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Advice for first auto loan

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Anonymous
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Advice for first auto loan

Long time reader and first time poster. Need advice for my 1st auto loan.

 

I’m looking to buy my first new car. Mostly interested in a base model prius, civic, or mazda 3, 2015 or 2016. I want to stick to a car that costs $22,000 or less. I have a 2003 accord LX to trade in, and I’m expecting it will be worth 2-3k trade in value.

 

I have more than enough in savings to buy the car outright, but would rather take out a loan as we’re saving up for a house next year. I would like to put down 5-10k plus the trade-in. I currently have a TU fico score of 815. I don’t know the other report scores, but I would guess they are similar. All 3 credit reports show either 0 or 1 inquiries, and no missed payments or other baddies. I have one student loan that was paid in full in 2012, and 3 credit cards, two are 10 years old and one is just over 1 year old. Current credit utilization is 7% and it won’t ever go over 10%. My income is $110k per year. I’ve had a chase checking account for 10 years and it requires me to have direct deposit in order to wave the monthly fee. Chase’s auto loan has an APR of 2.76% in the Portland area, assuming I meet their requirements for the best rates. My rent is $1400 per month. I have no other debt.

 

Should I apply with chase? Are there any credit unions that don’t require me to open a checking account with direct deposit? I thought about Light Stream, but I doubt I qualify since I have no previous auto loans and no current loans. I really don’t want to apply at multiple institutions because I want to keep my inquiries down as we are planning to get a home loan in the next 6 months. Dealer loans have good rates, but lose out on 1.5-2.5k cash back, plus too many inquiries could occur.

 

 

Thanks.

Message 1 of 13
12 REPLIES 12
CH-7-Mission-Accomplished
Valued Contributor

Re: Advice for first auto loan

Apply with DCU (Digital Credit Union).  They will do two inquiries on EQ.    Current rates 1.74% with direct deposit, I think 1/2% higher without it.   You should not go with Chase and should look no further.

 

https://www.dcu.org/loans/auto-loans.html

Message 2 of 13
Anonymous
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Re: Advice for first auto loan

Thanks for your quick reply, but the difference of DCU's 2.25% and Chase's 2.76% seem small, ~$100 if I do a 4 year loan on 10K. Is DCU better otherwise? Do they give a blank check that I can directly write to the dealer? Also does Chase do a blank check loan?

Message 3 of 13
Anonymous
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Re: Advice for first auto loan

I have a strong bias for credit unions, they are owned by their members and they value relationships so for that reason I would suggest considering a credit union.  With your scores you will get a decent rate from everyone so you have plenty of options. 

Message 4 of 13
fury1995
Valued Contributor

Re: Advice for first auto loan

With your scores and based on  your planned down payment, ANY lender will give you their best rate.

 

The amount you are borrowing will have a neglible effect on the payment and only slight effect on the overall cost of interest. I'm betting you will pay the loan early regardless based on your stated debt profile

 

If you PREFER Chase, stay with them. If you want to expand your relationships to include other lenders, by all mean follow the above advice and join a credit union.

 

The real question is what your exact intention is?

 

To get approved? (No problem based on the structure)

 

To get the absolute best rate? (By all means, you may find better)

 

To establish a relationship with another lender? (Again, with your profile, any lender will gladly take you).

 

Good luck!

August 28, 2023 FICO 8

August 28, 2023 FICO BankCard 8

August 28, 2023 FICO Auto 8

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Message 5 of 13
Anonymous
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Re: Advice for first auto loan

Thanks for the replies. They are all helpful. My intention is fourfold:

 

1) Get a decent rate without opening new accounts. We have too many checking/savings accounts and other benefits with Chase and need to keep our direct deposit with them.
2) Be completely prepared to purchase a car. I want to buy a car without having to go through dealer’s financing and being pressured to check my credit report/score or buy extra warranties/add-ons. Since I don’t have the exact car picked out ahead of time, I want a blank check to purchase any car up to $22k. Some banks want me to come back to them with the dealer’s purchase order which I want to avoid.
3) Demonstrate I can responsibly pay back loan, which may help when we shop for a mortgage. Currently I have no loans on my credit report.
4) Keep new inquiries to no more than 1 if possible for the mortgage shopping.

 

 

Note that I want a decent rate, I don’t need the absolute lowest rate. #2 above is most important to me. I don’t care about establishing a relationship with another lender and don't need more credit cards or lines of credit. I checked several of the recommended local credit unions close to where I live and they have a very similar or same APR as Chase.

Message 6 of 13
fury1995
Valued Contributor

Re: Advice for first auto loan


@Anonymous wrote:

Thanks for the replies. They are all helpful. My intention is fourfold:

 

1) Get a decent rate without opening new accounts. We have too many checking/savings accounts and other benefits with Chase and need to keep our direct deposit with them.
2) Be completely prepared to purchase a car. I want to buy a car without having to go through dealer’s financing and being pressured to check my credit report/score or buy extra warranties/add-ons. Since I don’t have the exact car picked out ahead of time, I want a blank check to purchase any car up to $22k. Some banks want me to come back to them with the dealer’s purchase order which I want to avoid.
3) Demonstrate I can responsibly pay back loan, which may help when we shop for a mortgage. Currently I have no loans on my credit report.
4) Keep new inquiries to no more than 1 if possible for the mortgage shopping.

 

 

Note that I want a decent rate, I don’t need the absolute lowest rate. #2 above is most important to me. I don’t care about establishing a relationship with another lender and don't need more credit cards or lines of credit. I checked several of the recommended local credit unions close to where I live and they have a very similar or same APR as Chase.


You have a good idea of what you want and how you would prefer to do it.

 

I agree with everything you've said, I will add that if you have a relationship with anyone at your Chase branch, tell them everything you've just said here. 

 

Then, I'd take a copy of your FICO reports with you and share it with them at the bank so you can get an idea of the outcome of application before you have the inquiry.

 

Just in case you may actually want the warranty.... make a couple of phone calls to the area dealerships for the brand vehicle you are shopping and shop the warranty ahead of time. Just ask for the business office and tell them you are only interested in the service contract that's available for the car you "own" (plan to own) to get some competing pricing. That way you will have an idea of what is and what isn't a good deal when you actually go to buy the car.

 

Good luck!

August 28, 2023 FICO 8

August 28, 2023 FICO BankCard 8

August 28, 2023 FICO Auto 8

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Message 7 of 13
Anonymous
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Re: Advice for first auto loan

Honestly I highly doubt ur score is 815... U should check here on my fico.. Reason is this is ur first car loan and no home loan typically score will top out at about 740-770.. Also, I wouldn't put that much down.. If I were u I'll finance the full amount.. When first statement come pay the minimum and put the other money that u were about to put into it for principal..or with ur credit score ur interest rate can be really low. With Honda Civic u can probably get 0-0.9% . If that's the case finance all of it and save the money in ur bank so when u get a house u can put a bigger down payment

Message 8 of 13
Anonymous
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Re: Advice for first auto loan

Thanks for your advice. I do check my credit score from my discover statement and it shows 815-825. I also forgot I've gotten my Equifax score in late 2014 and it was 817. I havn't seen my experian score, but based on my 3 credit reports, I would expect the score to be similar to TU and EQ.

 

Do you know if Honda adds more than one inquiry when they do a credit check? Thanks.

Message 9 of 13
Anonymous
Not applicable

Re: Advice for first auto loan


@Anonymous wrote:

Thanks for your advice. I do check my credit score from my discover statement and it shows 815-825. I also forgot I've gotten my Equifax score in late 2014 and it was 817. I havn't seen my experian score, but based on my 3 credit reports, I would expect the score to be similar to TU and EQ.

 

Do you know if Honda adds more than one inquiry when they do a credit check? Thanks.


Are you going to the Honda dealership? If so, then it'll probably be more than one inq. You might have some success asking them to ONLY check with Honda to see if you're approved, but dealers love to rate shop and come back with "Well, we found you a better deal..." but then you've got 5 - 6 inquires from all over. But, you know that. 

Message 10 of 13
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