Questions About Financing New Vehicles

steine13 · July 2004

...the reason it's not completely off topic is I have in the past taken out extra money when refinancing and bought a car with it... just pay it off fast enough, otherwise it's a 180-month auto loan...

Anyway, the reasons for not escrowing are as follows:

If I pay it myself, I control that it gets done. If I want to pay winter tax twice in a calendar year to maximize tax savings, i can easily do so.

Some lenders "forget" to pay property taxes, or drag it out forever, and in some cases, it has gone into the first steps of foreclosure proceedings. If that happens -- however unlikely -- you're caught in the middle, and what are you going to do about it?

Then there's the scam -- popular at Chase, i heard -- where they don't pay your insurance until it lapses, then substitute their own at twice the price. Mortgages are tightly regulated, nobody messes with that, but the "extras" aren't, and it's pot luck.

Or what happened to friends of ours; escrow ran low, they had to pay "extra" for a while, then they ran a $1,500 surplus. When they wanted the money back, the got the runaround over who owed it to them, seeing as how the mortgage had changed hands 3 times...

Last year we refinanced and dang if the title company didn't tack on $1k or so for "taxes" allegedly paid to the City. Right. If we had been escrowing, I might have fallen for the scam.

None of this "should" ever be an issue with a reputable lender. But I'd rather not worry about it.

-Mathias

mfullmer · July 2004

I've never once had a problem. One of the other great reasons to go with a large financial institute - you can check things out online 24/7. Also, the county I live in has a website where you can see when they receive the payment.

To each his own, I guess.

hospsafe · July 2004

I currently have a 2001 EB Expedition with 42,000 miles on it. The lease runs out next May. 2 Questions. I am ready for either a 2004 or 2005 EB Expedition. One, does anyone think that Ford will let me out of the lease this early providing I get another Expedition? Second, this time I want to put it in my company's name. What kind of documentation do I need to bring to the dealership in order for this to happen? Thanks for your help.

bowke28 · July 2004

most likely, yes. with little debt, good income, and a score in the mid-6's, as long as you are borrowing less than the value of the vehicle, you shouldnt be higher than around the upper 7's, low 8's at the worst.

******disclaimer******

im not quoting you a rate, nor guaranteeing that you will get that number...this is an educated guess.

lilmiss74 · July 2004

Anyone have experience with mycarloan.tv? this is a site that advertises they will work with you if you have bad credit. Thanks to all replies.

jayhawk · July 2004

Thanks for the reply, I was able to pre-qualify at a newly joined Credit Union for 6.5% @ 60 months.

dennis3 · July 2004

are rebate taken before sales tax is computed . the dealer is takeing the price of the car adding their paper fees. coputing sales tax then after the tax is added then minus the rebates. i'm in ct.. is that the correct way?

audia8q · July 2004

In CT, all rebates are taken off the bottom line, after taxes and fees. So your dealer is correct.

mfullmer · July 2004

I'm about 6 weeks away from my new MINI coming in and was going to go over to Capital One and put in application when I received my credit union statement in the mail yesterday. They have always been a good point higher in their interest rates so I hadn't gone with them in awhile but they have lowered them - New car loans, to 75%, 3.95% to 60 mos.

Of course I applied right away!

CarMan@Edmunds · July 2004

Hi dennis3. In most states how sales tax is calculated on vehicles that have incentives on them depends upon what type of an incentive it is. Most states treat dealer cash incentives as manufacturers' price adjustments and calculate tax after they are deducted from the car or truck's price. Consumer incentives on the other hand are treated as money that is given to consumers and are usually taxable, meaning that tax is calculated before they have been subtracted from the vehicle's price.

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CarMan@Edmunds · July 2004

3.95% is a heck of a low rate, mfullmer. I would have financed through them as well, especially when BMW Financial Services' standard rates on Minis are around four and a half percent. Which model are you going with, the Cooper, Cooper S, or the really neat new convertible that Mini is introducing? I played around with the convertible at one of the auto shows recently and loved it.

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CarMan@Edmunds · July 2004

Hello hospsafe. Ford does run early lease termination programs on certain models from time to time. I have seen this sort of promotion on the Windstar and Explorer recently, but I do not believe that Ford has ever offered the ability to terminate leases early to Expedition lessees. As a result, unless Ford unexpectedly introduces this sort of program on the Expedition, you will not be able to get out of your '01 Expedition lease early without making the rest of your payments or purchasing your leased truck and then selling it or trading it in, which could end up costing you quite a bit of money.

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mfullmer · July 2004

I'm going with the standard Cooper because my Partner does not like to drive a manual and, truth be told, I would probably have gotten tired of it with all of the commuting I do. The Cooper S only comes with a manual.

I love the look of the convertible when the top is down but cannot stand the look of it with it up. Plus, BMW has just last year finally worked through most of the problems the early MINIs had. I'm afraid that with all of the new changes a convertible presents that I wouldn't want a first year one.

The cool think with the MINI is that you can get all of the options on either one of the models. Since I am keeping my Lexus and swapping a Tahoe for the MINI I wanted to get as much "luxury" as I possibly could. Fortunately with MINI even after I had loaded on every option possible it was still under $27k.

amitflo · July 2004

Hi I am interested in purchasing a used vehicle and planning on financing it for 5 years. Because I am getting a new job and moving, I want to keep my monthly payments initially low until I settle down.

I want to be able to get a flexible loan that does not penalize me for prepaying or paying more than my monthly payment. Is this possible? and what type of loan would let me do this. Any keywords I need to look out in my contract?

Any help would be highly appreciated.

bowke28 · July 2004

the only auto installment loans that penalize you for pre-paying are the secondary, high-risk loans.

most of the time, they are simple interest loans, and only charge a small fee if you pay it off within the first 90 days.

mfullmer · July 2004

I don't know many standard car loans out there that would penalize you for an early payoff or paying more each month. Most people rarely keep vehicle through their whole financing term anymore so it's rarely an issue.

Where are you looking at financing? The terms should be pretty well documented.

amitflo · July 2004

Thanks for the reply bowke28 & mfullmer. I am currently evaluating my options from loans offered to me through places like LendingTree.com. I am a first time auto buyer and I guess I just wanted to make sure!

After doing research online and hearing about the Rule of 78's etc, I just want to be able to read the terms of my loan and not get caught in anything thats troubling down the road.

Thanks!

mfullmer · July 2004

Very good thinking. You're on the right track.

mfullmer · July 2004

CarMan. What do you know about the "Toyota Touch Preferred" program? Specifically, can the vehicle be sold/loan paid off at any time like traditional financing or must the term be completed, as in Leasing. Also, are the rates on these the same as traditional financing or higher/lower? Also, do you know of the TMCC rates in the Southeast for the Solara Convertible?

Thanks

CarMan@Edmunds · July 2004

Hi mfullmer. I am not all that familiar with the "Toyota Touch Preferred" program that you mentioned in your post. I have a feeling that this may be some sort of balloon note program. If this is the case, trying to get out of your contract early would be very similar to trying to get out of a lease prior to its scheduled termination date. As I am sure you are well aware, the sale of Toyotas is a little different in the Southeastern U.S. because they are sold though a distributor. It does not use the same bank as Toyota does in the rest of the U.S., Toyota Financial Services. Instead it uses its own bank SE Toyota Finance. I do not know what sort of rates SE Toyota Finance is providing at this time. Sorry that I could not be of more help.

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drew107 · July 2004

I purchased a 1999 Toyota Camry with 30+ miles from enterprise rent a car for about 17K. now i have about 102K miles on the car with several problems. my ac is shot and i just got my carpet flooded so i have to repair that too. i'm ready to get out of this car but i still have some money left on my current note.

ewalker · July 2004

I just found out my FICO score for the first time and it is abysmal. I would like to purchase a new car, BUT I don't even know if I can get a loan AT ALL.

Advice?

bowke28 · July 2004

with good income and little or no debt should be ok.

as long as the score is OVER 620, you can get a decent rate through nissan on a new car.

ford also dips down a bit more for retail AND leasing.

ewalker · July 2004

I just found out my FICO score for the first time and it is abysmal. I would like to purchase a new car, BUT I don't even know if I can get a loan AT ALL.

Advice?

bowke28 · July 2004

dont push the "refresh" button when you are on the page. it duplicates your post.

ewalker · July 2004

My computer is kinda wacked. . thanks for the info

drew107 · August 2004

I have a 1999 Toyota Camry Le. My AC system is leaking and recently with huge rain storm here in NJ, water came inside and flooded my carpets. I had car inspected and there were no other problems with the car.

To fix the carpets and AC, it would cost me about $1,200. The estimate for the carpet is $711.00 and the estimate for the AC hose is about $400.

I still owe about 6K on the note. i bought it in 2000 with about 30k miles. Now the car has about 103k miles on it. Should i try to tell it privatel or take it to dealer and trade in for new vehicle.

anonymousposts · August 2004

You will always do better selling your car privately. However, the AC problem could be a big downfall to selling it. Especially in the summer.

mfullmer · August 2004

I don't understand. You bought a 1999 in 2000 and it had 30k miles on it already? You've had it 4 years and still owe $6k on it? I'd love to know how much you paid for it (or how much negative equity you rolled into it????) in 2000.

It's time to stop the "rolling debt syndrome". If you trade it in now you will be lucky to get $3,500 for it. If you sell it privately, you'll be lucky to get $5,000 (very lucky). Since you bought it in 2000 how much time could you possibly have on the loan? Pay for the repairs and drive it until you have it paid off. If you were to trade it in now, you'd find yourself back into a hole again with whatever you bought.

jasmith52 · August 2004

here's another way to look at the Fix or Sell dilemma. The fees and sales tax and increased registration fees on a new car are probably going to be more than the $1200 it would cost to fix the A/C and the carpet on the old one you have.

Usually it's less costly to keep the old beater rather than buy new. However if the car gets to the point where the mechanic sees the car more than you do then just maybe it's time to start thinking about a new ride.

Some guys think the same way about their wife. If she spends more time with the mailman than you then maybe it's time to think about a new one.

For what it's worth, I have a 1985 Corvette with 240k miles that just keeps chugging along. I also remember seeing a Datsun 240Z with 750k miles that a private party was selling. Do you think he got his moneys' worth out of it ?

newbie_buyer · August 2004

The dealer for a new car I'm purchasing arranged for financing. He supposedly contacted three banks and the best deal he could get me was 6.3%.

I then applied directly to my bank and they approved me for 5.09%. But one of the three banks the dealer contacted was this very same bank. So now I wonder:

Does the dealer make more money for financing at a higher rate? Is he steering me toward another bank intentionally or is this likely just an error. I found all this out after hours, so I won't be able to discuss it with him til the morning, but I am now wondering just where the dealer makes money on all this. I don't like being in the dark going into these things.

He has also steered me toward financing about $500 more than I really need to, claiming the bank has a minimum. But the minimum is also lower than he claimed. Is this another ploy?

mikhail24 · August 2004

I've been searching the boards for a while, and I'm beginning to think the reason I can't find the answer to my question is because it's an "industry secret" or something like that

.

Basically, my question is...what are the different loan tiers for Nissan Finance? As in, at around a 620 average FICO Score (not great) what kind of % will I get from Nissan?

Also, I do have a large debt due to a current vehicle but the loan will be paid off soon. How soon will that reflect on my credit? I'm thinking if I pay off the loan then wait for that to reflect, it may bump me up enough to qualify for a better rate?

Or another option would be...pay off my current loan, finance a new Nissan, then refinance later when my score improves?

**edit**...one more question....how much will a higher down payment affect my interest rate? Say if I offer to put down $3000 on a $20,000 vehicle, would that help any?

CarMan@Edmunds · August 2004

Hi newbie_buyer. Dealers can and often do mark-up banks' base interest rates to make additional profit on deals. This is why it is in your best interest as a consumer to get pre-approved to finance the vehicle that you are interested in on your own through a local bank, or one that does business on-line. Doing so serves two purposes, one it gives you a good idea of what sort of interest rate you can expect. The second purpose is it often motivates dealers to beat the rate that you have already been approved at.

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mzche · August 2004

Hi,
I am in the market for a minivan. The sable that I am driving is pain for, but we are planning another child and so the sable just won't be big enough. I have driven the Sienna, Grand Caravan and the Odyssey. We are leaning toward the Odyssey and Honda is having a year end clearance. Sounds like an ideal time, but I wonder if we should by certified used or new? I have a few credit cards I would like to pay off and wonder if we should wait until next year when my credit is better. Also, We both have bankruptcies. Mine in 98 and his in 99. I know that some people stop counting it after 7 years which will be in March for me. Traditionally, the vehicles have been in my name. Is Honda lenient with their credit requirements? Does my payment history on the Sable come into play? I am also looking to get a home equity loan on my house...not related to the car. Will that affect my ability to buy or lease?

anonymousposts · August 2004

You previous car credit will be looked at along with your other history, including the bankruptcy. If I am not mistaken a banruptcy stays on your credit for 10 years. It's a good idea to find out what your beacon score is and try to get financing lined up before you go into the dealership.

You can get really great deals on the Odyssey right now including an extremely attractive lease deal. However, Amer. Honda Finance isn't quite as lenient as some captive finance companies.

also, babies aren't cheap. Why not pay of all of your outstanding cc debt before you simultaneously jump into a car payment and a baby payment?

bowke28 · August 2004

all good points. american honda isnt easy. the best deal, including money and benefits, would be a ford certified windstar or mercury villager. tiers 0 and 1 get 3.9%, and tiers 2 and 3 get 6.9%. the warranty goes to 6/75k, and the vans depreciate faster, so the purchase prices are alot less for used ones.

isellhondas · August 2004

I've seen Honda Finance buy a few lately that I never thought would fly. One, especially, I know I wouldn't have approved!

thong24k · August 2004

Toyota is offering low apr.now. So I went in and negotiate for the price of the car. Then come the funny part, F/I when they ran my credit score. They said I will need 690 FICO scores to qualify for that low financing. He came back and show me that I'm off 11 pts which mean I'm not qualified but he can help me come up with another deal. I didn't buy a car yet. When I came home I ran my credit score over the equifax which the one that dealer said he got info from. It shows that my credit score is 707 which above what they stated to me. I think this is his tactic to get more from me. In anyway that I can show to them my print score and argue with them?? Also, here is the deal: Toyota Corolla LE with 6 CD changer,floor mats,all weather pkg,cruise control. When I left we agreed on $15,000 which I think included everything. I know that he will added some $$$ on it somehow. So I called back and asked him what other costs to add in the price. Here what's he added: 6% sale tax here in NJ+Doc fees $197.75+window etching 99.64 which I agreed with that. Then he also added $515 destination fees which I think it should be included in that $15,000. What do you think? I think he tried to rob me the other ways

bowke28 · August 2004

even though the finance guy said he used equifax, he may have used transunion, since that is the preferred report for everyone except nissan (nissan uses equifax). run a transunion, and find that score before you go.

bikegal2000 · August 2004

I have a 98 Saturn (bought in 97) with close to 100K miles. I put about $500 for various repairs in it less than 6 mos ago. Now they're telling me the transmission needs to be rebuilt for around $1000. Seems like it's time to trade. Would you agree? Also, I don't mean to brag, but with hard work I've gotten me TransUnion score into the 730s. Would I qualify for 0% financing from a manufacturer or should I finance elsewhere and take the rebates? Thanks.

danf1 · August 2004

I would think it is definitely time to trade, donate, burn etc... As far as o% financing, score is not the only factor to consider. The banks will also want to see previous car credit or similar high line. Assuming that you have that I would say just about any promotional finance program should be acchievable for you; however, you should also consider taking available rebates and conventional financing. It may cost you less overall if you qualify for a low enough interest rate. It all depends upon how much you will finance.

bowke28 · August 2004

just specify to the dealer that you would like to compare payments with 0% and rebates. 9 out of 10 times, rebates work better if the car is less than $25k. over $25k, the 0% works better usually.

manamal · August 2004

I always take the rebate. Why? Well, when your six month old car is totalled, 0% does not do you much good.

bowke28 · August 2004

good point, but thats what GAP insurance is for. along those lines, most manufacturer lease plans include GAP.

so following that logic, one should be leasing.

mfullmer · August 2004

Uhh. That doesn't make sense. If you have to take advantage of GAP insurance then you are still losing any amount you have put down.

Bottom line: If you don't put down at least as much as the car depreciates after it's titled, then you are in jeopardy of losing any amount you put down if it gets totalled.

After several leases, I'm finally moving away from it. Even at 24 months, I'm not one that likes to be captive to a vehicle. Another thing that I've realized my last two vehicle purchases is that, since I get cars that need to be ordered and may take 4 weeks, 8 weeks or more, it's very hard to time it that it corresponds with my lease end.

One cool thing is I just sold my '03 Tahoe today, six months before the lease ends, and I'm coming out, after all is said and done, about $800 ahead.

bowke28 · August 2004

"I'm not one that likes to be captive to a vehicle."

and you arent captive when you finance???

mfullmer · August 2004

Are you serious? Not at all. I own the vehicle and I'm in no contract as to the time I will keep the vheicle. I can get rid of the vehicle anytime I want without any penalty, save the obligatory depreciation.

Also, when I purchase I put 25-30% down so I don't worry about the loan at all.

bowke28 · August 2004

in hopes of keeping this away from the "lease vs. buy" argument, ill leave it at this..

"I own the vehicle"

are YOU serious??? stop making payments and see who owns it.

with manufacturer leasing programs, you have the same RIGHTS of ownership as you do in a conventional finance contract. plus most cover GAP insurance.

the advantage is that you keep the lower payment WITHOUT having to make the HUGE downpayment. PLUS you are protected against depreciation from damage OR trading.

cant win this one, my friend. ive got math and centuries of economics on my side here.

also, let me ask you this...

if a stock broker asked you to invest in a company, and told you upfront that it would go down in value...would you invest?

same with homes...if they went down in value, most people would rent.

grandtotal · August 2004

if a stock broker asked you to invest in a company, and told you upfront that it would go down in value...would you invest?

Under certain circumstances, yes. There are certain bonds available for investment that do exactly that, but that's a whole other story.

bowke28 · August 2004

ive got this company. your investment will drop by 30% the first day, and drop by an additional 10-15% each year after that. want in?

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