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Questions About Financing New Vehicles

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  • seedpowerseedpower Member Posts: 4
    Hello everyone,

    This seems like a group very knowledgeable on the subject so I look forward to reading the responses to my question.

    I have a 2003 subaru that I bought new and have owned for 9 mos. It has 12k miles on it and the buyout on my financing is about what it’s valued ( if you average out all the opinions on value).

    I want a new subaru. Hahahaha.

    I have a 7month old daughter and I want the safety features of the 2005 models. When we got the 2003 my wife was working a small job and we were able to put both of us on the financing. Her credit score at the time was better than mine so it I am under the impression that they some how finagled it with her credit score and my income. Now we both have credit scores in the mid to upper 600's. I have over paid by $51.00 ($449.00 payment rounded up tp $500) on every payment and have not been late or missed. My wife no longer works (full time mom) and we moved so time at current residence is only 4 months as opposed to the 1.5 years last time. I got 2.9% financing last time although I doubt I will get that again. I would be comfortable paying sticker for the car if the dealer will take my 2003 and no down payment. Is this at all possible? I financed through Subaru Motor Finance (chase automotive) originally if that helps.

    I would pay up to $600 a month and still be ok.
    Also I could have her put on the payroll at work to make it look like she has a part time job if that would help...although I would only do that if I really really needed to.

    Thanks
    -michael
  • steine13steine13 Member Posts: 2,825
    If this is such a good idea, why is the hair on the back of my neck standing up?

    Your credit isn't great, your finances sound to be okay but a little tight. Why would you do this to yourself?

    Your car has depreciated a lot more than you think -- the new ones are being sold, at least around here, at dead flat invoice - rebate. And unless you have put a bunch of money down -- and it doesn't sound like you have -- you're upside down by quite a bit. Don't get me wrong, Subies hold their value pretty well, but not THAT well. Unless you live in a state that taxes the difference, the tax money is due again also, and that ain't chicken feed.

    You know what, knock 2mph off your speed everywhere, and the safety is the same... the '04 Subies were plenty safe, and 90% of it is the driver anyway.

    Good luck,
    -Mathias
  • geodonnellgeodonnell Member Posts: 16
    Thanks everyone for your responses to my creative financing question. I appreciate the quick response from everyone.
  • seedpowerseedpower Member Posts: 4
    Thanks for the response.

    At this point I am not upside down...I seem to be about even.

    I could slow down 2mph but that won't put side curtain airbags in the car.

    I might put it off 2 months and sell the car. I will then put down 2k...this is what I was thinking while driving to work today.

    thanks again.

    anyone else have any insight?

    -m
  • steine13steine13 Member Posts: 2,825
    If you're going to buy the new car, you might want to hop on over to Real-World Trade-in Values and post the relevant details about your present car.

    Then you'll know to within a few hundred bucks what your situation is, and you can go from there.

    -Mathias
  • isellhondasisellhondas Member Posts: 20,342
    I agree with Mathias. The Subaru you currently have is a very safe car and I think you should keep it.

    If you want to trade a car everytime a new safety feature is introduced you will be on an endless cycle.

    Just my opinion...
  • janzjanz Member Posts: 129
    the best place for a child seat is in the middle of the back seat. This is away from the doors and windows. Not only is this location probably far enough away from the airbags for them to offer additional safety, there are sigificant studies to indicate that the force in which airbags deply can do more harm to infants and children small bodies, than offer safety.

    In our community, we have had 2 infant/small child deaths due to the child being too close to the airbags when they went off, granted the children were were in the front passenger seat.
  • seedpowerseedpower Member Posts: 4
    We use a britax child seat (highest safety rating) and it is positioned in the middle.

     The new subaru has a sensor in the front seat that turns off the airbag if the person is under 75lbs. This is a common feature that should be standard I think. Many childern would have been saved from harm or death had this been standard years ago.
  • leo2000leo2000 Member Posts: 3
    i need advice guys, i financed 2003 vehicle through gmac ive had it for a year now at the time i could afford the payments but about a month i had to get a new job and im not making as much and honestly to the point that i really cant afford the payments and insurance versus my monthly income in others words my cost of living is to high"my son,my rent,other bills etc... at the outcome i have about average credit so i guess what im trying to say is that im trying to get out of this financing situation,i would like a used car just so get by for now and lower my mth. payments i mean! even if its something that will affect my credit ill do it because i just cant afford it anymore so any advice other than changing jobs is greatly appreciated for example: can i just take back and if so what would happen with the actual loan, or should i try purchasing a used before i do anything with the vehicle i have; HELP ME OUT, im trying to weigh my options at this point...
  • bowke28bowke28 Member Posts: 2,185
    the first thing to do is to calm down. this is not a life-ending situation.

    next, what kind of car do you have, how many miles, what payment do you have, and how much too high is it?

    taking the car back is NOT an option. the dealer has no say in anything. if you call the bank to take it back, you will show a repossession on your credit, regardless of whether its voluntary or not. please do not do this.

    third, your negative equity wont make a used car any better, money-wise. keep the car you have. getting rid of it will only screw up your credit. forget about buying a house, having an emergency credit card, or even getting a checking account. also, insurance companies raise rates based on bad credit, so that will offset any drop in your car payment.

    what i would do is get a part-time job for just long enough to get over the hump. mcdonalds is the best option. i know it sounds funny, but thats the truth.

    even 10-15 hours a week can pay your car payment...unless you have a hummer or something...lol.

    take a step back and think logically. an extra 10-15 hours a week working can make the REST OF YOUR LIFE better. bite the bullet and take care of business, my friend. i just wish someone would have told me this 8 years ago...
  • leo2000leo2000 Member Posts: 3
    THANKS MAN, I THINK ILL DO THAT, I HAVE AN IMPALA I STILL OWE A LITTLE MORE THAN WHAT ITS CURRENTLY WORTH BUT THAN AGAIN ON A YEAR TO YEAR BASIS ITS HARD TO GET AHEAD OF ITS VALUE,BUT YEA I THINK ILL HOLD OFF FOR NOW, AND TRY TO GET A FEW XTRA $ ON THE SIDE UNTIL I GET SOME SORT OF EQUITY ON IT, CAN YOU EXPLAIN TO ME THE PART ABOUT THE USED, JUST SO I COULD GET AN IDEA, AT THE OUTCOME THANKS FOR THE ADVICE IT REALLY CAME HANDY!
  • bowke28bowke28 Member Posts: 2,185
    first, take off the caps, dude. its hard to read.

    second, if you bought a used car, you would have a higher interest rate, have to roll the negative equity into the used car, and will have to finance on a shorter term. all-in-all, you probably cant get a lower payment anyway...so you might as well keep the newer car that you know the history of.
  • dbgindydbgindy Member Posts: 351
    Way to talk him down.:-)

    Leo- He's right. Do what you can to keep up the payments on your car. It's not worth the damage to your credit to have it repo'd. Another thing to consider is perhaps contacting your lender and letting them know about the changes in your life. They MIGHT consider reworking(i.e. lengthing) the loan to get the payments lower. It's not a great solution but it's better then screwing up your credit.

    Just my .02.

    Duncan
  • leo2000leo2000 Member Posts: 3
    i really appr. the heads up before i went and did something dumb, so really thanks alot guys!
  • who-knowswho-knows Member Posts: 1
    Hello my name is Ray I'm currently financing 2 vehicles one 02 Chevy Blazer Ls I owe approx 18 on it and it has a trade value of 10,500. reason being is it has 54k miles on it and they are no longer making the it. I also have 02 Mitsubishi Galant De that I owe approx 15k on and it has 31k miles on it. and that has a trade value of 7k. so heres my idea theres a dodge dealer giving 8,000 dollar rebates on remaining 04 caravans. so that8000 will help out some but heres the scoop the msrp is 28,195 and the internet manager says he's dropping the price to invoice and then less the rebate bottom line 20,201+ T/T/T so any ideas see I'm trying to trade in both my cars and only have one car payment and one insurance we don't need 2 auto loans I have a work truck that we owe nothing on nothing fancy just a beater. so this does any one know possibly if theres more room for negotiating or is my idea just wishful thinking
  • steine13steine13 Member Posts: 2,825
    First up, here's some extra punctuation that you can use until you get your own: .,;?!
    Seriously, it's hard to read the way it is.

    Secondly, I commend you for being realistic about the trade-in values of our cars. At least ball-park, the Blazer sounds right to me; the Mitsu seems low, but is probably true as well.

    I got the part with not needing 2 car payments. Why do you need to buy a new minivan? Unless you can come up with $8k in cash -- and we wouldn't be having this conversation if you could -- your only rational way to downsize is to sell the Blazer and keep the Galant.

    Sell the Blazer on the street, not to a dealer, and you'll have a little jingle left over.

    If you MUST have a new minivan, at least get one that doesn't depreciate like a rock, and get one that is known to be reliable over the long haul. I.e. Odyssey or Sienna.

    But not only is the $8k neg. equity not going away, you'll be out a ton of taxes and fees, and you'll be worse off.

    Good luck,
    -Mathias
  • augiaugi Member Posts: 1
    Hello. my wife and I are in quite a predicament!! Our lease for our 2001 Subaru is ending in August. We are going to turn it in and want to buy another car. The problem is this. My FICO is 623, her FICO 604. She just graduated grad school and finances have been tight. But now she will begin working and we can afford to buy a car. The finance manager at a Subaru dealer told us that we would have to pay about 19% interest. I know our credit is poor, but I am a little shocked by this rate. We would like to know if you think this sounds right. And also, should we lease again until we restablish our credit? If we can even do that. We are very concerned about this. Thanks very much.
  • KCRamKCRam Member Posts: 3,516
    Hi augi

    Yup, those are low credit scores, and you'll either be paying double-digit interest with a high down payment, or you may need a co-signer to get your rate down. Having the lease will help your cause; it shows that you have had an automobile payment already and successfully completed it (although late payments will hurt you).

    Most importantly, keep your expectations reasonable - just because you feel you can afford a more expensive car, do yourselves a big favor and keep your sights low - think about a late model used car over a new ride. You want payments that won't gurt you and will build that credit score, not one that fills out your budget.

    kcram
    Host
    Smart Shopper and Wagons Message Boards
  • fredvhfredvh Member Posts: 857
    Is there a web site where one can calculate whether to take the rebate vs. a low interest rate loan which includes a calculation for interest earned(including various tax rates) on the amount that is being financed?
  • jasmith52jasmith52 Member Posts: 462
    Try this calculator:

    http://www.auto-loan-calculator.bz/auto-lease/auto-lease-calculat- - - ors/lease-vs-buy-calculator/

    This calculator takes into account your investment return of down payments and rebates.

    You'll have to play around with the down payment by adding rebates or changing the available interest rate. In other words just add the available rebate to the down payment. Or for the low rate option don't add the rebate to the down payment but adjust the loan rate to that offered by the manufacturer.

    For after tax returns you'll need to adjust the investment interest rate to reflect your tax rate.

    So if you can get a before tax return of 10 percent on your down payment and you are in a combined federal and state tax bracket of 33 percent. Then the net after tax investment return rate will be 10 *(1 -0.33) = 6.66 percent.

    You might want to subtract off an inflation rate too, If you want to be strictly correct.
  • leeandginaleeandgina Member Posts: 38
    I was just curious about the range of finance deals mentioned here, esp with people with good credit getting poor deals. My wife and I have a few issues in recent times so our score was not good (575). However, our local Volvo dealer (Rahal) got us 2.9% APR over 5 years on a new S40 2.4i thru Volvo finance with just 1500 down (and they paid our last 3 lease payments on our current car too). We were very happy but is this an unusual deal?
  • lancerfixerlancerfixer Member Posts: 1,284
    You're kidding! Wow.
    Auto pros...is this unusual?
  • isellhondasisellhondas Member Posts: 20,342
    A 575 Fico score is, well...pretty bad.

    Some companies will reach pretty deep when they have a lot of cars to get rid of. They will take much greater risks than usual.

    I could be wrong but I think the S40's have not doen will for Volvo and they are pushing hard to move them.

    It's a flat rate, a person is wither approved or they are not.

    Believe me...those last three lease payments were paid by the buyer.

    BUT...it sounds like they are happy and that's what matters!
  • lancerfixerlancerfixer Member Posts: 1,284
    Yeah, I could see them moving the old style S40s agressively, but this is the new 2004.5 model...from what I understand, it's doing OK. Am I wrong about this? I know the old body style is distressed merchandise, but the new ones, only weeks after intro?
  • leeandginaleeandgina Member Posts: 38
    Just to confirm, it was a 2004.5 S40, in fact the dealer had to locate it and bring it in off the docks to get the right spec car we wanted. I agree that we helped pay those lease payments too but the deal as a whole was a very good one for us (with having a poor credit score). The payment is just under $480/month inc tax over 5 years, with 12% APR we were offered by roadloans the price would have been over $600/month.
  • whoknows3whoknows3 Member Posts: 1
    Hello Mathias, Thanks for the punctuation. I have already thought of just selling the blazer on the street but who would pay 18k for a blazer that has 54,000 on it and it's an 02. Not only that but a bank won't loan more than the vehicles retail value. I really don't need a minivan. I just thought the large rebate would help! I'm not rushing in on anything just taking my time waiting for something good. Who knows maybe the LOTTO! LOL! Thanks Ray
  • steine13steine13 Member Posts: 2,825
    Ray,

    "[...] 02 Chevy Blazer Ls I owe approx 18 on it and it has a trade value of 10,500."

    I apologize. When I first read the above, I somehow got "owe $8k on a $10k vehicle".

    My advice was completely wrong, and I need to work on my attention span.

    No, your best bet is to keep what you've got, grit your teeth and pay it off. Being $16 in the hole is no fun, but if you can keep making the payments, it'll go away.

    Good luck -Mathias
  • rroyce10rroyce10 Member Posts: 9,332
    ........ Lance, I'm sure there's a little more to this than what meets the eye .. 2004.5's (they should have just made it a 2005) is a new vehicle from the ground up and the Volvo dealers are doing very well with them, they run "around" $28/$29 with all the stuff ... like I said, there's more to this than meets the eye, low score bad credit, no rebate and not enough money down to even cover the taxes.? ~ okay, whatever you say ...

                             

                               Terry.
  • isellhondasisellhondas Member Posts: 20,342
    They gave those new S40's some rear legroom!

    The last editions had FAR less legroom than a Civic!
  • lancerfixerlancerfixer Member Posts: 1,284
    I seemed to have a bit more when I checked a 2004.5 out, but I still could not get the driver's seat adjusted to my liking if my son's rear facing car seat were behind it (I measured.)
    It seems like it'd be asuper car for singles, young couples, or families with kids who are big enough for forward-facing seats or boosters. I wouldn't put teenagers or adults back there for anything but short trips, though.
  • borathborath Member Posts: 10
    Was wondering if someone could help me with some questions I have.

    1. How is finance charges calculated? I got a really good deal on a new car, but the fiance charges are pretty high. Curious as to how they reached taht number.

    2. Is there a penalty if I have a 60 month loan and I pay it off faster?

    3. Also curious about how credit scores work if there is anyone familiar with it. Let's say someone has no credit and just recently starts making payments on time etc...What would their credit rating be under that circumstance? Does everyone start off with a perfect score and it lowers from that point or how is the initial score calculated?
  • CarMan@EdmundsCarMan@Edmunds Member Posts: 38,514
    Hi borath. There is a great article here at Edmunds.com on how to calculate finance payments. Click on the following link to check it out: Simple Finance Calculations - You Do The Math. You can also use the convenient calculators that are available here at Edmunds to calculate what your payment should be: Edmunds.com Financial Calculator Suite. Most banks do not charge a pre-payment penalty on auto loans, but it never hurts to ask. If you feel as though the interest rate that you were quoted by your dealer is a little on the high side, you can always apply for an auto loan on your own through a local bank. Getting pre-approved to finance the car or truck that you want serves two purposes. One, it gives you a good idea of what sort of interest rate you can expect. And two, it motivates the dealer that you are getting your new vehicle from to try to beat the rate that you have already been approved at. The following are a couple of articles that are available here at Edmunds that will help you understand how credit scores work: Credit Tips - Getting The Best Deal On Your Car Loan, Credit Basics - Some Basic Truths, and Credit Scores Demystified - Getting the Numbers.

    Car_man
    Host
    Smart Shoppers Message Board
  • bowke28bowke28 Member Posts: 2,185
    gotta be a bank lease...

    the "12%" they were quoted might be a 0.120 money factor.
  • bowke28bowke28 Member Posts: 2,185
    a couple small things to help educate you:

    "off the docks" is a lie...they will get it from another dealer. the ones at the dock are all specced out for a specific dealer already.

    "$480/month inc tax over 5 years"

    hmmm...lets do math here. 480x60=28800...BEFORE interest.

    i would never recommend someone leasing for more then 3 years. if you can do a 3 year lease, then by all means, do it...but this smells of b.s. to me.
  • grandtotalgrandtotal Member Posts: 1,207
    Before you go off educating people you should take the time to read the original post properly. The poster said:
     
    The payment is just under $480/month inc tax over 5 years, with 12% APR we were offered by roadloans the price would have been over $600/month.

    If you assume 12% interest, $600 per month and 60 months the principal is just under $27000. Working backwards, with a monthly payment of $480 that would indicate an interest rate of 2.61%. $27000 including taxes looks to be enough to buy a 2004.5 V40 to me.

    You said ...but this smells of b.s. to me.

    I think an apology may be in order, but the poster should probably not hold his/her breath.
  • bowke28bowke28 Member Posts: 2,185
    all good points...except they are a 575 beacon with extra payments being rolled in. no way in hades they are getting 2.6%...or even 6.2%.
  • stickguystickguy Member Posts: 53,330
    IIRC, it was a subsidized program by VMC, so the normal bank rules may not apply.

    2020 Acura RDX tech SH-AWD, 2023 Maverick hybrid Lariat luxury package.

  • bowke28bowke28 Member Posts: 2,185
    a 575 beacon isnt getting a special rate.

    you notice that all he told us about is the payment and not the "better" rate he got?

    ive been doing this a long time, and i know a long-term lease deal when i see it.
  • jscmpvjscmpv Member Posts: 1
    Our lease is up on my '00 Mazda MPV in Aug. '05. I was allowed 60K for the length of the lease. I'm at 73K now. Cost for excess mileage is $.15. Buyout at end of lease is $10,426. Our current payments are $399/mo. Our understanding is that we'd owe $16,012 to get out of the lease, is this correct (14 payments plus buyout)? Should we trade it in now, or wait 'til end of lease?
  • bowke28bowke28 Member Posts: 2,185
    "Our understanding is that we'd owe $16,012 to get out of the lease"

    no. call your leasing company, and they will tell you how much...chances are, it will be a bit less than that.

    what i would do is park it for a year, buy a $1000 car, and drive it for the year. you will spend alot less this way.

    next time, dont lease more than 3 years, and know your driving lifestyle before you do.
  • johnnypicjohnnypic Member Posts: 11
    I just bought a 2004 honda accord EX V6 with Navi. on May 29 2004. I got approved at the dealer for 3.9% he ran my credit and offered me that rate 60 months with Honda financing. I signed the contract and it does state that it is for 3.9%. I recieved a letter from honda financing last night say that they regret that they cant offer me financing.
    The finance manager at the dealership is aware of this and is working on the problem.

    What would my options be? I already have the car and my first payment is in July. I dont want the car if it is at a higher percentage rate.

    I could use all the advice I can get.

    Thanks.
  • rroyce10rroyce10 Member Posts: 9,332
    ........ Unfortunately, you don't *Qualify* for Honda's special rate ..

                     Could be a few late bills in the past, maybe your debt ratio is too high, could be not enough time on the job, maybe too much negative equity in the deal, I can't say without seeing the paperwork ....

                      But the question is: why wouldn't you still want the vehicle if the rate was fair in the market.? .. you *qualify* for what you qualify for, it's a credit thing, not a vehicle or a dealer thing .. perhaps your bank or credit union can help.

                              Terry.
  • stickguystickguy Member Posts: 53,330
    Legally, I believe you have the option of returning the car if they couldn't finance you as agreed. Of course, unless you have really bad credit, isn't a "normal" rate still in the 6-7% range? If so, there really isn't that much difference in payment, and if yo ucan't handle the higher amount, you might be in over your head anyway.

    2020 Acura RDX tech SH-AWD, 2023 Maverick hybrid Lariat luxury package.

  • johnnypicjohnnypic Member Posts: 11
    I'm confused because I was approved at the dealership. The finance manager ran my report and told me that I can have it at 3.9% for 60 months. I even signed off on the paperwork stating that I'm being financed for 3.9%

    Paying 3,000 in Interest is a lot different than paying 11,000
  • leeandginaleeandgina Member Posts: 38
    Sorry i havent kept up with the comments but everything i stated was true. I can fax you the agreement if you like :)

    The last 3 payments on our current car were $2367. The total price for the Volvo, OTD was $27100 after the $1500 down. The Volvo itself was $26832.55 (sticker was $26300). I know we helped pay off our lease but the above deal was with a check for $2367 from the dealer too.

    IT WAS NOT A LEASE.

    $27100 over 60 months, 2.9% APR was $485.73 through Volvo financial. Terry, im happy to give you more info via email if you dont think its true. Roadloans offered 12.9% APR with a max loan of 35k on a new vehicle. The same car, assuming the same deal from Volvo would have been $615.32. Yes, we were amazed and very happy to get 2.9%.

    Finally, the "at the docks" was a figure of speech. The sales manager said the car was new allocation to them but it was at the port where they arrive from Europe. The car arrived on a Transporter and had 7 miles on it when we collected it.
  • bowke28bowke28 Member Posts: 2,185
    to beleive that someone with a 575 beacon got 2.9%. ive been doing this a long time, and have never seen something like that. heck...the 12.9% would be competitive with that score.
  • isellhondasisellhondas Member Posts: 20,342
    Desperate companies do desperate things.

    I've seen Ford buy people that ought to be in jail!
  • bowke28bowke28 Member Posts: 2,185
    yes...but not at 2.9%.

    i have a 605 and was lucky to get 8.49 on a $13k focus...they are borrowing $30k.
  • lancerfixerlancerfixer Member Posts: 1,284
    And isn't Volvo Ford's only profitable division right now?
  • bowke28bowke28 Member Posts: 2,185
    i just dont see how a 575 was approved at 2.9%. id LOVE to talk to that F&I guy...get him working for ME!!!
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