04-14-2014 02:34 PM - edited 04-15-2014 02:39 PM
So I'm looking to buy a crap box to drive to and from work for roughly $2000 - just got a new job and I'm putting too many miles on my new car. I don't want to pay cash upfront, because I'm trying to get my credit score as high as possible and every little bit helps. With that aside, I've come up with a plan and wanted to get some input if it'll work lol.
With that out of the way, here is my scheme... I found this bank offering 3.19% on used cars (lowest around.) However, you have to take a $5,000 loan minimum. Additionally, this loan is a cash style loan which is deposit into your account for negotiation purposes (which is AWESOME, I could technically get the car even cheaper than $2000.) Now my question is, if I dont use all the cash from the $5000 loan (which I dont plan on doing,) can I use what's left over to pay down the balance of the loan an essential keep the same rate????
Thoughts, input, and opinions please???
P.S. - I have excellent credit (760+,) so I'm not worried about being denied or anything like that; just the overall plan...I definately dont want to tell the bank what Im doing either lol.
04-14-2014 02:48 PM
Depends upon the terms and conditions of the loan.
Is it a personal type loan that doesn't require collateral - then your plan should be fine.
However, if the loan specifies collateral you will need to modify your plan.
Only you know that answer because you have been speaking directly to the bank. If you don't have the answer, ask to see the loan terms in writing - which is the note to which you are agreeing when you accept the loan.
04-15-2014 08:15 AM
If they're doing 5k unsecured at those rates let me know!
Thoguh if it's an auto loan, they probably won't give you 5k on a 2k car unless the car's NADA Retail is 5k...
04-15-2014 02:33 PM - edited 04-15-2014 02:43 PM
Thanks for the responses,
Here are the details of the loan,
" The AnyThing Loan, hassle-free loan that rewards you for your excellent credit. "
## Loans from $5,000 to $100,000
## Money in your account as soon as today. (This is the haggle-friendly part that I was talking about.)
## No fees (Another Plus)
## Response in minutes during business hours
AutoLoan Chart: $5,000 to $9,999 (3.19% - 3.94% )
- The higher the Loan, the lower you can get the APR.
For 2.19%, I believe you have to take out $10,000 or more... Which is what I'm thinking about doing and dropping the $8k back towards the balance of the loan.
-Excellent and substantial credit required for the lowest LightStream rate
-Fixed rate, simple interest installment loans, no fees or prepayment penalties
-Rates quoted with AutoPay option. Invoicing option is 0.50 points higher
-Loan proceeds may not be used to refinance any existing loan with LightStream
-Florida loans subject to Documentary Stamp Tax. The tax amount is not included in the quoted APR.
-For applications that do not qualify for an unsecured AnythingLoan for a used auto you may be eligible for our secured auto loan; rates may vary based on your credit profile.
They are basically offering an unsecured loan with the cash amount qualified deposited right into your account. Seems legit for my scheme right? I bet they're under the assumption that if you have such good credit - you wont be buying a crap box of a car.
04-15-2014 10:21 PM - edited 04-15-2014 10:45 PM
Wow, yeah, they definitely are offering unsecured. Seems perfect for your purpose esp. since you have good credit. Heck, I may just be buying a used car soon thanks to you!!!
If you can, report back what bureau they pull and what they approve you for.
I looked into it and you can definitely just send the money back to pay down the loan after lol. There's no prepayment penalty.I'd maybe send it in with the second month's payment just to make it a little less obvious haha.
Just keep in mind though that your monthly payments will remain the same. Aka 2k @ 36 months @ 3% = $58/month. But 10k @ 60 months @ 3% = $156/month.
So when you pay the 8k back (make sure they mark it as a extra principle payment), your payments remain at $156/month, meaning your loan will be paid back earlier than 60 months. I don't know what term you're applying for but if you do like 36 months, a 10k loan @ 36 months @ 3% has a payment of $290/month! So if you want lower payments, apply for a longer term. The difference in interest will probably be tiny given the fact that you are sending 8k back soon after it disburses.
04-16-2014 08:25 AM
Not too shabby, huh?
I will absolutely report back with the credit bureau(s) that they use - I'm likely going to apply for this loan tonight (4/16.) However, I'm kind of undecided on the term that I want. My gut is telling me to go for the $5k @ 3.19% over 24 months, but the cheapstake in me wants the 2.19%. If I go for the $5k, the unused $2 - $3,000 + extra can be sent at the prinipal and theoretically that should knock down the monthly to coincide with the balance for a cool $50 - $60 month, depending on the balance.
I'm even going to check and see if I can possibly aquire that 2.19% on 5k. (Doesn't hurt to ask right?)
04-16-2014 08:54 AM
I don't understand. Your score is a 760+ and that score will get you the best rate on ANY loan you try to get. So why get a loan and pay interest on it to get your score higher which will have absolutely 0 impact on any future credit decision? Just pay $2,000 and get the car interest free.
04-16-2014 11:07 AM - edited 04-16-2014 11:35 AM
Just wanted to update:
I sent a question to LightStream and they don't reamortize loans if you have unused money and send it back to the balance. I've sent a second question as to what can be done with any unused money from the loan. I'm hoping its cash as I'm thinking this maybe an opportunity to consolidate some debt at 3.19% with my higher interest credit cards that have semi-low balances.
Well there is some truth to what you say, but I like to have what I call a, 'buffer' score. It may sound pointless, but a simple graph will show that anything you do that involves credit creates rollar coast effect with your score. I like my hills to be on the very top-end of the x/y axis.
As for the $2,000 beater... The extra points are well worth little interest aquired - remember, I dont plan on carrying a balance on this loan for long. Additionally, I have ulterior motitives for what I want to do with the loan as well. Remember, to have excellent credit, you also have to fiscally utilize credit to your advantage. Working for a mortgage company with some of the brightest credit analysts in the game, helped to open my eyes to these tricks.
04-16-2014 11:16 AM - edited 04-16-2014 11:17 AM
Almost noby reamortizes loans. That's why I cautioned that payment remains the same. Just do 5k for 60 months. Your monthly payment will be pretty low.
This might be a better ask fewer questions story haha. They are going to deposit the money to your bank account (as long as they approve you for unsecured, the secured version probably wouldn't work since you need to buy from a dealer with their secured loans). I'm sure you can use the remainder to pay off cards (on the website it states "most of the money should be used for primary purpose.") IMO apply for 5k (or 10k) w/ purpose as used car, buy the car, pay off the cards, send the rest back to principle.
04-16-2014 11:21 AM - edited 04-16-2014 11:42 AM
Yep, you're right... Guess, I can always bounce around some balances that I have.
As for the question, I sent it from a rogue email address under a different name haha. (They might put 2 and 2 together when I apply, but eh...)
Update, answer to above question.
Dear Mike Walters,
If approved for our unsecured auto loan and you do not use the full amount of the loan, you may choose to either make a large one-time payment or to use the remainder of your loan for an alternate purpose. If you are approved for our secured auto loan, you must pay back the unused funds via a one-time payment. Please note that when you initially submit an application, you are applying for our unsecured auto loan. The Credit Department may then decide to offer you our secured product, depending on your credit profile.
Please let us know if you have any further questions. We hope you have a good day!
Now I'm 99.9% ready to pull the trigger.
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