Questions About Financing New Vehicles

anonymousposts · June 2004

Generally in leases the owner and the leasing company are co-owners. You can sell a leased vehicle any time you want as long as you send the leasing company the ENTIRE payoff (residual + total of remaining payments - sales tax if selling to a dealer).

KCRam · June 2004

Having leased before, bioth through the manufacturer and a bank, I can tell you beyond any doubt that as a lessee, you do not own anything. The registration will always have the name of the owner/bank, not the driver/lessee. The whole issue in some states about vicarious liability and leasing is because the bank is the sole owner of the vehicle and that law specifies that the owner is fully responsible for damages incurred, not the driver.

When you desire to sell your leased car or truck, you must buy it from the owner first. That means paying them what they tell you the payoff is to staisfy the terms of the lease AND covering the residual value, egardless of how far ahead of lease termination you are. Once they receive payment in full, they send you the title. Regardless of any pre-arrangements you make with a person or entity who wishes to buy the vehicle,

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mfullmer · June 2004

here: http://www.edmunds.com/finance/leasing/articles/48958/article.htm- l

Correctly, it states the differences between leasing and financing in #9 - Leasing="You do not own the vehicle"

stickguy · June 2004

regardles of who technically "owns" the car, if you finance, the bank controls the title (even if it is in your name). Similar to a lease, you can sell the car anytime you want, as long as you pay the bank what they are owed (at which time they will release the title to you).

Biggest practical difference in my opinion is that with a loan, it's just collateral, and the bank could care less (or will never know)what you do with the car, as long as they get the payments. With a lease, they do care how you treat the car since tyhey are getting it back. Maybe more accurate to say they don't really care about the car, just getting paid for any damage you do to it.

natashadt · June 2004

I'm a 20 year old college student. I plan to buy a car within the next 3 to 4 months. I am going to make at least a 3 thousand dollar down payment. I don't have a good credit score because of no credit and I am thinking along the lines of purchasing a honda civic or toyota echo. My question is how much can I expect financing to be over 5 years? And am I going about this the right way?

kevhead · June 2004

I recently ordered an 04 Acura TL and I am a salesman who puts on approx 30,000 miles a year. What is the best way to take delivery of this vehicle? I get a new vehicle every 3-4 years and my goal is to have the lowest monthly payment and to have the least amount of expense after 3-4 years. This is a new position for me and I'm not sure what is going to work best. Should I lease & pay the mileage penalties? Should I finance over 60mos and hope the trade in price & what I owe on the vehicle is close? What about a balloon loan with the hopes that the vehicle is worth what I owe after a few years? I need HELP!!! I know that I will have to pay something.

bowke28 · June 2004

i NEVER said that you OWN a car that you lease. secondly, selling a leased car is NO DIFFERENT from selling a financed car. the title is not free to sell either way until the bank receives payment in full.

when my customers sell their leased cars, they contact the bank, find their current buyout amount, and arrange payment from the buyer to the bank. the bank then faxes or mails a release statement to the DMV, stating that its OK to transfer. there is no difference in this than a finance lien.

more often, however, my customers bring their buyer to us and have us do all the financing and transfer work. this makes for a 1-stop process, and allows the lessee to get another vehicle immediately.

please dont try to say i dont know what im talking about, terry. ive been working in lease renewals directly with ford and honda for the last 3.5 years. you are the expert in used cars, and i could use more knowledge there, but there ARE things that others know that you do not.

bowke28 · June 2004

i would say to go to a 3 year high-mileage lease. your monthly payment will not be much different than a 5 year finance payment, and you will stay close to your mileage.

regardless of how you buy the car, you will pay for the mileage you use, whether its in mileage penalties, lease payments, or depreciation on trade-in. if you want to minimize the amount you have to come up with when you trade again, then a 30k mile per year lease would be the best protection.

mfullmer · June 2004

I'm trying to talk legality and common sense to someone who only knows how to speak double talk.

Try this: Call up Ford Leasing or any other lease company and ask them who the vehicle owner is and whether or not the lessee is an "owner". Call up Ford Credit or any other lender and ask them who the vehicle owner is and whether or not the lender is an "owner".

bowke28 · June 2004

again...and im giving up on you after this...i NEVER SAID A LESSEE IS THE OWNER.

i said that the lessee has the same RIGHTS to sell the car as a person who used traditional financing.

godflesh12 · June 2004

Rent a van for the trip.

mfullmer · June 2004

Actually this all started by you saying that someone who purchased a car but financed it didn't own it.

We got all of track but that was my original issue.

KCRam · June 2004

There are different laws regarding resolution of a lien versus selling something you don't own. You are confusing "rights" that are backed by law, with "procedures" which in this instance are similar.

I have the right to sell a condo because I own it. I have no right to sell an apartment because I am simply leasing it and hold no ownership of the property. For me to sell the apartment, I would have to buy it from the owner first. Same with vehicles.

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godflesh12 · June 2004

The last couple of pages have turned into a pissing match. The problem is that bowke is right, Terry is right and isell is right--if you read post x, y and z.

I would not read this thread and consider myself educated in leases, that's for sure.

bowke28 · June 2004

"For me to sell the apartment, I would have to buy it from the owner first."

EXACTLY!!!

and thats exactly what you do to sell a leased car or a financed car. the difference between an apartment and a car is that the language in the auto lease contracts specifically says that you can sell it upon the leasing company being paid in full per the contract. the language on a finance contract is no different.

similarly, neither is the language regarding damage to the car. if you buy it from the leasing company, whether to sell it or keep it yourself, then the damage becomesyour problem anyway, and not the leasing company's.

rroyce10 · June 2004

.... ** ive been working in lease renewals directly with ford and honda for the last 3.5 years ** ....

              3.5 years .? ~ golly ghee I'm impressed, thats about the same time I put my sister in the car biz and she doesn't yet have a grasp on it either ..

                 I hate to tell you this, but I was leasing vehicles in 1989 so I have seen a "Ton" of leases, good and bad .. but thats ok, obviously it's *your world* and we are just living in it .....

                              Terry.

bowke28 · June 2004

" I was leasing vehicles in 1989"

so you were leasing vehicles when they were set up different, and i work with them NOW...hmmm...

if someone learned to work on commodore 64s, i wouldnt want them working on my dell...would you?

audia8q · June 2004

your debating this with the wrong guy...

bowke28 · June 2004

no...i will debate with anyone when i know im right.

;-)

mfullmer · June 2004

Ok, now I'm really scared. Are you really in the new car business? If so, you need to take a Financing 101 course. I just looked at two different lease contracts, one from GM and one from Lexus (plus I looked at a website whereas the Federal mandates for lease verbage are posted) and they both said the same thing:

1. "This is not a purchase agreement. You are not buying the vehicle. By signing this lease, you are agreeing to transfer ownership of the vehicle from the previous owner (dealer, if new) to the lessor. By signing this lease you are agreeing to pay the owner (lessor) for the priviledge of use of the vehicle for the specified terms agreed to."

2. "Prohibition of transfer of your interest. You will not sublease or otherwise transfer any right or interest you have under this lease, or in the vehicle without our prior written conset. You may purchase the vehicle from the lessor at any time, with prior consent of the lessor, for the full amount of the outstanding payments and residual value (payoff amount)."

Hmmm. Let's see. You didn't purchase the vehicle. Your name is not listed as the "owner" on the title. You may purchase it from the owner at any time. What part of that tells you the lessee can "sell it upon the leasing company being paid in full."????

AND what part of that is anything like a traditional financing agreement?

mfullmer · June 2004

God, I know I'm spinning my wheels here but it is just so scarry that someone that is truly "in the business" really doesn't understand the concept of "rights" of an "owner".

lancerfixer · June 2004

Dude, stop digging (actually, don't...this is some of the best entertainment I've had in a while.)

mfullmer · June 2004

"i NEVER SAID A LESSEE IS THE OWNER.

i said that the lessee has the same RIGHTS to sell the car as a person who used traditional financing"

Ok, if you really still think this, go to YOUR SALES MANAGER and ask him if a customer can trade in a vehicle (sell to you) if he does not own it.

sandman46 · June 2004

I'm quite amused reading all these posts also. Sometimes it pays to just shut one's mouth and watch what happens.
Terry, I'd be happy to buy a car from you anytime...I don't know you by sight, but I have tremendous respect for you in that you give so much of your free time to everyone here and are still able to run a successful business.
May g-d bless you!

The Sandman :-)

dbgindy · June 2004

This reminds me of the old line in a Jim Croce song" You don't tug on Superman's cape.". It's a misunderstanding ease back......

Duncan

isellhondas · June 2004

What would I do? I would keep it at least until it's paid off. It makes a great family car! You sure don't need an SUV for that!

isellhondas · June 2004

You are out of your class and you are totally embarassing yourself!

Give it up...you are embarrassing ME!

Any you are in the business???

bowke28 · June 2004

"ask him if a customer can trade in a vehicle (sell to you) if he does not own it."

if its a leased vehicle, then yes they can. we do it all the time.

also, with your language from the lease contracts, it specifically says that the lessee may buy it at any time. selling a leased vehicle is just that...the lessee must buy it to sell it, but those 2 transactions are most often done at the same time, and mostly at a dealer.

also, the leasing companies waive the need for written consent if they are paid in full (residual+total of remaining payments).

jkwtrade · June 2004

I am looking for a new midsize SUV. My FICO is 658 with Experian and 653 with Equifax. Does anyone know what manufacutures have the best financing deals with this type of score. I am paying off a credit card this week and will hopefully be above 660 in the near future. I believe 660 is the minimum at most lenders to obtain Tier 2 rates.

Thanks for the help.

isellhondas · June 2004

It usually takes a 740 score for the best rates.

A 660 MAY get you into the second tier depending on the lender.

nomad2172 · July 2004

I am currently in the market for a new 2004 Jeep Wrangler. I was able to get 1% under invoice plus a very good trade in value of 11K for my 2000 Wrangler. Chrysler Financial is offering 1000.00 off if I finance through them. I am prepared to pay cash up front but then I lose the 1000. Is it better to pay the cash or go with the lowest loan they offer at the shortest time or would I lose the 1000 in interest anyway?

stickguy · July 2004

take the loan and the $1000. Just make sure that there isn't a prepayment penalty and pay off the loan after the $1000 is officially yours (in case there is a minimum hold time of say 3 months).

stickguy · July 2004

Actually, I think you are usually better off with a large rebate on a cheaper car (4K on a Cavalier is a no brainer). Simple math: calculate the loan amount, and see what the total interest paid is. If it is less than $1000, take the loan.

Sylvia · July 2004

A newspaper reporter is hoping to talk with people today, July 7, 2004, who waited to buy a vehicle in hopes generous incentives would come back...and is now reaping the benefits. Please respond asap, no later than Tuesday, July 7, 2004 to jfallon@edmunds.com with your daytime phone number and a line or two about your automotive experience and plans.

Thanks,
Jeannine Fallon
PR Director
Edmunds.com

bsumm · July 2004

Does anyone have any experience financing thru Capital One? They seem to offer the best rate (4.55% for 3 year term for used car) in my area. Thanks in advance!

audia8q · July 2004

We have accepted checks from Capital One loans....but there is something you must know.

The color of the check determins stipulations.

They have a green check and a blue check. One of them allows the buyer to essentially buy what they want. The other color has all kinds of hoops to jump thru, like amount financed may only be XX% of invoice, no trade payoff, etc. One is for people with great credit and the other one is for people with sketchy credit.

I can't remember which color check was the good one.

bsumm · July 2004

Wow, good info. What about E-Loan?

isellhondas · July 2004

It's the blue checks that are good. The others are next to worthless and we won't take them.

I thought E-loan went out of business as most of these upstarts have. Maybe not.

No dealer is going to allow one of these companies to make them jump through hoops or beg for their money.

These rates can usually be matched anyway. I know I would gladly pay an extra half point to deal with a local bank or credit union than some faceless enity.

mfullmer · July 2004

For me the large "faceless entities" are the way to go. This is not someone giving you a personal loan, they are a business loaning you money for an asset. I couldn't care less what they look like or how soft the chairs are in the waiting area?

For me, my first thing is rate then it is being able to pay from their website instead of through check or through my bank. Those small, local banks and credit unions usually don't have a website where you can pay by them pulling from your bank.

The problem I have run into paying these kinds of operations directly through the bank or bank bill pay is that they can't electronically send the money to them either so it just gets paid by a paper check. Of course the bank debits your account upon writing the check (meaning you loose the "float" interest) and you have no way of telling whether or not the check got there until you call.

bsumm · July 2004

I found out today that E Loan (thru my Sam's Club membership) will give me a 3 year @ 4.45%
The best Capitol One would offer was 5.45%! And they wouldn't go any lower and try to match or beat E-Loan. This seems strange to me. I'm obviously gonna go with E-Loan.
Thanks for the input...

audia8q · July 2004

you say...meaning you loose the "float" interest

Come on....float interest? Can you put a pencil to that for me. How much are we talking about here???

jayhawk · July 2004

I am looking into purchasing one of the following vehicles, a Honda Accord, Acura TSX or Mazda 6. My FICO scores: 671 Experian, 658 Equifax & 647 TransUnion, I went thru a bankruptcy over 4 years ago, but have had two car loans since albeit w/ higher rates. Same job for the last 5 years with good income & little debt, so I have made some progress. My question (I apologize for being long winded), can I expect low(er) rate financing this time, maybe not 0% but at least below 7%? Any help or guidance would be appreciated.

steine13 · July 2004

Who cares who they are as long as it's THEIR money? Now when it comes to putting MY money in the bank, I'll deal with the locals, thank you very much. Federally insured, too.

Same with the mortgage, keep it simple, no escrow, no PMI, no they pay my insurance, no nothing. But on a car loan I wouldn't worry about it, as long as you can verify your transactions online.

-Mathias

mfullmer · July 2004

Why put a "pencil" to that? Money is money and interest is interest. Whether it's .11 or $11.00, I couldn't care less. Those with a large amount of savings calculate their income using their earned interest also. Would you be willing to give up your "income" just to work with a pretty/handsome face and pretty surroundings? The interest isn't my main concern. Why have the bank deduct the funds from your account when it is days from being credited to the other account?

mfullmer · July 2004

I'll deal with the locals, thank you very much. Federally insured, too.

All of the large commercials are Federally Insured. I don't mind using local banks, if their interest rate (to me) is good and they have a policy of free ATM use. When you travel all over the country/world is it worth that "local feel" to be charged for every ATM transaction?

Same with the mortgage, keep it simple, no escrow, no PMI, no they pay my insurance, no nothing.

While "no PMI" is all dependant that you put at least 20% down, which I totally agree with, the escrow thing is good and just makes good sense. If the lender will knock off .5% of interest or .5% points of, say a $400,000 mortgage, that is going to save you a hell of a lot more money than say your $450/mo is going to earn you in the bank. Banks make a lot of money off of people thinking they are "in control", when in fact you are not at all. The insurance and the taxes are still going to get paid regardless. One way saves you money paid in interest (net) and one way costs you money paid in interest (net). As Clark Howard says, "No one gets rich paying interest...". Although most people must have a mortgage, why pay more interest that necessary just to feel "in control"?

anonymousposts · July 2004

"If the lender will knock off .5% of interest or .5% points of, say a $400,000 mortgage, that is going to save you a hell of a lot more money than say your $450/mo is going to earn you in the bank"

That statement is so true. We bought our latest house when the rates were 6%. When the rates dropped we refi'd at 4.1% fixed for 15 years. Knocked $100,000 of interest off. And that's before we take into account the 6 extra mortgage payments we make a year.

mfullmer · July 2004

Good deal. I'm at 3.75 with a 7/1 ARM and love it. That is using CitiMortgage's escrow service. I actually don't mind not wasting my resources (checks, postage, time, risk of it getting their late, etc) to mail those huge property tax checks to the county.

anonymousposts · July 2004

I love escrow as well. Either way you are paying for it but it doesn't hurt as much when you don't have to write a separate check for the taxes. It's a mental thing I guess. Besides, when we sold our last house we got money back from Escrow so that was a nice bonus. Even though, again, it was money that we had already paid in.

isellhondas · July 2004

I was thinking the same thing. It's like picking at specks. Maybe I'm old fashioned...I admit it. I like dealing with people I know and trust even if it costs me a bit more. The difference w'nt amount to a hill of beans on a short term car loan.

Then, I don't go to Supercuts either.

natashadt · July 2004

I'm looking into buying a 2001 Nissan Sentra. It is used (of course) with 16,000 miles. The dealer's list price is $8,444. Is this too much or too low? Should I finance through the bank? How does the process go? I want to make a down payment of about $1,000-$1,500. Help please

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