topic Re: First Time Auto Loan in Auto Loans

First Time Auto Loan

Anonymous — Sun, 14 Apr 2013 21:49:20 GMT

Hi All - Hoping to get some advice from folks. I want to apply for my first auto loan this year however, I'm hesitant about getting approved. I've had credit issues in the past and have spent the last two years cleaning up negative accounts. In total, I had 9 negative accounts - mostly collections for for less than $300 average. The bulk was my student loan which I defaulted on. However, that has been finally paid in full as of May 2012. I currently have a secured credit card and was just recently approved for an unsecured credit card with the same bank. However, I don't have any other loans since I used cash for 99% of my purchases for the last two years.

My question is:

1) How likely do you think I would be approved for an auto loan on a new car? Loan amount would be about $20,000

2) Would it better to go through a dealership or bank / credit union? Which would give me a better rate?

My current FICO score is 642 (Equifax) and 666 (Transunion). I have a car that would be used for trading in (clear title and worth about $8,000) along with $5,000 down. My monthly income is $9,100 / month.

Reason I'm hesitant to apply is that I tried to get a secured loan 6 months ago for $5,000 from my bank. They denied me even though i had the car (fully paid) as collateral along with $3,000 1 yr CD. Reason i was doing this was to rebuild my credit and have positive items. The secured credit card was not bulding my credit history as fast as I hoped it would...no missed payments for 2+ years now!

Re: First Time Auto Loan

Anonymous — Sun, 14 Apr 2013 22:02:58 GMT

I think the dealer can take care of you. Dont settle for a high rate since you are putting so much down.

Re: First Time Auto Loan

Anonymous — Thu, 18 Apr 2013 04:39:06 GMT

Even with that much money down the OP will probably still get a high rate..first time buyer and the negatives on his reports were small amounts which looks really bad to lenders.

Re: First Time Auto Loan

Anonymous — Thu, 18 Apr 2013 21:05:44 GMT

@Anonymous wrote:
Even with that much money down the OP will probably still get a high rate..first time buyer and the negatives on his reports were small amounts which looks really bad to lenders.

$13k down can work wonders as long as you negotiate.

Re: First Time Auto Loan

staifokuzed — Thu, 18 Apr 2013 15:32:32 GMT

If i am reading correctly you want 30k car and have 13k down. You will most likely get a loan and rate a dealership might be the best route. You will have to negotiate as stated above. I recently purchased a vehicle with dealer financing and they started with the payment trick first. Saying IM not sure what your rate is. If I had signed would of be 16-19%. Just make sure before you go you know what the payments should be for each rate for amount you want to finance. There are free calculators and just a search away. From the advice on here and having that knowledge going in gave me the upperhand. I got 8.83% not the best but better than where they started.

Re: First Time Auto Loan

Anonymous — Thu, 18 Apr 2013 15:54:23 GMT

Thanks all! Lots of good info. Correct - I'm trying to get a $30K car with $13K down. Glad to know that you were able to get 8% interest. I had a firm goal of getting 10% or less, if approved. If more than 10% interest, I'm going to walk away from the deal. This car is more of a want and not need - which definitely takes some of the pressure off.

Re: First Time Auto Loan

staifokuzed — Thu, 18 Apr 2013 16:33:00 GMT

10% was my goal as well. I told the dealer that it was a want and I don't have to buy the car. That was after they gave me the first rate and that i was not paying more than 8%. It is also wise to go when the banks are open. M-F 8-4 good times to go. So you can get a 100% answer. I have heard of dealers doing shady deals and rate jacking after you leave. Best of luck to you. You are the one in control of your financials not the dealer. Also to let you know i did walk away 6 months prior. I just continued to build. And it was the best decision. Sometimes time is all you need

Re: First Time Auto Loan

Anonymous — Thu, 18 Apr 2013 21:15:24 GMT

Try to go in with some kind of pre-approval. Talk to local credit union. Be sure to tell them about the large down payment.

An APR of 10% is rediculous.

If a dealer want's to make a deal they will hook you up in terms of financing.

You don't even have to tell the dealer how much you have to put down. Maybe state something like "I would like an APR around 3%, what kind of a down payment do you need to make that happen." They may say you need to put $20k down, then you can counter with $10k ect.

The first thing though, is to settle on the price. Don't let them talk in terms of payment. Look at the price of the vehicle, the term, and the APR. Also, don't buy anything F & I tries to sell you. You will not need gap, and if you want a warranty. You can find one cheaper online than at the dealer. Negotiating should take awhile. If you scored a deal an hour after walking into the dealer, you probably didn't score a deal.

Re: First Time Auto Loan

Anonymous — Fri, 19 Apr 2013 00:03:58 GMT

My scores are similiar to yours. I also traded in a vehicle worth $8k. I have less than two years of credit history and have never had an auto loan in the past. I was given 0% on the purchase of a car with an MSRP around $26k.

I do not have the past baddies that you have. You can explain that to the bank/dealer "I was a student in college trying to pay high tuition loans. I have since been employed and have paid off those debts."

Re: First Time Auto Loan

p- — Thu, 18 Apr 2013 22:17:14 GMT

@Anonymous wrote:
Try to go in with some kind of pre-approval. Talk to local credit union. Be sure to tell them about the large down payment.
An APR of 10% is rediculous.
If a dealer want's to make a deal they will hook you up in terms of financing.

I've had great luck with getting my financing approved ahead of time. Companies like USAA, Penfed, or even Capital One will give you a prior approval up to a certain amount financed, and a voucher you give to the dealer at time of purchase. If you use an amortization calculator you can decide what your top dollar financed amount is and know it before you walk in. There will be no discussion about payment amount, it will all come down to price.

I have purchased two vehicles this way and will never go back. On one of them I used USAA's car buying service. I took the USAA price, and emailed dealers in a 100 mile radius the color, style, and option package I wanted. I was able to negotiate the price from my desk on breaks over a couple of days, and then drove an hour to pick up the car.

On the second deal, I let the dealer run my credit to see if they could beat USAA, and they did with the manufacturers financing, so I took that deal. But all of that was after I had already negotiated the price.

If you use penfed's car buying service, they are offering rates as low as .5 or .74.

I won't buy a car based on the payment amount ever again.

Re: First Time Auto Loan

Anonymous — Sat, 20 Apr 2013 03:12:13 GMT

So I bought the car. I ended up getting a 2013 Toyota 4Runner which is what I've been looking at the past year. Received $7,100 for my 2007 Ford Escape trade in so I ended putting $6,000 down instead of $5,000 in cash. (Don't ask me why but $13K was somehow my magic #). Toyota Credit approved me for $27,000 financing with 4% interest. This was after they initally offered me 8% and I told them I was walking. Thanks to all of you for your advice since I would have accepted 8% interest and not tried to go any lower thinking I couldn't qualify. The auto dealer pulled my credit at 653.

Re: First Time Auto Loan

Anonymous — Sat, 20 Apr 2013 03:19:45 GMT

@Anonymous wrote:
So I bought the car. I ended up getting a 2013 Toyota 4Runner which is what I've been looking at the past year. Received $7,100 for my 2007 Ford Escape trade in so I ended putting $6,000 down instead of $5,000 in cash. (Don't ask me why but $13K was somehow my magic #). Toyota Credit approved me for $27,000 financing with 4% interest. This was after they initally offered me 8% and I told them I was walking. Thanks to all of you for your advice since I would have accepted 8% interest and not tried to go any lower thinking I couldn't qualify. The auto dealer pulled my credit at 653.

Very well done!

Looks like I was able to help, glad to do so

Re: First Time Auto Loan

Anonymous — Sat, 20 Apr 2013 03:21:54 GMT

How did you do price wise on the car? Did you buy any extra's?

Re: First Time Auto Loan

Anonymous — Sat, 20 Apr 2013 04:38:15 GMT

I went for the Limited edition so it came with heated leather seats, navigation system, backup camera, and 3 yrs of Entune thorugh Toyota along with a few more perks. I did buy the extra 4 yr warranty on top of the three year warranty that came with the car which after a couple negotiatons, the dealer charged me $300 / per year - original was $400 per year. I didn't go for the gap coverage, credit life, or disability. i work in insurance so I already knew those options rarely paid out - hence how the dealer maks additional revenue.

Re: First Time Auto Loan

Anonymous — Sat, 20 Apr 2013 04:41:01 GMT

With all options priced in, mfr pricing was $39,000, dealer pricing was $42,000 and I got it for $40,000 and some odd dollars. Where I live, they don't carry too many 4Runners. They had maybe 6 total on the lot so not a lot of room to decrease price.

Re: First Time Auto Loan

Anonymous — Sat, 20 Apr 2013 05:03:49 GMT

@Anonymous wrote:
With all options priced in, mfr pricing was $39,000, dealer pricing was $42,000 and I got it for $40,000 and some odd dollars. Where I live, they don't carry too many 4Runners. They had maybe 6 total on the lot so not a lot of room to decrease price.

So, you paid over MSRP and bought a warranty?

Re: First Time Auto Loan

Anonymous — Sat, 20 Apr 2013 05:08:20 GMT

Again, congrats on the car and rate

Re: First Time Auto Loan

maiden_girl — Thu, 25 Apr 2013 00:36:38 GMT

That's some really good advice. Making the decision to buy a car is a learning experience. You don't always get it right the first time but it helps when you do. I recently purchased a used 2011 Hyundai Accent like five months ago and I went in with a preapproval letter from Chase at $11k for 60 months at 4.9%. I actually ended up getting a better deal with the dealership b/c I knew what kind of offer I deserved with the type of credit that I had. So I ended up getting approved by Hyundai Motor Finance at the same rate but with some added protections such as GAP (canceled) and repair advantage (4 year maintenance). My car buying experience was smooth but then again, I was the only person in the dealership at the time Best of luck in your future endeavors.