Financing Four Wheels

roybean · 12-09-2006, 06:24 PM

I want to buy a 2006 vehicle since the year is going out and before anyone says anything, I have looked for months and what I see in the used car market, I wish that I would spend thousands on someone else's problems. There are brand new cars on the market that cost a little more than some of the crap people have been trying to put over on me because they know I need a car.

I remember someone saying that you should never finance for over 48 months, correct?

centex · 12-09-2006, 06:34 PM

Roy, I don't subscribe to firm rules on contract terms. The question becomes one of what is the financing going to cost me. If I can do better with investments than I can on the rate for the vehicle, then the APR becomes even less of a consideration.

I also am one that tends to buy new, but that has more to do with the fact that I don't flip vehicles every few years. I tend to keep vehicles far beyond the point where book does justice to resale value. You'd be surprised what people will pay for an older, high mileage vehicle when you can show them receipts for everything done since day one, including an occasional oil analysis.

roybean · 12-09-2006, 06:42 PM

Quote:

Originally Posted by centex

Roy, I don't subscribe to firm rules on contract terms. The question becomes one of what is the financing going to cost me. If I can do better with investments than I can on the rate for the vehicle, then the APR becomes even less of a consideration.

I also am one that tends to buy new, but that has more to do with the fact that I don't flip vehicles every few years. I tend to keep vehicles far beyond the point where book does justice to resale value. You'd be surprised what people will pay for an older, high mileage vehicle when you can show them receipts for everything done since day one, including an occasional oil analysis.

That's all I seem to be able to find; high mileage cars and the same line; "It's all highway miles." I've had enough used cars to know that when it gets over 100,000 miles on it you can expect everything and anything to go wrong. I want a new car. Nothng lavish or expensive, just good reliable transportation.

roybean · 12-09-2006, 06:44 PM

BTW...I just found this: read the small print-
"Subject To Financing": why the dealer called you 2 weeks later to re-sign your auto loan.

New car financing at the dealer can be a headache. The "Subject to Financing" clause appears on paperwork of all new car loans. It means the deal is not done, yet you think you are signing a contract. Then 2 weeks later the car dealer calls saying "your new car loan fell through." They knew what APR you qualified for when you bought the car, a common auto loan scam, usually pulled on people with bad credit. You should not buy a new car first then worry about new car financing. Sometimes dealers call and say they found you a lower APR, come on back down and re-sign the paperwork! Oh, Really? Have them fax you over all the new figures and APR in writing, and make sure they did not increase the number of months, or payment, or anything. Otherwise do not re-sign any contracts. This is why we are big proponents of online new car loans. Don't get stuck with a bad credit auto loan if it's not necessary. This would have been avoided if you used online auto financing.

http://www.carbuyingtips.com/bad-credit-auto-loans.htm

roybean · 12-09-2006, 06:44 PM

I want to get it financed before I go to a lot and I know there are offers for people graduating. One more thing..
I have a paid car loan on my reports.

jlynn · 12-09-2006, 06:48 PM

Don't be ashamed to want something new there are 100 different reasons and not just vanity. The only vehicle I didn't buy new was my jeep, and it was only 1yr old, and is now 8 years old.... (no comments from the peanut gallery)!

I used to hear the "don't finance over 48 months" alot...but that was, well, 8 years ago LOL. Teaser finance rates are becoming more the rule than the exception. How is your credit now?

Secondly, if you are going to buy now, I would suggest waiting until the last week of December. That is probably when some of the most kick butt deals will come out. Its not only End of the Month, but its also End of the Year.

Have you narrowed your choices of vehicles yet?

centex · 12-09-2006, 06:51 PM

Quote:

Originally Posted by roybean

That's all I seem to be able to find; high mileage cars and the same line; "It's all highway miles." I've had enough used cars to know that when it gets over 100,000 miles on it you can expect everything and anything to go wrong. I want a new car. Nothng lavish or expensive, just good reliable transportation.

You missed my point Roy...my guess is most of those people can't show you jack in terms of maintenance records. When I sold the Mustang, the guy that bought it with close to 400K miles on it (that is correct, four hundred thousand) got a folder full of paperwork. Six years later, the car is still on the road.

That being said, there is a lot of crap out there new and used, and that is why I went to Ohio when I bought my most recent vehicle. It is the only one that has any sort of a note on it right now.

roybean · 12-09-2006, 06:52 PM

Quote:

Originally Posted by jlynn

Don't be ashamed to want something new there are 100 different reasons and not just vanity. The only vehicle I didn't buy new was my jeep, and it was only 1yr old, and is now 8 years old.... (no comments from the peanut gallery)!

I used to hear the "don't finance over 48 months" alot...but that was, well, 8 years ago LOL. Teaser finance rates are becoming more the rule than the exception. How is your credit now?

Secondly, if you are going to buy now, I would suggest waiting until the last week of December. That is probably when some of the most kick butt deals will come out. Its not only End of the Month, but its also End of the Year.

Have you narrowed your choices of vehicles yet?

Yes, I know what car I want and I thought the real deals would be about January since they will be trying to get rid of all that they didn't sell.
As for my credit, I still have a few baddies, but as I mentioned above, I have a paid car loan on my reports, a few good tradelines(one of which I will pay off next week), ...

Hedwig · 12-09-2006, 06:54 PM

roybean, I financed my last three cars for five years (each, of course). Two were new, one was a very low-mileage, well maintained vehicle from an extended family member. Like centex, I tend to buy new cars and keep them until they fall apart, usually at 200-300K miles.

As centex said, you have to look at the whole picture. My cars were all financed for under 5%. I can make more than that in investments, so I'll stretch it out, then invest the difference in what the payments would have been on a shorter-term loan. Sometimes people just can't afford the payments on a three or four year loan. Especially if you think you'lll have more income in the future, you might want to stretch it out even if you pay more in the end. It depends on what's right for you.

As far as the dealer financing goes, you're better off to go to a bank or credit union and get qualified for financing. If the dealer offers you better financing and you want to take it, go ahead. If they up the rate, you have the CU or bank to go to and get out of the loan.

Another point to watch on dealer financing. Sometimes you get a lower rate or you can get a rebate. You're often better taking the rebate and getting the financing elsewhere. Again, you have to look at the total picture.

One final thing on dealer financing. You want to know how interest is computed. Most credit unions do simple interest, which means it's computed on the balance each month and paying even an extra hundred bucks early will greatly reduce your interest. On the other hand, a lot of finance companies (not necessarily banks) will give you an amortization schedule (or at least it's not simple interest). This is usually a front-loaded interest, and is computed based on the life of the loan. In these loans, paying early really doesn't save you anything, and you're better putting your money in a good money market account or investing it.

roybean · 12-09-2006, 06:55 PM

Quote:

Originally Posted by centex

You missed my point Roy...my guess is most of those people can't show you jack in terms of maintenance records. When I sold the Mustang, the guy that bought it with close to 400K miles on it (that is correct, four hundred thousand) got a folder full of paperwork. Six years later, the car is still on the road.

That being said, there is a lot of crap out there new and used, and that is why I went to Ohio when I bought my most recent vehicle. It is the only one that has any sort of a note on it right now.

You're right; no one has shown me squat. I did see one transmission shop selling a car that someone couldn't afford to pick up, but he didn't know much else about the car other than the new transmission.

I got your point, I've bought one like you just mentioned and I sold one like that, but it is hard to fine. People do not keep their cars up!

Hedwig · 12-09-2006, 06:56 PM

jlynn is right about the last week of the year, depending on the state. In a lot of states, they have to pay an inventory tax on whatever they have in inventory at the end of the year. So they try to get the inventory down before they have to pay taxes on it.

jlynn · 12-09-2006, 06:58 PM

Don't know if its still that way but Ford is said to be the most forgiving (and I believe that would include Mazda). As long as you have good vehicle TL history - nothing else matters to them.

I know when Hubby's credit was in the toilet and he had to have a vehicle, we got 4.9 on a new Ford truck because our car loans were perfect. Everyone else wanted to charge us 18% and up...that's one of those times that new makes more sense then used

.

BTW - scores were mid 500's at the time.

Some of the stuff you read about is true - dealers will do the bait and switch on the financing, but its very simple (and we did this on said truck). We absolutely refused delivery and signing of any paperwork until we were signing firm financing agreements.

roybean · 12-09-2006, 06:58 PM

Quote:

Originally Posted by Hedwig

jlynn is right about the last week of the year, depending on the state. In a lot of states, they have to pay an inventory tax on whatever they have in inventory at the end of the year. So they try to get the inventory down before they have to pay taxes on it.

So you mean like, right after Xmas? Dayum, I better work fast.

roybean · 12-09-2006, 06:59 PM

Quote:

Originally Posted by jlynn

Don't know if its still that way but Ford is said to be the most forgiving (and I believe that would include Mazda). As long as you have good vehicle TL history - nothing else matters to them.

I know when Hubby's credit was in the toilet and he had to have a vehicle, we got 4.9 on a new Ford truck because our car loans were perfect. Everyone else wanted to charge us 18% and up...that's one of those times that new makes more sense then used

.

BTW - scores were mid 500's at the time.

Some of the stuff you read about is true - dealers will do the bait and switch on the financing, but its very simple (and we did this on said truck). We absolutely refused delivery and signing of any paperwork until we were signing firm financing agreements.

I want a Chevy. Know anything about them?

Hedwig · 12-09-2006, 07:00 PM

Yes, the week between Christmas and New Year's. Not to mention the fact that business is slow then, and salesmen need the money to pay Christmas bills.

jlynn · 12-09-2006, 07:01 PM

That's GMAC, they can be tougher.

Start slow here:

Narrow your choice of vehicles down to 3. Lets see if they are in the same "finance family".

roybean · 12-09-2006, 07:06 PM

I'll be back.

hannah · 12-09-2006, 07:50 PM

Quote:

Originally Posted by roybean

I want a Chevy. Know anything about them?

Yes. I always buy a Chevy. Last 3 cars were Chevy Cavaliers...next to the last one you already know about... May it rest in peace...

DH is buying a Chevy truck soon as well. We will buying either Christmas week or right after...you should have seen the salespeople salivating over waiting on us yesterday...you should get a great deal!