topic Re: Countdown to purchase -- 6 months .. advice please! in Auto Loans

Countdown to purchase -- 6 months .. advice please!

Anonymous — Wed, 30 May 2012 16:54:24 GMT

I am planning on purchasing a vehicle soon, and I need some advice to help guide me through my process. I know that buying a non-budget sporty car is never financially sound, but I also know that there isn't much point in saving money on things that don't matter to me, if I'm not spending some money on the things that do matter to me. In other words, please save the Camry/Prius/Civic speech.

I am looking to purchase a Subaru BRZ with MSRP of right around $26,000. I was looking at a WRX in the last few months and was seeking some advice around these parts. Ultimately, this will be a lot less expensive.

It is currently in high demand and in a limited production phase.

I'm looking at putting down a $500 refundable deposit to secure one from my dealership, but the car will not likely be built until October putting delivery at around November of this year.

That leaves me with a lot of time between order placement, and delivery, and some options on what to do with my current vehicle that I still owe on.

I have equity in my current car, and if I traded it in today, I would have around $3000 to include in my down payment.

If I spent the next 6 months putting aside $400/mo (this is what I've been doing to save for a down payment), that would net me $2400 extra to put down on the car.

Or I could take that $2400 and make extra payments towards the loan value of the vehicle I am planning on trading in (It's financed at 8% APR).

What's the better move? Save the 8% in interest by putting extra money into something that is depreciating in value, or save the cash and guarantee the full value of it?

Also, when is it smart to secure financing for the vehicle? I have reasonably decent credit scores right in the 720's. I am attempting to have the one and only derogatory (30 day late) removed as a gesture of goodwill. It's 2 years old, so I doubt my score would jump more than a couple of points.

The credit union I am a member of offers a very competitive rate of 3.24%, but they do run promotions from time to time as low as 1.9%. Is it common to agree to the terms of an auto loan months before actually needing it?

Any other general money saving advice here?

Re: Countdown to purchase -- 6 months .. advice please!

Anonymous — Wed, 30 May 2012 21:38:47 GMT

Personally I would save the money in cash rather than putting it towards the vehicle you are going to trade. It won't make a large difference in the interest paid or your equity position in the vehicle in such a short time frame. And if the loan on the trade is higher it gives you a reason to say that you need a little more for the trade in value as a part of the deal.

As far as securing financing I believe that most CU's when they approve a loan have a time limit on how long the approval is good for. Usually like 30 - 45 days. You may want to check with yours for the particulars. But with your scores and auto history securing the loan will not be a problem anyway. When you have a definite delivery date from the dealer I would get a preapproval from your CU and then if you want ask the dealer to shop it and beat it. If you are satisfied with your CU's rate then just pick up your car and enjoy.

I have the same basic mindset as you when it comes to my toys / luxury purchases. If I want it and I can afford it then it's nobody else's business. I'm just not going to call Suze Orman and ask her "Can I afford it?" She'll say "Oh you are so denied" no matter what I think.

Re: Countdown to purchase -- 6 months .. advice please!

AZHeather — Wed, 30 May 2012 21:50:45 GMT

I have the same basic mindset as you when it comes to my toys / luxury purchases. If I want it and I can afford it then it's nobody else's business.

+1,000

What is the point of working hard to make good money if I cannot get something "fun" for myself every once in a while. If I can afford it and I am taking care of my financial business, then I agree 200% - it's nobody else's concern.

Re: Countdown to purchase -- 6 months .. advice please!

ccubedzx3 — Thu, 31 May 2012 16:33:04 GMT

No advice here, just want to commend you on the possible purchase of the BRZ. I think it is going to be this generation's Mazda Miata. Looks like a sound platform to build upon. I just hope the engine and tranny are more sound than that of a WRX. Enjoy!

Re: Countdown to purchase -- 6 months .. advice please!

Anonymous — Fri, 01 Jun 2012 12:25:47 GMT

@ccubedzx3 wrote:
No advice here, just want to commend you on the possible purchase of the BRZ. I think it is going to be this generation's Mazda Miata.

Let's hope not!

Re: Countdown to purchase -- 6 months .. advice please!

Anonymous — Fri, 01 Jun 2012 12:35:29 GMT

I really knew nothing about this car, but looked it up, and it looks like a fun little sporty car, OP. Good luck.

I don't think you can compare it to the Miata, as the appeal of the Miata is it weighs ~2400lbs and has nearly 50/50 weight distribution. Other than that, it is underpowered, and is FWD. The platforms really aren't that similar.

There's gonna be a big power drop-off from what you've experienced in the WRX, but it still looks like a fun car.

Re: Countdown to purchase -- 6 months .. advice please!

marty56 — Fri, 01 Jun 2012 12:48:03 GMT

I would love to see a STI (turbo) version of the BRZ. The WRX STI is on my short list as my next car but it is ugly looking.

I agree the BRZ will be a hot seller.

Re: Countdown to purchase -- 6 months .. advice please!

Anonymous — Fri, 01 Jun 2012 13:37:19 GMT

Whaaaat? Are you talking about the wagon version of the STi? I absolutely love it!

Re: Countdown to purchase -- 6 months .. advice please!

Anonymous — Fri, 01 Jun 2012 16:04:47 GMT

To continue off-topic car chat

I think comparing the BRZ to a Miata MX-5 is pretty fair.

2013 BRZ -- curb weight: 2620 weight distribution 53:47

2013 MX-5 -- curb weight: 2447 weight distribution 50:50

Both are pretty light. Both are RWD. Both are almost perfectly balanced.

You can almost think of the BRZ as the coupe version of the Miata cabriolet just because they are so damn similar.

I think I will notice the power drop off from the WRX as well, but I will hopefully make up for it with the driveability.

I can't wait, but because of the slow production start-up for this brand new model, I am going to have to.

Oh, and about the STi BRZ... it's coming either next year or the following, but as of right now it's not Turbo. They just juiced out another ~50hp from the engine, and did some weight saving tricks.

Re: Countdown to purchase -- 6 months .. advice please!

ccubedzx3 — Sun, 03 Jun 2012 14:48:25 GMT

@Anonymous wrote:
To continue off-topic car chat

I think comparing the BRZ to a Miata MX-5 is pretty fair.

2013 BRZ -- curb weight: 2620 weight distribution 53:47
2013 MX-5 -- curb weight: 2447 weight distribution 50:50

Both are pretty light. Both are RWD. Both are almost perfectly balanced.

You can almost think of the BRZ as the coupe version of the Miata cabriolet just because they are so damn similar.

I think I will notice the power drop off from the WRX as well, but I will hopefully make up for it with the driveability.

I can't wait, but because of the slow production start-up for this brand new model, I am going to have to.

Oh, and about the STi BRZ... it's coming either next year or the following, but as of right now it's not Turbo. They just juiced out another ~50hp from the engine, and did some weight saving tricks.

Thank you Crashprime for backing me up......I'm not comparing a convertible to a coupe, I'm comparing the specs and capabilities. The Miata is iconic in translating the car from street to track, and the BRZ will translate the same. It is going to be a fun car to whip around for sure! Enjoy OP if you do get one, I'd love one as a 2nd car!

Re: Countdown to purchase -- 6 months .. advice please!

Anonymous — Tue, 05 Jun 2012 13:17:40 GMT

Here's a bit of oddity. I have not gotten pre-approved for a loan because I just assumed (like what was discussed here) that an approval would expire in a month or two's time.

Well, I made a big step and stopped by the Subaru dealership. They said I would need to get approved for the loan before I could place an order for the car (which remember, won't be here until November). They said when the loan is approved, and I put down a $500 refundable deposit they will place the order for the car. Then when the car arrives, they will call up the loan company and "re-approve" the loan.

Well, my concern is the hard inquiry now, and again in November. This will be considered 2 seperate hits, because they aren't within a close period. Not only that, but I feel like there is a chance my score may go up from where it is right now.

Finally, I wanted to stop by my credit union to get approved before walking into the dealership so that I could avoid the (up-to) 2% hidden markup of whatever loan I am approved for. I feel like I am putting myself at a huge disadvantage because when the car is delivered they will have me over the coals.

How should I proceed?

Re: Countdown to purchase -- 6 months .. advice please!

Anonymous — Tue, 05 Jun 2012 14:39:49 GMT

Is this a car that is going to be in that high of a demand that you couldn't wait until November and then go to a CU followed by the dealer?

Re: Countdown to purchase -- 6 months .. advice please!

Anonymous — Tue, 05 Jun 2012 19:42:59 GMT

Crashprime - I can fully understand the dealer wanting to make sure you can be approved for credit within their network before placing a special order for the car. And also a lot can change between now and November in your credit world so it is impossible for them to say that the approval is guaranteed until then.

That being said, it does not mean that you have to accept the dealer financing when the car is delivered. They should be able to give you at least a couple weeks notice before the special order arrives and you could secure your own financing at that time through whichever lender you choose. As to the inquiry, yes you will have one now and at least one then. But that is the small price you will have to pay for a special order versus buying what's on the lot. Good luck in your purchase.

Re: Countdown to purchase -- 6 months .. advice please!

Anonymous — Tue, 05 Jun 2012 20:32:42 GMT

I know nobody can really predict the future with 100% accuracy, but what kind of credit score penalty will 1 auto loan hard inquiry typically have on an overall score, and how long does it take to gain those points back?

TU ~720

only ~4-years reporting on file

3-years of ontimes from an auto loan

only derogatory mark is a 30day late on a store card 1yr5mo ago.

Re: Countdown to purchase -- 6 months .. advice please!

Anonymous — Wed, 06 Jun 2012 19:52:36 GMT

The hard inquiry is typically only a few points and depending on how many are already on that bureau may not be any points at all. General consensus seems to be that a first inquiry with none in the last 12 months is 3-5 points. A second has no effect. Third may be a few additional and really none beyond that. The points lost are typically recovered in 4-6 months. The biggest factor is what else is going on in your credit between those months. New accounts or increased utilization or especially the appearance of a negative item or late pay would be the main concerns.