topic Re: How long to wait before financing a second car? in Auto Loans

How long to wait before financing a second car?

Born123 — Fri, 07 Dec 2012 19:16:25 GMT

Hello, any feedback is greatly appreciated :)

I applied for my very fist auto loan with no cosigner in August 2012 for $24k and put down $10k ($32K total) @ 3.4% Rate.. Made my 1st payment in October

Now im hoping to get a second vehicle around March for about $40k and putting down $30k leaving me with around $10k to finance.

My credit score was 720 when i applied in August and i have yet to miss any payments so i expect my score to improve a bit by March. So my question is, should March be a long enough wait to apply for a second loan? Or is that too soon and wait a year or so?

My Income is about $45k yearly.... DTC of 9%

Re: How long to wait before financing a second car?

ds3 — Fri, 07 Dec 2012 21:07:27 GMT

If you have $30k to put down, why not just pay off the first one before buying another one and having 2 car payments? $45k a year in income and a current new car loan seems like it would make it very hard to get another loan, but I may be wrong.

Re: How long to wait before financing a second car?

Born123 — Fri, 07 Dec 2012 21:22:41 GMT

Well i thought about that, and the reason why i got the first auto loan was to help raise my credit score for when im ready to buy a house ina couple of years. I have no previous loans in my history.... just credit cards.

Im going to be selling a car i never drive anymore and hoping to get about $25k, which i will then use as a downpayment along with $5k i have saved up.

I could easily pay off the 1st loan with the $25k but then wouldnt have much to put down for a second loan for the car im looking to get.

Re: How long to wait before financing a second car?

bahbahd — Sat, 08 Dec 2012 00:08:10 GMT

I may be wrong here, but paying off the first car loan in full makes more sense to me as long as there are no prepayment penalties. You will have a paid satisfactorily auto loan, one completely positive tradeline w/ no chance of derogs, no chance of repo on one vehicle, only one auto payment to worry about, no outstanding auto loan debt hurting your DTI, and your co-signer will be in the clear on first loan. With one closed positive auto loan and 720+ scores, you might not even need a co-signer on the next loan.

Re: How long to wait before financing a second car?

Croselx — Sat, 08 Dec 2012 01:48:23 GMT

I see no reason to pay interest for 2 auto loans when you can pay one off. I also see no reason to buy 2 (assuming) new cars so close to eachother. Since it seems you have already made the decision to buy the car I advice: pay off the first loan (a satisfactory auto loan might make you more attractive on next purchase) and wait until you have $10K (or more) down for the next car (you can also save more for down payment and wait for a good offer such as 0% financing or 1-2%

Re: How long to wait before financing a second car?

YHWHUDAH — Sat, 08 Dec 2012 02:14:57 GMT

Relax, take a deep breath; I think you are rushing into things to much. Rushing and over indulging can lead to bad credit and money problems.

Re: How long to wait before financing a second car?

ds3 — Sat, 08 Dec 2012 06:21:37 GMT

As someone who really wishes he'd done things differently in the last 48 years, you are getting some good advice here. Pay off the first loan...don't take the chance of a repo, which is where you're heading, whether you agree or not.

Re: How long to wait before financing a second car?

StartingOver10 — Wed, 12 Dec 2012 19:39:49 GMT

100% agree with the others.

Besides, having two car loans may actually knock out the possibility of getting a mortgage. Remember the DTI on a mortgage includes all of your debt on the back end. Having the first car loan paid off is a positive factor toward your future mortgage.

Re: How long to wait before financing a second car?

tooleman694 — Mon, 17 Dec 2012 15:32:06 GMT

Getting a bank to approve a car loan when you already have one is tough. Unless you have history showing you can handle it.

I got a second car loan last year but the bank required that my Wife also be on the loan to do it.

Be careful with new cars, it was buying new cars that got me in my credit problems.

Re: How long to wait before financing a second car?

maiden_girl — Tue, 18 Dec 2012 14:47:32 GMT

If you have 30k as a down payment...it'd be silly to finance. If a dealer saw a person walk in with 30k cash for a car...I'd think the dealer would be willing to deal. Anyway I agree with the others...why do you need two car loans? Pay off the first one. Having two auto loans is definitely going to knock out any chances of you getting a auto loan anytme soon.

Re: How long to wait before financing a second car?

4thmouse — Mon, 24 Dec 2012 03:18:07 GMT

My Experience is different. I walked into a dealership with $17K a couple years ago to purchase a car and after the negotiations we got to the finance office and the dealership actually tried to push us into financing it, Even though we had 100% cash in hand. They even went as far as to say the price we negotiated was only good because they thought we were financing the whole thing. Course that backfired on them in a big way when we walked out. Before we even got home the sales manger called our cell and tried to get us back. We told them we would only come back if they would knock $500 off the price previously negotiated and we didn't have to deal with the guy we dealt with the first time and they agreed.

Don't suppose there is room to negotiate that $40K price down.

Re: How long to wait before financing a second car?

ImprovingYouth — Wed, 26 Dec 2012 16:06:06 GMT

4thmouse wrote:

Don't suppose there is room to negotiate that $40K price down.

If you are coming in with 30k you should have no problem getting the price down from 40k, maybe not all the way to 30k, but I dont see how you wouldnt get 35-37k easily. Unless you are already factoring in getting the car down from some higher price to 40k by bargaining.

Another thing to think about, most dealers will not finance below a certain amount, usually around 7-10k. So you might need to keep some of your money and just pay it down on the back end.