Financing for auto loan

[myboynoah]

Somewhere Dave Ramsey weeps.

My thoughts exactly.

I listened to Ramsey for three straight hours driving across Northern Mississippi and Alamaba two years ago. I was converted.

[happyone]

My thoughts exactly.

I listened to Ramsey for three straight hours driving across Northern Mississippi and Alamaba two years ago. I was converted.

I tend to agree with Ramsey, but I didn't want to use all my savings for a vechile at this time. I will have it paid off with in a year. As it is a 4 yr loan is only going to cost me $900.

[TripletDaddy]

My thoughts exactly.

I listened to Ramsey for three straight hours driving across Northern Mississippi and Alamaba two years ago. I was converted.

What does he have to say about my auto loan?

[Jarid in Cedar]

What does he have to say about my auto loan?

Pay cash.

[TripletDaddy]

Pay cash.

Great idea during a recession. Get rid of a huge chunk of liquidity in order to save a few hundred dollars in interest over a few months.

[Jarid in Cedar]

Great idea during a recession. Get rid of a huge chunk of liquidity in order to save a few hundred dollars in interest over a few months.

"It's brilliant!"

[happyone]

Great idea during a recession. Get rid of a huge chunk of liquidity in order to save a few hundred dollars in interest over a few months.

My thoughts exactly - that is why I borrowed the $14K

[NorthwestUteFan]

Great idea during a recession. Get rid of a huge chunk of liquidity in order to save a few hundred dollars in interest over a few months.

If you are indeed going after that 997 for $55k, that is such a great price that it likely won't lose any value before you have the loan paid off.

Dave Ramsey pushes the "autos are for basic transportation only" mantra. His system also uses a bit of fuzzy math, but it is very easy to follow.

Besides, even at the 2.9% on a 48 month loan you are talking an average of $15/mo/$10k borrowed ($25/mo to start, $18/mo after a year, and so on). 1.9% cuts that interest in half. No biggie!

If you were looking at a 10% rate he would have a valid point. At 1.9% they are giving it away as the value of the loan depreciates faster than the rate of inflation.

[NorthwestUteFan]

Did you have a good reason to sell it?


(be careful, this may be a trick quesiton)

My dad had a '69 Chevy Chevelle Super Sport 396 with every option. On his wedding day he sold it to my grandfather.

My mom never forgave him.

Of course selling the car allowed him to cut his expenses, buckle down in school, graduate Magna Cum Laude in 3 years and gain early entrance to medical school, where he finished at the top of his class, had the pick of his residencies, and scored in the 98th percentile on the Boards, despite having 3 kids at home under the age of 6.

But then again, he could have driven that cool car for a few more years...

[wuapinmon]

Bank of America gave us the best rate back in October.

[Clark Addison]

Bank of America gave us the best rate back in October.

[Surfah]

Lets say America First is lending at 3.5%. You can get that rate from them personally, or you can run the paperwork through a dealership and get that same 3.5%.

So why does the dealership want you to use their finance department? America First will kick back as much as 1% of that loan to the dealership for processing the paperwork and for using them for the loan in the first place.

Its a mistaken belief that money costs more at the dealership. Also, if your great "friend" at the bank or credit union encourages you to work directly with them, it's because they would get that 1% kick rather than the dealership.

Good points. Also note that the rate at America First may actually be 2.5% and the finance manager at the dealership may say you qualify for 3.5%. You have no way of knowing. The kickback to the banks is certainly true, but any points over the approved rate the dealership can take. Most people with lousy credit are susceptible to this. The finance manager will say they can get them approved at 9%. Really they were approved at 7% but the people are so stoked to be getting approved at all they take it. The dealership makes money off those 2 points.

Also, Katy Lied, most dealerships, and even states won't allow you to buy a car on credit card anymore. Most will only allow a down payment with a max of a few grand. Credit card companies were getting killed on rewards accounts and they're the ones that imposed the limits.

[NorthwestUteFan]

Bank of America gave us the best rate back in October.

Considering the bailout they received ($20-Thousand-Million) after enduring the massive defaults on their risky no-doc mortgages, they had BETTER give you a good rate.

Good points. Also note that the rate at America First may actually be 2.5% and the finance manager at the dealership may say you qualify for 3.5%. You have no way of knowing. The kickback to the banks is certainly true, but any points over the approved rate the dealership can take. Most people with lousy credit are susceptible to this.

Excellent points as well. Be smart, and take a good financial calculator with you (or iPod app). I was buying a car a decade ago and already knew the bank rates when I went in. The dealership started speaking in terms of "payment per month". I whipped out my calculatrice, pumped in the numbers, and realized they were weaseling their way into getting me to sign a loan with a 8.9% rate, when the rate from my CU at the time was ~3.9%. I said something about them "I didn't expect them to treat me the way Larry H. Miller would", and beat them up on price a bit. Then I went to my CU, got a loan, and drove my new car home the next day.

Also, check the "true cost" for the car on Edmonds.com. Then throw in the term "out the door" when you are talking about price. They LOVE to add in dealer prep charges, etc. Out The Door is the price including EVERYTHING (taxes, license, fees, document prep, sensual massage for their lawyers, etc).

[Surfah]

Considering the bailout they received ($20-Thousand-Million) after enduring the massive defaults on their risky no-doc mortgages, they had BETTER give you a good rate.



Excellent points as well. Be smart, and take a good financial calculator with you (or iPod app). I was buying a car a decade ago and already knew the bank rates when I went in. The dealership started speaking in terms of "payment per month". I whipped out my calculatrice, pumped in the numbers, and realized they were weaseling their way into getting me to sign a loan with a 8.9% rate, when the rate from my CU at the time was ~3.9%. I said something about them "I didn't expect them to treat me the way Larry H. Miller would", and beat them up on price a bit. Then I went to my CU, got a loan, and drove my new car home the next day.

Also, check the "true cost" for the car on Edmonds.com. Then throw in the term "out the door" when you are talking about price. They LOVE to add in dealer prep charges, etc. Out The Door is the price including EVERYTHING (taxes, license, fees, document prep, sensual massage for their lawyers, etc).

My suggestion is go to your CU/bank whatever and see what rate you can get pre-approved at. Stay off financing through the price negotiation, specifically any discussion of what you can afford, down payment, trade-in and monthly payments. Out the door seems to be a popular ploy by consumers but it's not very effective. Any salesman worth their weight can navigate through that easily. In fact, that's the same game salesmen use. If I could get you in this car for under $20k do we have a deal? It's an old line. The Edmunds TMV price though is effective. That number is compiled by the actual sales price of the very vehicle you're looking at in your area. IMO, if you do better than that you've done well. However, for many this isn't a good enough deal because everyone thinks they're getting either getting screwed by the dealer or are the world's most savvy haggler. But I'd have no problem going in with the Edmund's TMV and asking the dealer to beat that price. Many will. When you get into the financing of the car with the finance manager I'd pull out my pre-approved rate and tell the finance manager if he can beat it I'll finance through them. At this point if they're holding a point on me or whatever I don't care because they've beaten the best rate I could do on my own.

Something else to consider is Costco or some other purchasing service. Costco usually has an agreement worked out with local dealers (usually those that park their cars out front on display). They vary but most are $500-1000 below invoice. As part of every Costco agreement the dealer is required to show you their invoice receipts so you know you're not getting screwed. It's a hassle free-no haggle way to buy a car.

On new cars today there is very little margin, particularly on any car under $30k. You're looking at <$2000.

[Viking]

I you can avoid it, pay cash. Paying interest for a rapidly depreciating asset is never intelligent.