I need to get a hybrid car, have low/fair credit. Should I buy used or lease?

[Anonymous]

I had a business disaster a few years ago that left me with a tax lein. Prior to that my credit was great and my previous car had 0% financing. I know I won't have that again however I need a new car. There is no way I can pay off the lein now so that's not an option. I need to get a hybrid car for work next month.

My FICO scores as of today are:

• Transunion-688 (684 according to Credit Karma)
• Equifax-675 (677 according to Credit Karma)
• Experian-622

I am starting a new job and will be making approximately $55,000 per year. Would I be better off leasing or buying used in terms of getting the lowest interest rate? I must have a hybrid due to the distance I'll be driving to work. Honestly I don't care how old the car is, I'm looking to do what would allow me to get a hybrid and save the most money possible so I can put it towards paying off the tax lein.

Any suggestions regarding what online lenders or big banks I should look at?  Only one credit union in my area will offer loans to non-members. 

Thanks for your help

[Anonymous]

Given the cost of gas and the maintanince issues that can come with hybrids I don't think anyone needs a hybrid (short of living in a state that allows them in the carpool lane). Hybrids are most efficient in city useage, their efficiency drops on the freeway to match a conventional car.  If you value efficiency most then you may want to consider looking at a VW TDI, they are extremely efficient cars. Regarding financing I think you will be able to find a decent loan, I have an IRS lien and have 4.29% for 72 months which is not terrible all things considered.  Joining a credit union like DCU (Digital Credit Union) is super easy and they offer great financing so I would suggest going that route.  If you are commuting and calculate your annual mileage to be more than 12-15k then leasing is pretty much out. Getting prequalfied through a credit union will give you an idea of what your price range is and that will make it easier to figure out which car to buy.  If you are set on hybrid the sales are down quite a bit ovet the past couple of years so pricing should be decent.  Personally it is hard to beat a simple Honda Accord or Civic for resale value, efficiency and reliability. 

[Anonymous]

This is great information, thank you.  Regarding the type of driving I do-it's all stop/start right now.  However several days a week I'll be commuting 58 miles each way, 3 days a week which is why I wanted a hybrid.   I can't drive a Honda Civic, Corolla, etc.  Both myself and my son have football player builds, he's 6'4.  The Sonata I have right now makes us feel cramped. I wouldn't purchase a Diesel car, it's too difficult to find Diesel around here and after owning one, I hate VWs.  

  I went to the Toyota dealership recently and neither the Prius or Hybrid Camry seemed to be down in price, maybe they'll knock it down more. 

Given the information I shared, would you suggest buying used or new?  Obviously I'm much more limited if buying new.

Thanks again for your really useful info.

[Anonymous]

New vs Used is mostly a preference on your part, of course you know that new cars all take a big depreciation hit during the first couple of years, used cars represent a better value because that hit has already been taken by someone else.  Cars these days are really reliable and have amazingly long life spans compared to just 10-15 years ago so there is not the same risk of getting a lemon as back in the day.  Certified pre-owned cars represent a great value in that you get the discount from the depreciation during that first 2-3 years but also get factory warranty coverage so that is a safe suggestion.  As far as hybrid discounts they have not changed the sticker prices but the dealers are dealing them at pretty large discounts, an example from Truecar is a Camry LE hyrid that stickers for $27,600 that sells for $23,100 so over a 4k discount on a base Toyota Camry hybrid, that is pretty significant.  If you decide to go new I suggest Truecar as a good way to set a reasonable price, most could not negotiate better pricing on their own, also Costco has a great buying service that is free for members and some credit unions also have preffered pricing services that can save you money.  Hope this helps.  

[Anonymous]

Have you sat in a Prius and felt comfortable in it?  I have not, just thinking they dont look that big from the outside so expecting them to not be big inside either.

A recent model used car with a 4 cylinder engine is good for high 30s or low 40s these days.  If you will be driving 58 miles each way, maybe getting a lower priced but comfortable used car (size and price comfortable) that gets 38 mpg on the highway might be an Ok compromise, at least for awhile?  I havent calculated what it would cost to drive it with 45 mpg vs 38 but it doesnt seem like a huge difference.  Gas prices are projected to stay low for the next few months, dont know about 2 or 3 years from now though.

BTW - I just applied for a new position that is 65 miles each way so I could be in the same situation soon.  In my case, I need a few weeks at the new job to establish a new pay rate and get a better chance at a good rate for an auto loan.  For example,one of the Chevy small SUVs can get 32+ mpg with a 4 cylinder so I am thinking along those lines.

GL

[Anonymous]

Hi 

In the past few days I drove a Prius, Ford Fusion Hybrid and Lincoln MKZ Hybrid.  I did not like the Prius, my son sat in the back and didn't have headroom, when you look out the rear window it's awkwardly cut in half by a metal bar (it's technically a hatchback) and I didn't think the ride was great.  I really liked the Fusion and the MKZ (same cars really).   Now I'm wondering if I should approach a credit union for financing (I joined DCU), the dealer or go to one of the banks.  This is really confusing not knowing who I have the best chance with...

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@Anonymous wrote:

Have you sat in a Prius and felt comfortable in it?  I have not, just thinking they dont look that big from the outside so expecting them to not be big inside either.

A recent model used car with a 4 cylinder engine is good for high 30s or low 40s these days.  If you will be driving 58 miles each way, maybe getting a lower priced but comfortable used car (size and price comfortable) that gets 38 mpg on the highway might be an Ok compromise, at least for awhile?  I havent calculated what it would cost to drive it with 45 mpg vs 38 but it doesnt seem like a huge difference.  Gas prices are projected to stay low for the next few months, dont know about 2 or 3 years from now though.

BTW - I just applied for a new position that is 65 miles each way so I could be in the same situation soon.  In my case, I need a few weeks at the new job to establish a new pay rate and get a better chance at a good rate for an auto loan.  For example,one of the Chevy small SUVs can get 32+ mpg with a 4 cylinder so I am thinking along those lines.

GL

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[EddieK]

Buy used, get an off lease 2012-13 Chevrolet Volt.  <15K with ~30-40K miles.  If you can charge at work, used Leafs are a steal right now, off lease 2012-13 models are almost hitting 10K with under 30K miles.  I'm almost tempted to get one even though I'm not even close to liking them.

[Anonymous]

DCU has helped a lot of ppl on this forum lately and with good rates, I would recommend starting there.

I joined Nasa Fcu and State department Fcu lately, to establish a relationship for future business with at least one of them.

I think it takes a HP to become a member.

I would recommend making an app for a car loan and if approved, then the membership.

I didnt think a Prius would be comfortable for a big guy.  I understand they have several models now, but I am just not a fan of them at all.

[Anonymous]

I joined Nasa Fcu and State department Fcu lately, to establish a relationship for future business with at least one of them.--So did you just deposit money in an account with each of them?

I think it takes a HP to become a member.  What is an HP?

I would recommend making an app for a car loan and if approved, then the membership. Oh maybe I did this backwards, I joined DCU today before doing a loan app.

The actual front of the Prius was comfortable for both of us, sitting in the back was the issue.  Also with Toyota cars you don't get much technology for your money compared to Ford however they have seemed to be catchin up recently.   

If I were to get a car loan from DCU and would pay off about 5,000 after I got the car would that lower my monthly payment or would it just decreased the amount of time I have to pay?

@Anonymous wrote:

DCU has helped a lot of ppl on this forum lately and with good rates, I would recommend starting there.

I joined Nasa Fcu and State department Fcu lately, to establish a relationship for future business with at least one of them.

I think it takes a HP to become a member.

I would recommend making an app for a car loan and if approved, then the membership.

I didnt think a Prius would be comfortable for a big guy.  I understand they have several models now, but I am just not a fan of them at all.

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[Anonymous]

When I joined Nasa Fcu and SDFCU, I made a small deposit of 20 bucks each into a savings account.  In a CU, its called a 'share deposit account'.

A HP (hard pull) is when your CR is pulled by someone like a creditor, a CCC (credit card company) or a potential auto loan, or a mortgage.  It counts on your CR and indicates that you are 'seeking credit' and is 10% of your score.  If you apply for auto loans or mortgages within a 14 day period and they are coded as such, they are lumped together and count as one, instead of many.  Generally, when you are seeking credit, you have to authorize them to do a HP.  A SP (soft pull)  is another way for them to view your credit, but it doesnt count against you as an Inquiry.  An established creditor might do a SP on you every 3 months to make sure they dont see any issue coming up, and they do not need to get your permission.  When you get your own credit report,it is a SP and doesn't count against you.  The INQs will fall off after 24 months and will have a lesser impact after 12 months.

If you joined DCU already, decide quickly if you want to apply for an auto loan.  It might save you from a HP if they get your app soon.

If you get a car loan and add a large amount to it liek 5k, it would shorten the payoff date.  To get a new payment schedule, you would have to refinance it.

HTH