still has money owed on it make a difference? What can we expect to get for them if we trade them in?
Basically, we are looking at a Toyota Prius, which runs around $20,500. We were hoping to have < $300/mo. payments. We are not at all sure if this is realistic, and not sure where to turn for info. Pretty sure the dealership will give us a skewed version of the info.
So, if someone could illuminate the path a bit for us, we would be incredibly grateful!
1. When you trade in a car that still has money owed on it, you'll get trade-in value minus the amount owed back. Using your numbers, it looks like the Explorer and Escort combined are worth about $9k, which is about what you owe, so you probably won't get much out of them (I'd go to the Real-World Trade-In Values board and ask Terry (rroyce10) what you can really expect to get for those cars). Bottom line: you may be able to walk away from the Explorer and Escort clean, but it's unlikely you'll generate much cash to pay for the Prius.
2. With a bankruptcy less than 2 years ago and no steady income, it's going to be _very_ tough for you to get a car loan at anything less than extortionate rates. Even if you had great credit, and could get top-tier loan rates, the payment on a base Prius with _no_ options ($20.5k MSRP, which is what they're going for) is $415 a month or thereabouts (60 month loan, 4% rate).
3. Frankly, I'd recommend sticking with the cars you have (maybe selling the Explorer?), making the payments, and improving your credit over time. The gas savings between a Prius and an Escort isn't that huge, it'll take a lot of driving to make the difference in cost pay off for you.
Wondering whether there is another tier to the mfg financing/lease offers "must have score of 740/750/7?? to qualify"- & if different manufacturers use different ratings among the 3--for some reason, I have a WIDE divergence 660 to 710 , depending on how their scoring formulas penalize heavy credit card debt (most of which is between 4 & 8.00%, by the way--NONE of the 14-19% crap)
Hi BOBPUT. The credit scores that are needed to qualify for manufacturers' special financing programs vary widely depending upon what brand one is talking about. For instance, General Motors' special financing program allows individuals who have fairly low scores to still qualify for its best rates, while other automakers are much more selective. Even if you do not qualify for a brand's lowest rates, as you suspected many of them have slightly higher, but still "special" rates for consumers who qualify for other credit tiers. If you let me know what model or models you are interested in, I can do a little digging and see what I can find out about the financing rates that are available on them right now.
I own a 2003 Camry. My financial situation may be changing soon and I need to downsize to an older car. My payoff is around $21,000. I checked the trade-in value and it is around $14,200 with the miles I have on it. So, that makes me nearly $6,800 negative equity right? Would a dealer take the trade-in with the $6,000 down? Or, do you think I could get by with a maybe $4,000 or $5,000 down? Also, I need to get a car for my daughter by summer next year. So, I was looking at trading in the Camry and getting two older toyotas -- maybe one for around $3,000 for my daughter and a $6,000-$7,000 for myself.
One of the reasons I need to change cars is I had a 12.5% interest rate and my payments are $460/month. Please give me your opinion after taking this into consideration.
BTW, my financial situation changing also means my income may decrease by $8,000 to $7,000.
take the cash you have and buy 2 cheap cars, or one almost cheap car. if you try to trade it in, you will do one of two things:
1) you MIGHT break even on the camry, but you will have no money with which to buy another vehicle.
2)if you buy a cheap car, you will only be able to finance about 12-24 months, and the interest will be AT LEAST 3-5% more than you have now. your payments probably wont go down enough to justify giving up a 2003 camry that is under warranty.
i see people try this very same thing all the time, and it almost never happens.
so you are saying keep the camry and take the $6K and buy another car cash. But, I would still have the $460 month payment. I guess I don't understand.
Hi georgia00. If I was in your situation, I would try to refinance the Camry at a lower interest rate. If your credit has improved over the past year or two you should be able to lower your finance payment fairly easily. Check out the following article that is available here at Edmunds.com for more information on refinancing: Time to Refinance Your Car Loan.
You also may want to think about using some of the $6,000 that you mentioned in your post to pay off your Camry earlier than you normally would have. By doing so you will be less upside down if you do eventually trade and will be that much closer to not having to make any more payments on this car.
I am a first time used car buyer. I have been approved for a loan through my bank. My question is what are the steps once I get to the dealer? Do I tell them right away that I am going through a bank loan? Are they going to accept this or try and talk me out of it? When do I contact my bank to close on the loan? While I am at the dealer or after I leave? I guess I am just confused on what I must put down to secure the car before leaving the dealer and what the steps are I must take at the dealer to not look like an idiot. Any help would be appreciated!!!
Hi bkahl34. I usually advise consumer to negotiate the best possible selling price that they can for the vehicle that they are interested in prior to getting into any specifics about financing. Once you have agreed upon a price, tell your salesperson that you have been pre-approved to finance the car or truck that you want and see if they are able to beat your rate. Getting pre-approved serves two purposes. It gives you a good idea of what sort of interest rate you should expect and it also motivates your dealer to try to beat the rate that you already have. Your bank should be able to provide you with a check that you can bring with you to the dealership. If you use your loan just fill out the check for the exact amount and sign it over. If you finance through a loan that the dealership sets up for you, you need to cut them a check for your down payment and then fill out the necessary paperwork.
I Have a question if you could assist. Last Sunday bought a 2003 M3, Agreed upon a price did the paperwork in the financing dept and left with our vehicle. The problem is the financing guy never asked us for are down pymt of 1,500 dollars and by all means I did not remind him, the contract all paperwork that was signed of course has the down pymt included. I am a good person and I have been feeling guilty, But I know the BMW dealership will not be going out of business because of this what would be the worst that could happen?
When they "wash" the deal, whether it be this week or next, they will catch the $1,500 swing ..
** I am a good person and I have been feeling guilty, But I know the BMW dealership will not be going out of business because of this what would be the worst that could happen? **
I bet if they made a $50 mistake you would be ALL over these boards calling them low lifes and how you got cheated ... people - it's amazing, the more you meet, the more they stay the same ....
no, you are right. the dealer wont go out of business over the $1500. but the salesman is relying on anywhere from 25%-35% of it for his household income. the F&I guy also loses the money they earned, because you are right...the dealer WONT get hurt by it. they will get theirs.
i realize that you think you are getting one over on the evil dealer, but try and consider exactly WHO you got over on.
I'm not in the car biz (as are bowke & Terry who both gave you some real good advice). So my opinion is just from a fairness perspective. I'm glad you are feeling guilty about this because that shows you know to do the right thing and GIVE THEM THE $1500 YOU CONTRACTUALLY AGREED TO DO.:-) It will be caught and if you step up and do the right thing now I just think you'll feel better.
Thank you for the sound advice. I have decided to keep my camry and refinance it at lower interest rate. I made financial mistakes before, that's why I wanted to come to this board and find out what other people would do. Thank you again.
"assuming you need your cash to make up the difference, how will you buy your daughter a car? "
Put as much down as your bank needs to do the deal.
Put the rest of the $6 (if any) down on a 99-2001 Chevy Prizm. Get the 4sp auto (or the stick), a simple one with power stuff but no LSi should be no more then $6,000 with 40k miles.
Finance the rest, maintain the car, life should be good.
he is AT LEAST $7000 buried. he will need every bit of the $6k he said he has in cash to get it bought.
my point was that he wont have anything left unless he finances a car for her.
also, financing $15k still keeps it a little over $300/mo. if he does it this way, there will be nothing left for another car. nothing in cash OR payment.
The camry is financed with a credit union 12.5%. They will refinance cars as long as there is no negative equity. Thus, why I am paying the $6K down. So, hoping for a $300 payment. I could get my daughter a car next summer with downpayment from my income tax refund and adding her payment to my budget would put me back at $460. Thanks.
This sounds great. Unfortunately, it won't work because I have a four year old bankruptcy on my credit report. I have reestablished my credit though and not been late with any payments for past four years.
then try a 2005 focus. the residuals are INCREDIBLE, and ford buys deep on red carpet leases. a 4 year old BK with good history since should be a no-brainer.
use your $6k as cap-cost reduction, and you can get both cars for inder $350/mo. total.
also, the focus carries a 5 yr/100k mile powertrain warranty....just in case.
.... ** use your $6k as cap-cost reduction, and you can get both cars for under $350/mo. total. ** (this coming from a guy who should have been at the auction buying his car instead of leasing, Yikes.!)
Ever since Bowke fell off that ride at the State Fair he's never been right .. $6,0 big ones on a lease ..?!? .. if they will approve you, maybe a few security payments upfront, but $6 large is throwing your $$ in the street and $6,000 is alot of scratch ...
way to spend 6 large, but he wants to have 2 cars and under $450/mo. total.
this is a way to do that. i never said this was the best way to buy a car, but in his situation, its a good solution.
also, put the $6k away and keep the camry. make your payments out of income whenever possible, and when things get tight, dip into the savings to make a payment or two.
BTW, terry...i dont think i mentioned it, but so far, my dealership has paid half of my payments through a bonus structure.
Bowke28, putting $6,000 down on a lease is an absolutely terrible idea. She'd get more enjoyment by making little origami figures out of the individual bills, or perhaps throwing them in the fireplace. Consumers should never make down payments when leasing vehicles.
again, i will repeat...(if you didnt actually READ my last post:
looking towards the ultimate goal:
under $450/mo. for 2 cars.
to do this, one must either finance 2 $8-$9k used cars (using the 12% rate), or lease 2 new cars. my contention is that this can be done with little or nothing down, but based on the stated rate and credit history, one may be requested by the lending institution to provide some capital investment.
i never said it was smart...as a matter of fact, i agree with you in most cases. but this is just a POSSIBLE solution that i came up with. there may be others, but none of them will land 2 cars for under $450 a month.
Ultimate goal of under 450 does not have to include a 6-bill cap cost reduction. Dropping that much to get the lease payments down means one thing and one thing only - the car was too expensive in the first place. Like Terry said, a couple of extra security deposits are fine, but 6 bills on a cap-cost is financial suicide.
Does the dealer get a percentage of the amount financed through a manufacturers plan? If so, how much of a percentage? I'm qualified from my CU at the same rate as the MFG offer. If I offered to go with the MFG financing, could I get another $500 or so off the deal? The total amount financed would be @$1700.00 for 60 mos.
Hi raydahs. Whether or not the dealership that you are working with would make any money by your signing of a financing contract that they arrange depends upon what interest rate you have been approved at. All things being equal, dealers usually prefer to arrange financing for consumers for two reasons. The first is that they have more control over when they will be paid if they have a good relationship with the bank that you will be financing through. The second reason is that dealers often make money by marking-up banks base interest rates. Let's say that both the dealer and your bank are able to finance this vehicle for you at 5%. The dealer may actually be able to get you the money at 4% or 4.5% and be marking this rate up to match the rate that you have been approved to finance at through your bank. The bank that it finances you through will kick back some money to them for the mark-up. If the dealership is not marking up your rate, it will not make much money off of arranging financing for you, probably only a couple of hundred dollars from a flat fee that most banks pay on regular finance contracts. In your post you state that you will be financing $1700 for 60 months. I have a feeling that you mean $17,000, but if you actually are financing less than $2,000 then the dealership will not make much either way.
Thanks for your response, yes the total amount financed is $1700.00 for 60 mos. I guess what I was thinking that we could get more money into the salespersons hand and a little bit more off the deal in my favor going through American Honda financing, instead of the CU. Guess I have too much time on my hands while commuting (always thinking) Thanks
A newspaper reporter is looking for someone who has financed a new car for longer than 60 months and is still paying for it. Please send your daytime contact info to jfallon@edmunds.com no later than Wednesday, May 19, 2004. Thanks! Jeannine Fallon PR Director Edmunds.com
MODERATOR /ADMINISTRATOR Find me at kirstie_h@edmunds.com - or send a private message by clicking on my name. 2015 Kia Soul, 2021 Subaru Forester (kirstie_h), 2024 GMC Sierra 1500 (mr. kirstie_h) Review your vehicle
I'm in the market for a new car, and simultaneously I'm getting ready to move. To my benefit, I'm selling a house that has appreciated significantly and moving into a new home that will cost much less. I likely won't have the cash from the home sale for several months after I want to get the new car though.
My idea was to offer the dealership the opportunity to finance me at an above-market rate in exchange for a discount on the sales prices. Then, when I get the cash from the sale of the house, I'll pay off the loan in full, paying only a couple of months of interest.
Any thoughts on whether or not this strategy is likely to go over well with the dealership? What could I expect in terms of a trade-off? If market is 4.5%, and I pay 7.5%, is that worth $2000 off the sales prices? $3000? $2.50?
Yes you are correct, if a dealer can mark-up your loan then just maybe you'll get a better price on the car. However it is unlikely that a dealer will go much below invoice or invoice plus some amount.
People use this technique to get a good price and then they go over to their credit union and refinance the car at the going rate to save a little money.
The money that a loan gets for a mark-up is, of course, dependant on the loan amount.
You can ball park the mark up value as follows:
1) subtract the mark-up interest rate from the best rate that you can get from your bank 2) Multiply the interest rate differential by half of the loan amount(the average loan principle over the loan term) . Then multiply this amount by the loan term in years. You'll need a financial calculator to compute the exact amount but this little formula is really close to the true amount.
So if you buy a $20k car and you can get a 5 percent loan over 5 years (60 months) and they mark-up the loan to 8 percent. Their (ballpark) additional profit is ($20k/2)*(.08-.05)*5 = $1500 (or so).
Keep in mind that a dealership will have to share some of that mark-up profit with the bank. So any negotiating discount that you are expecting will be less than that amount.
Also, remember that, if the loan is paid off _too_ soon, the lender claws back the money they paid to the dealer. If memory serves, it's something like three months, but I could be wrong.
....... We gotta kind of put this in it's "right" prospective ..
Yes, the dealer can make a little more money via the the points .. but as a rule the dealer has to split the points with the lender depending on the loan and the advance .. also, dealers weren't born yesterday and they can be charged-back in 30/60/90/120 days depending on the lender and the loan .. the point is, front-end profit lasts forever, finance money can be lost on a phone call and they know it .............
Comments
"Improve your credit score
If your credit report is less than squeaky clean, don't despair. Regardless of how creditors may make you feel, it is not a judgment on you as a person, but simply a report on how you've handled your credit related financial obligations. You will need to take a few active steps to set the record straight for the future. Here are a few ways that may help you improve your credit standing.
Improve your credit: Tip 1
Pay your bills on time.
Many creditors will consider lending to someone with some late payments, if recent records show that you've mended your ways. However, apart from extreme circumstances like bankruptcy or tax liens, nothing has a greater negative impact than late payments. The due date for a payment is when it has to be in the hands of the creditor, not postmarked. Anything more than 30 days late will hurt your credit standing, often seriously. Never let a payment of any kind get 90 days past due. Keep in mind that one day past the due date is considered 30 days late.
Improve your credit: Tip 2
Fewer credit cards is generally better.
When it comes to the number of credit cards you should have, fewer is generally better. However, lenders usually prefer you to have at least 3 credit cards. Having a few clean, active credit card accounts will also boost your credit score.
Improve your credit: Tip 3
Minimize your outstanding debt.
Even if your debt is relatively small and your monthly payments are manageable, having outstanding debt is always a negative score factor. Try to pay down your existing debt as quickly as possible within your budget limitations.
Improve your credit: Tip 4
Time is sometimes your best ally.
Although you may have late payments or other derogatory information on your credit report, the more time you can put between such negative information and a better record of on-time payments and low debt, the more favorable your credit profile will appear in the eyes of lenders. Although negative information can stay on your credit report between seven and ten years, every month that passes where you exhibit responsible credit behavior is a positive step toward improving your credit.
Improve your credit: Tip 5
Correct any inaccuracies on your credit report.
Credit reporting companies rely on the accuracy of the reports they receive from creditors and public records. Credit bureaus are committed to reporting accurate information and must resolve any mistakes on your credit report. However, with more than 190 million individual credit files, even a small percentage of errors can mean thousands of files that contain mistakes. Make sure to write legibly when filling out credit applications.
People who have a common name, move, change jobs often or have many different credit lines are more likely to have errors on their credit reports because there are so many details that might be misreported. If you have a common name or share a similar name with someone in your family, get in the habit of using your middle initial on credit applications. It is absolutely essential for you to check your credit report at least once a year to be sure all the information on it is accurate, particularly before you expect it to be reviewed as part of a mortgage loan, refinancing, auto loan, or employment application."
Here are a couple of links to other articles on this subject as well: CNN Money - Improve Your Credit Score and MyFICO.com - Improving Your Score.
Car_man
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- TransUnion
- Experian
- Equifax
For more information about what credit scores mean and how they are calculated, make sure to check out the following article that is available right here at Edmunds.com: Credit Scores Demystified.
Car_man
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Remember, your credit rating affects the lending rate you qualify for. True, there are some good rates out there, but not everyone qualifies for them. To get the best rates, you need to have a good credit rating. What you can do right now is make do with the car you have for now and work on improving your credit rating. When it IS improved, as long as you maintain your good rating it will serve you well for your next purchase and long into your future.
Be patient, it will pay off.
A family member tried teaching about credit to his high school life-skills class. Most of them didn't realize at the time how important it is, and probably got nothing out of it.
Hey, you know where most kids' heads are at that age!
I am hoping someone will be kind enough to shed a bit of light on our situation and how we should proceed. First a bit of backstory. My wife and I are filmmakers with sporadic income. We went through a MAJOR bankruptcy which was discharged in Nov. of 2002. We are also in the process of paying off our two cars, a 1999 Ford Explorer XLT, and a 1999 Ford Escort ZX2 Hot Coupe. Finally, we just came through a year-long ordeal with cancer which left us financially destroyed and forced to move in wiht relatives to avoid becoming homeless. We are both working, teaching theater arts, but the work is not steady and currently is not covering our expenses.
That said, we owe approximately $9000 on the two cars (total, not each), but the payments and gas are eating us alive. We are contemplating trading them both in on a hybrid. We are both bright people but have never truly understood the whole car buying thing. So, I guess, for starters, does it make sense for us to trade the cars in to the dealer with what we owe on them? According to the Kelly Blue Book, the Explorer is valued around $6000-$8000 and the Escort around $3000-$4500.
Does trading in a vehicle that still has money owed on it make a difference? What can we expect to get for them if we trade them in?
Basically, we are looking at a Toyota Prius, which runs around $20,500. We were hoping to have < $300/mo. payments. We are not at all sure if this is realistic, and not sure where to turn for info. Pretty sure the dealership will give us a skewed version of the info.
So, if someone could illuminate the path a bit for us, we would be incredibly grateful!
Cheers,
Chris
1. When you trade in a car that still has money owed on it, you'll get trade-in value minus the amount owed back. Using your numbers, it looks like the Explorer and Escort combined are worth about $9k, which is about what you owe, so you probably won't get much out of them (I'd go to the Real-World Trade-In Values board and ask Terry (rroyce10) what you can really expect to get for those cars). Bottom line: you may be able to walk away from the Explorer and Escort clean, but it's unlikely you'll generate much cash to pay for the Prius.
2. With a bankruptcy less than 2 years ago and no steady income, it's going to be _very_ tough for you to get a car loan at anything less than extortionate rates. Even if you had great credit, and could get top-tier loan rates, the payment on a base Prius with _no_ options ($20.5k MSRP, which is what they're going for) is $415 a month or thereabouts (60 month loan, 4% rate).
3. Frankly, I'd recommend sticking with the cars you have (maybe selling the Explorer?), making the payments, and improving your credit over time. The gas savings between a Prius and an Escort isn't that huge, it'll take a lot of driving to make the difference in cost pay off for you.
Thanks for the input. I guess what you say is pretty much what we had figured, but were hoping the answers would be different.
We will probably opt for selling the Explorer and keeping the Escort.
Cheers,
Chris
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my suggestion would be similar...sell the explorer privately for $8k-$9k, pay off both, and enjoy the 35 MPG of the free-and-clear zx2.
in the future, with your sporadic income, i would consider doing one of 2 things:
1) save enough money to buy a 1 or 2 year old domestic without payments
2) make films more like matrix or lord of the rings.
;-)
sorry...i couldnt resist.
Thanks for your input.
BTW, my financial situation changing also means my income may decrease by $8,000 to $7,000.
Thank you.
take the cash you have and buy 2 cheap cars, or one almost cheap car. if you try to trade it in, you will do one of two things:
1) you MIGHT break even on the camry, but you will have no money with which to buy another vehicle.
2)if you buy a cheap car, you will only be able to finance about 12-24 months, and the interest will be AT LEAST 3-5% more than you have now. your payments probably wont go down enough to justify giving up a 2003 camry that is under warranty.
i see people try this very same thing all the time, and it almost never happens.
You also may want to think about using some of the $6,000 that you mentioned in your post to pay off your Camry earlier than you normally would have. By doing so you will be less upside down if you do eventually trade and will be that much closer to not having to make any more payments on this car.
Car_man
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Car_man
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When they "wash" the deal, whether it be this week or next, they will catch the $1,500 swing ..
** I am a good person and I have been feeling guilty, But I know the BMW dealership will not be going out of business because of this what would be the worst that could happen? **
I bet if they made a $50 mistake you would be ALL over these boards calling them low lifes and how you got cheated ... people - it's amazing, the more you meet, the more they stay the same ....
Terry
i realize that you think you are getting one over on the evil dealer, but try and consider exactly WHO you got over on.
It will be caught and if you step up and do the right thing now I just think you'll feel better.
Just my .02
Duncan
assuming you need your cash to make up the difference, how will you buy your daughter a car?
Put as much down as your bank needs to do the deal.
Put the rest of the $6 (if any) down on a 99-2001 Chevy Prizm. Get the 4sp auto (or the stick), a simple one with power stuff but no LSi should be no more then $6,000 with 40k miles.
Finance the rest, maintain the car, life should be good.
Good luck,
-Mathias
my point was that he wont have anything left unless he finances a car for her.
also, financing $15k still keeps it a little over $300/mo. if he does it this way, there will be nothing left for another car. nothing in cash OR payment.
do a short-term lease on 2 cars. a honda civic VP can be done for under $200/mo. with nothing down.
a nissan sentra would be about $200/mo.
you can get 2 of these for under $400/mo, both brand new, under full warranty, AND your daughter gets a car too.
so instead of a slightly used car for $460, you have 2 brand new ones for under $400.
use your $6k as cap-cost reduction, and you can get both cars for inder $350/mo. total.
also, the focus carries a 5 yr/100k mile powertrain warranty....just in case.
Ever since Bowke fell off that ride at the State Fair he's never been right .. $6,0 big ones on a lease ..?!? .. if they will approve you, maybe a few security payments upfront, but $6 large is throwing your $$ in the street and $6,000 is alot of scratch ...
Terry.
this is a way to do that. i never said this was the best way to buy a car, but in his situation, its a good solution.
also, put the $6k away and keep the camry. make your payments out of income whenever possible, and when things get tight, dip into the savings to make a payment or two.
BTW, terry...i dont think i mentioned it, but so far, my dealership has paid half of my payments through a bonus structure.
Car_man
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....l.o.l.. I love that one, can I use it .?
Terry
looking towards the ultimate goal:
under $450/mo. for 2 cars.
to do this, one must either finance 2 $8-$9k used cars (using the 12% rate), or lease 2 new cars. my contention is that this can be done with little or nothing down, but based on the stated rate and credit history, one may be requested by the lending institution to provide some capital investment.
i never said it was smart...as a matter of fact, i agree with you in most cases. but this is just a POSSIBLE solution that i came up with. there may be others, but none of them will land 2 cars for under $450 a month.
kcram
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i agree that $450 can be done with little or nothing in cap cost reduction.
Car_man
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however...
they offered you the same rate as your credit union, so this is obviously the best you have gotten so far. dont overthink it. enjoy your new car.
Car_man
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My idea was to offer the dealership the opportunity to finance me at an above-market rate in exchange for a discount on the sales prices. Then, when I get the cash from the sale of the house, I'll pay off the loan in full, paying only a couple of months of interest.
Any thoughts on whether or not this strategy is likely to go over well with the dealership? What could I expect in terms of a trade-off? If market is 4.5%, and I pay 7.5%, is that worth $2000 off the sales prices? $3000? $2.50?
Thanks.
People use this technique to get a good price and then they go over to their credit union and refinance the car at the going rate to save a little money.
The money that a loan gets for a mark-up is, of course, dependant on the loan amount.
You can ball park the mark up value as follows:
1) subtract the mark-up interest rate from the best rate that you can get from your bank
2) Multiply the interest rate differential by half of the loan amount(the average loan principle over the loan term) . Then multiply this amount by the loan term in years. You'll need a financial calculator to compute the exact amount but this little formula is really close to the true amount.
So if you buy a $20k car and you can get a 5 percent loan over 5 years (60 months) and they mark-up the loan to 8 percent. Their (ballpark) additional profit is ($20k/2)*(.08-.05)*5 = $1500 (or so).
Keep in mind that a dealership will have to share some of that mark-up profit with the bank. So any negotiating discount that you are expecting will be less than that amount.
Yes, the dealer can make a little more money via the the points .. but as a rule the dealer has to split the points with the lender depending on the loan and the advance .. also, dealers weren't born yesterday and they can be charged-back in 30/60/90/120 days depending on the lender and the loan .. the point is, front-end profit lasts forever, finance money can be lost on a phone call and they know it .............
Terry.