ZesteR March 22, 2006 Share ZesteR Member March 22, 2006 Hey guys, I'm in need of some help. I want to take out a car loan for a new car (used but 2002 and up). Is it better to go with a bank auto loan or a car loan from a dealership? Right now, i have some good ppl in good places to get a loan from 3 different banks, but I have not did any of the research to see what one is better. I also heard from my boss that with a brand new car, I could get a better deal from a dealership. What's your thoughts?! Link to comment Share on other sites More sharing options...
bullet-401 March 22, 2006 Share bullet-401 Member March 22, 2006 I bought my New 2005 with a loan from the dealership. I have no idea what one was better.. I assume it was the dealerships loan.. my parents helped me out Link to comment Share on other sites More sharing options...
Unclean March 22, 2006 Share Unclean Member March 22, 2006 The best thing you can do is see what kind of interest rates you can get and walk into the dealership with them. The salespeople get a bonus if they get you to finance through them, so they'll do their best to get you a better rate. For example, say the best you can get is 7% for 5 years through a bank. If the dealership can give you 5% for the same rate, on a $20,000 loan that's a savings of $20 per month or $1,115.96 over the span of the loan! I guess it also depends on how much of a hardcore negotiator you are. You could always bluff and say you can get a really low rate through your parents. I didn't have to bluff with mine -- I was able to get a 5.2% through USAA. And with other car companies offering 0% again, well, you can figure it out. Is this your first car? Link to comment Share on other sites More sharing options...
NOFX March 22, 2006 Share NOFX Member March 22, 2006 (edited) really the best deal is find the one with the lowest APR. Some dealerships offer 0% on new cars, I know you can do that with the new Jeep wranglers. Just find out what they will give you, I called up my bank for a used auto loan and it was at 10.9%!!!! Theres no way, I have a 5.9% on my car now, @ 10% your going to pay a butload in interest. What I recently did, was up my credit card limit to 13,000!!! Its only at 5.9%. so im buyin a jeep on my credit card, going to sell my car for more than I owe on the card and woohoo, I come out ahead. do your homework. If you buy a used car for 15,500 @ an interest rate at 10%.... you will be paying way more in the long run than you did if you bought a car for 17,000-18,000 @ 0% Edited March 22, 2006 by NOFX Link to comment Share on other sites More sharing options...
Unclean March 22, 2006 Share Unclean Member March 22, 2006 NOFX is right too. I worked out his example, and here's how it pans out: Loan amount: 15,500 Terms: 60 months Interest rate: 10% Monthly payment: $329.33 Interest paid: $4,259.75 Loan amount: 18,000 Terms: 60 months Interest rate: 0% Monthly payment: $300.00 Interest paid: $0 Still, you may not qualify for the 0% -- it's dependent on your credit rating. But if you get a loan with your parents co-signing it, you could get a much better rate. Link to comment Share on other sites More sharing options...
Chief March 22, 2006 Share Chief Member March 22, 2006 The problem with getting a co-signer is you're reponsible for the payments, but it won't benefit your credit history and if you get into trouble it will hurt your parents' credit. I'd go to your bank or credit union and see what rates they'll offer you--most have a table that they can show/give you. Then you know that level of detail and there is no pressure because you're car shopping. Then I'd go to the dealerships and see what they can offer. You already know what your bank will give you and you can use that to negotiate with the dealer. Make sure you negotiate the car price before you get into financing or trade ins. Don't be afraid to leave and close the deal another day. You can use other dealers/brands as well as other financing options as leverage in negotiating. Most dealerships get a commission off of the financing so they are encouraged to get higher rates for you. Rates are better for new cars then used cars. Some terms aren't available for older new cars. The lowest rates will always be financed through the manufacturers on new car purchases. Banks will not compete with dealer incentive loans. However, 0% or low number loans are reserved for superb credit scores. National averages for loans are 7-8% http://www.bankrate.com/crc/rate/auto_home.asp Get a credit report before you shop so you can see your credit score and what things are affecting the score you have. Paying off you credit card or fixing errors, late bills/collections will make a difference with the terms you are offered by the banks as well as helping get cheaper insurance. Go through the process with at least one other dealership so that you can "stage" two people competing for your business. That's consistently the best bet. Then walk away from the second deal and buy the car you want at the best you can negotiate for. Link to comment Share on other sites More sharing options...
ZesteR March 22, 2006 Author Share ZesteR Member March 22, 2006 I bought my New 2005 with a loan from the dealership. I have no idea what one was better.. I assume it was the dealerships loan.. my parents helped me out How did your parents help you out? co-sign? I do NOT want that. Is this your first car? This is my 1st car that I need to take a loan out for. I paid $1500US 5 years ago for a 1989 Bronco II... it's starting to rust away into swiss cheese. Also, i'd like better gas mileage and a more reliable car for trips. really the best deal is find the one with the lowest APR. Some dealerships offer 0% on new cars, I know you can do that with the new Jeep wranglers. Just find out what they will give you, I called up my bank for a used auto loan and it was at 10.9%!!!! Theres no way, I have a 5.9% on my car now, @ 10% your going to pay a butload in interest. What I recently did, was up my credit card limit to 13,000!!! Its only at 5.9%. so im buyin a jeep on my credit card, going to sell my car for more than I owe on the card and woohoo, I come out ahead. do your homework. If you buy a used car for 15,500 @ an interest rate at 10%.... you will be paying way more in the long run than you did if you bought a car for 17,000-18,000 @ 0% You say to find the lowest APR (Annual Percentage Rate), yet your percentages you talk about are Interest Rates. I was told by a co-worker (who works for PNC bank) to look at the Interest Rates first. Also, I was looking at your Jetta... did you really feel the way you did when you drove it? The problem with getting a co-signer is you're reponsible for the payments, but it won't benefit your credit history and if you get into trouble it will hurt your parents' credit. I'd go to your bank or credit union and see what rates they'll offer you--most have a table that they can show/give you. Then you know that level of detail and there is no pressure because you're car shopping. Then I'd go to the dealerships and see what they can offer. You already know what your bank will give you and you can use that to negotiate with the dealer. Make sure you negotiate the car price before you get into financing or trade ins. Don't be afraid to leave and close the deal another day. You can use other dealers/brands as well as other financing options as leverage in negotiating. Most dealerships get a commission off of the financing so they are encouraged to get higher rates for you. Rates are better for new cars then used cars. Some terms aren't available for older new cars. The lowest rates will always be financed through the manufacturers on new car purchases. Banks will not compete with dealer incentive loans. However, 0% or low number loans are reserved for superb credit scores. National averages for loans are 7-8% http://www.bankrate.com/crc/rate/auto_home.asp Get a credit report before you shop so you can see your credit score and what things are affecting the score you have. Paying off you credit card or fixing errors, late bills/collections will make a difference with the terms you are offered by the banks as well as helping get cheaper insurance. Go through the process with at least one other dealership so that you can "stage" two people competing for your business. That's consistently the best bet. Then walk away from the second deal and buy the car you want at the best you can negotiate for. Thanks for all the negotiating tactics! Is there a site other than freecreditreport <dot> com to use or should I use that? Okay, a brief credit report of myself: I'm 20, 21 in June, 2006. I have worked since I was 16. (going on 5 years) I bought a pool table 2 years ago. I took out a loan for 1500 from one of my banks. I had my mother co-sign b/c I couldnt get it on my own. I didnt have a credit history. I have 2 credit cards, I use only one and I pay it off every month in full. I have paid off my pool table loan in Feb of 2006. My parents tell me I now have a credit history. and I wanted my next step to be a new car. Link to comment Share on other sites More sharing options...
NOFX March 22, 2006 Share NOFX Member March 22, 2006 Still, you may not qualify for the 0% -- it's dependent on your credit rating. But if you get a loan with your parents co-signing it, you could get a much better rate. That is what they say, but I didn't seem to have much trouble. I have perfect credit, I think my score is around 800 or so.. anyways, you can negotiate that rate if they try to stiff you.... The originally offered me a 8.9% on my car, I showed them the paper where I could get a 7.9%, then they offered me a 5.9%. You gotta play hardball with them, I have no problem telling them they are nuts..... For instance, I was looking at Jeeps at the dealership and here is what they were trying to talk me into..... I give them my car.... they give me a check for 3,700...... I then have a $250 car payment for 36 months, If I dont want the jeep at the end of the 36 months, I give it back to them and I am left with no car. Or I can continue to pay 250 for another 3 years.... In the end. I would have given them $18,000 and a car worth 14,000 for a 21,000 Jeep and a check for 3,700.... What I do is, be just as aggressive to them as they are with me.... and when they offer me a deal like above, I ask them if they would like for me to bend over for them also... You say to find the lowest APR (Annual Percentage Rate), yet your percentages you talk about are Interest Rates. I was told by a co-worker (who works for PNC bank) to look at the Interest Rates first.Also, I was looking at your Jetta... did you really feel the way you did when you drove it? Honestly, I dont know what the difference is between APR and Interest Rate, I thought they were the same. Is Interest Rate, when they automatically charge you the going % rate and no matter how soon you pay it off, you have to pay that percentage? I would never buy into that crap... I always look at the APR, My APR on my credit card is 5.9%, That means if I keep about a 12,500 balance on there at all times, Im paying 375 a year 61 bucks a month in interest... Figure out your numbers before you go in there and how much you can afford a month And what do you mean by did I really feel the way I did when I drove my jetta? thing is with my Jetta, I knew I was going to pay off almost the entire amount in a few months, so I did not worry to much about the long run, I know for one, I cannot stand having a $300 dollar car payment over my head for 5 years, I would much rather drive around a peice of junk. Link to comment Share on other sites More sharing options...
ZesteR March 22, 2006 Author Share ZesteR Member March 22, 2006 To tell you the truth NOFX. I read somewhere in one of you recently created threads that you felt sissy (not sure of the word, but in that context) driving in a Jetta, and you wanted a Wrangler. I read both of your threads, but almost every post you made was edited... so I honestly dont know if u took it out or I read something else and just took it that way. ------------------------------------------------------------------------------ Also, I did the freecreditreport dot com and I have a 737. There is nothing wrong with my history other than the lack of one. I only have a history for about 2-3 years. On average, many of your accounts have been open less than three years. Having long term credit accounts that you consistently pay on time is an important indicator of stability to lenders. Over time, your score should improve as your credit history ages. As I look at your #'s you guys are putting up.... I might not get one if I have to pay 300 a month.... If that's the issue, I might end up getting a late 90s model instead of 2002 and up... I hope it doesnt come to that. Link to comment Share on other sites More sharing options...
Leveller March 22, 2006 Share Leveller Member March 22, 2006 I always look at the APR, My APR on my credit card is 5.9%, That means if I keep about a 12,500 balance on there at all times, Im paying 375 a year 61 bucks a month in interest... NOFX, I disagree actually, if you kept the balance at $12,500 over the course of a year and make the minimum payments (normally includes about 3% repayment), you're actually paying about $630 a year in interest. Link to comment Share on other sites More sharing options...
Chief March 22, 2006 Share Chief Member March 22, 2006 Here's an excel spreadsheet that I use to budget and play with things like this. http://www.jtkt.com/chief/mcc/Budget_worksheet.xls Then you can see how much you want to put on a car. Note the worksheets at the bottom for calculating stuff. The second tab is locked, but the password in posted on the page. phoque is french for seal, and it is my email address @speakeasy.net. Also, I took out the formulas I use for taxes because they are based off of paystubs to get exact numbers. I just typed in the hard percentages so that everything will work and be reasonably accurate. I have used truecredit.com. Which ever service you use, make sure that it gives you full details and scores for all three credit agencies. Different people use different scores, some use more than one. Don't pay for a credit report unless you get all three. And don't stick with the free one--you need all three. Link to comment Share on other sites More sharing options...
ZesteR March 23, 2006 Author Share ZesteR Member March 23, 2006 Do I really need to know? Wont the loan ppl check that out? Dont feel like paying for something I alreayd almost know. I'm in good standings and I know b/c I never missed apayment on anything. Link to comment Share on other sites More sharing options...
Chief March 23, 2006 Share Chief Member March 23, 2006 Yes, you should know, you should pay because you don't actually know. Here's why you should know. There are often, seriously, mistakes on your report. A utility company, something you don't even know about...it's worth knowing so that you can fix it. You have had a credit card for a couple of years, but you've never carried a balance from month to month. That's great for showing that you don't buy more than you can afford, but it doesn't show that you can make regular payments to pay off a debt. You've never had an installment loan, like a house, car, or other major appliance with longterm financing. Those regular payments on your credit card are great--congratulations. But that is only one type of credit, so your score will be held back a little but more important it will affect the formulas for lending to you. A lack of history can be a bigger problem than you think. I'm 31, have decent credit that is pretty old. I paid my way through HS and college. But I always bought my cars, when I had one, outright and never financed. That ended up being a bigger deal on financing the car I bought 1 month ago than me not having a job. The loan people will be trying to make money off of you. The information in the credit report is one of their biggest tools. Do yourself a favor and make sure you credit report is accurate. Each of the 3 agencies will report different things and show different scores, this is all but guaranteed even after your two years of little credit activity. If you have a score over 700 and they're offering bad rates, tell them to stick it...but you have no choice if you don't know your situation before you walk in. Also if you credit score is that high, a lot of dealers offer special deals (financing and $500 off) to first time buyers, which are promotions from the manufacturers themselves. The information you know, and the work you do ahead of time will save you a couple of thousand dollars over the next 3-5 years. Link to comment Share on other sites More sharing options...
ZesteR March 23, 2006 Author Share ZesteR Member March 23, 2006 Yes, you should know, you should pay because you don't actually know. Here's why you should know. There are often, seriously, mistakes on your report. A utility company, something you don't even know about...it's worth knowing so that you can fix it. I've never had to pay for a utility payment. no need to worry about that. You have had a credit card for a couple of years, but you've never carried a balance from month to month. That's great for showing that you don't buy more than you can afford, but it doesn't show that you can make regular payments to pay off a debt. You've never had an installment loan, like a house, car, or other major appliance with longterm financing. Those regular payments on your credit card are great--congratulations. But that is only one type of credit, so your score will be held back a little but more important it will affect the formulas for lending to you. I use my credit card every month for gas. Only to show that I can pay it off every month. Instead of using my debit card. It is usually around 160-210 a month for gas depending on prices and a lot of other variables. Also, I have had an installment loan b4, I stated it above! I paid it off already, and never missed a payment in 2 years. A lack of history can be a bigger problem than you think. I'm 31, have decent credit that is pretty old. I paid my way through HS and college. But I always bought my cars, when I had one, outright and never financed. That ended up being a bigger deal on financing the car I bought 1 month ago than me not having a job. And now you know why I am doing what I am doing now, at the age of 20. Starting to build my credit early, so when I go to buy a house.. Ill be in great shape! The loan people will be trying to make money off of you. The information in the credit report is one of their biggest tools. Do yourself a favor and make sure you credit report is accurate. I could see why I need 3 reports... yes. But do I REALLY need to do so, right now. I dont have a complex credit history, but if it's something I can use to help me get a better deal from a bank or dealership.. I suppose it'll be worth the 25 bucks or w/e it is. Each of the 3 agencies will report different things and show different scores, this is all but guaranteed even after your two years of little credit activity. If you have a score over 700 and they're offering bad rates, tell them to stick it...but you have no choice if you don't know your situation before you walk in. Yet another reason for me to get those other two scores. You're being such a great help! Also if you credit score is that high, a lot of dealers offer special deals (financing and $500 off) to first time buyers, which are promotions from the manufacturers themselves. The information you know, and the work you do ahead of time will save you a couple of thousand dollars over the next 3-5 years. For the free report that I got was 737. And it wasnt higher only b/c I didnt have a history that was longer than 3 years. That seems to put me in pretty good shape. I hope the other reports say the same or better! Link to comment Share on other sites More sharing options...
NOFX March 23, 2006 Share NOFX Member March 23, 2006 (edited) NOFX, I disagree actually, if you kept the balance at $12,500 over the course of a year and make the minimum payments (normally includes about 3% repayment), you're actually paying about $630 a year in interest. your right, I did my math completely wrong What I did was this .059*12500 = $737.50 thats how much interest I would owe if I didn't pay ANYTHING on principal I then divided that by 12 and I get 61 a month, which is still correct.... To tell you the truth NOFX. I read somewhere in one of you recently created threads that you felt sissy (not sure of the word, but in that context) driving in a Jetta, and you wanted a Wrangler. yea i think i did say that somewhere... I do kinda of feel like a wuss in the car, to me it the perfect girls car, I need a roxy sticker in the back and im set.. But you gotta see where im coming from, Ive always owned 2 POS cars, I then bought an S-10 and I was hooked on a pickup, I decided to try out a nice car for my next purchase and I dont really like it. I wished I had my pick up back. The Jetta is a nice car and all, but its just not me... Edited March 23, 2006 by NOFX Link to comment Share on other sites More sharing options...
ZesteR March 23, 2006 Author Share ZesteR Member March 23, 2006 I see what you mean. It def needs some juice injected into it's butt. I was looking Audi's too... now they are some nice cars Link to comment Share on other sites More sharing options...
ZesteR March 28, 2006 Author Share ZesteR Member March 28, 2006 AutoLoanCalculator I thought this was neat to see where I stand. Link to comment Share on other sites More sharing options...
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