First TIme Car Buyer and Financing! Confused!

[Anonymous]

I am currently shopping for my first car purchase. The car I've been driving is already 7 years old and was bought by my parents when I was still in high school. I have excellent credit (have had credit for about 8 years)... Somewhat of a down payment saved... I have had my job for about 4 years already... Making about 38K... I have 8 months left to finish my bachelors... and I want to purchase a car between 20k-30k. I don't want to use a cosigner but I'm being told that because I'm a first time car buyer I wouldn't get financing lower than 5%. If anyone has been through this before or has any kind of information that might be useful... PLEASE ADVISE!

I've done my research and I know about all the different options for financing through different banks and credit unions but I really don't want an interest rate above 3%. The only thing I can imagine doing is when I finally decide what car I'm actually going to get -Which I have one in mind- getting pre-qualified for a loan and taking it to various dealers with my down payment and negotiating the best deal..... DOES THIS SOUND RIGHT? Thank you!

[Anonymous]

For Excellent Credit through a dealership assuming no incentives your APR is going to be 5.99%.  The APR they are telling you about wouldn't matter if you have had 10 car loans.  Dealerships make their money on the finance note, not the purchase of the car.

NFCU is quoting 3.75% for a 3 year loan. 5.25% for 37-60 months

The only way you are going to get an Interest Rate under 3% is if you buy a car that comes with a low APR as an Incentive (which cancels out the cash rebate if any)

Also, a 30K car is too much for your income.  20K is more realistic.

Good Luck! Don't let them intimidate you and be willing to walk out.  Also, do your research on the car and its selling price in the area etc.

[missfortune76]

I just got my first car three months ago and  I got 2000 cash back and a rate of 3.9.  So incentives are out there, good luck!

[Anonymous]

1- Most banks for financing expect a year of employment at your current job.

2- A large down payment will counteract the need for a co signer. By large I mean at least 20% of the transaction. The larger the better

Assuming you have no negs on your credit report. if you have negs you may need a co signer.

3-If you have done your research as you have said, you should have realised that there is no institution offering interest rates lower then 3%.

A 5% rate is a VERY COMPETITIVE RATE, especially for someone with your limited credit history.

Quite simply, if they are going to offer 2.9% and also assume the risk and costs of carrying the transaction, the instution would be better off to buy some high yield certificates of deposit instead of loaning someone the money.

Interest rates lower then 4%-3% are promotional rates a bank may offer. They trend to have higher qualifications then general interest rates.

Manufacturer advertised low interest rates are called "subvented" as the cost of the money the bank incurs is paid by the manufacturer. In most cases you the buyer may have to give up some or all of the rebate to get the 0% rate. Traditionally, manufacturer 0% rates do trend to be attainable for many people.

It is up to you to do the math to find what is the best deal.

Assuming a $18K transaction, with $2K down and using bank financing at 5% and having a $2,000 rebate will get you a cheaper payment then no rebates and zero percent.

An under 3% rate is unrealistic unless it is a manufacturer incentive.

If you take the preferred rate you must understand that you may lose some if not all of your rebates.

Your best bet is to figure what car you want. Then when you get close to purchase apply and get some type of pre-approval, go into a dealership and get the price you want for your vehicle, see if their finance department can beat that interest rate. if not buy the car with your approved financing.

In all reality an "internet price" from a dealership will be their best price, no negotiation needed. get prices from several dealerships.

[jestan01]

Did you notice how old this thread is??