topic Re: HELP PLEASE!! First Time Car Buyer in Auto Loans

HELP PLEASE!! First Time Car Buyer

Anonymous — Wed, 04 Mar 2009 01:01:28 GMT

My Experian credit score is 674. I have no previous history of an auto loan. I want to purchase a used Nissan Altima from the dealer and want to finance the remaining balance after my $3000 down payment. Are there any suggestions to where I may get a good APR considering that my credit score is just "ok" and I have no auto loan history. This recession is scaring me and I'm not sure if I want to start applying for auto loans only to be denied and then have my credit score lowered due to inquiries. By the way, I am a NYC resident (not sure is that is a factor). Thanks in advance for your help.

My monthly income is $2600 after taxes and I have been at my job for 1 year 1 month

Message Edited by cupcake8503 on 03-02-2009 08:28 AM

Message Edited by cupcake8503 on 03-03-2009 05:01 PM

Re: HELP PLEASE!! First Time Car Buyer

oneilldn — Wed, 04 Mar 2009 23:25:17 GMT

Go to your local credit union, with a 674 and 3k down you'll be good to go. Do not take a loan through the dealer, they love first time buyers and not for good reasons. Get your loan with a CU and remember to always negotiate the price first of the car.

Re: HELP PLEASE!! First Time Car Buyer

moondog7324 — Thu, 05 Mar 2009 03:15:08 GMT

Just curious- how old, and how much is the altima? may I suggest research on www.edmunds.com

It's a buyer's market- rebates are at an alltime high-you may be able to get a great deal on a base (few options) new altima.

Re: HELP PLEASE!! First Time Car Buyer

Anonymous — Sat, 07 Mar 2009 02:23:35 GMT

I've actually decided to go with a new Altima, either 2008 ($18,620) or 2009 ($21,540). Prices are from Edmunds.com.

Re: HELP PLEASE!! First Time Car Buyer

cabarkeep — Sat, 07 Mar 2009 19:28:08 GMT

Oneilldn

TERRIBLE advice. Yes I work for a dealer .... who would know more about where this person would have their best chance at an approval and at what rate than someone who sees first time buyers everyday?

Do you know that most of the time when you call a credit union customer service line they just give you a generic answer? "oh yes we have this rate available ...(give you a range of rates up to a dollar amount)...is there anything else we can help you with?" ...blah blah blah ... and they dont even run your credit lol ...so how did they approve you for anything much less give you an actual rate? This has happened more times than I can count.

Then when I finally run the customers credit all three bureaus and show them that their credit union did not run their bureau they finally understand ....granted it could have been a soft pull so we do call the credit union to find out if the customer was in fact approved at the rate they were told.

Did you know most credit unions don't even offer a first time buyer program?

First time buyers are usually a higher risk than even someone with a prior repo!

Most of the time the Manufacturers ie: Ford, Chevy, Dodge, Honda, Toyota etc will have great first time buyer programs. I know Ford offers 5.9% up to 60 months for First Time Buyers in addition to giving a rebate for being a first time buyer or college student/graduate etc.

The other thing to consider is how much income you have as most First time buyer programs allow a certain percentage of payment to income (usually in the realm of 15-18%) and require at least 6 months to 1 year on the job with no derogatory credit.

Good luck ... happy shopping ...

Message Edited by cabarkeep on 03-07-2009 11:28 AM

Re: HELP PLEASE!! First Time Car Buyer

oneilldn — Sat, 07 Mar 2009 21:30:32 GMT

Cebar, ( I was a former Desk mng , then a GM, just retired, for a big brand dealer), so we both know that what said above is true. So don't even go there with me. Also, keep it clean and respectful.

Re: HELP PLEASE!! First Time Car Buyer

cabarkeep — Sat, 07 Mar 2009 22:57:25 GMT

Oneilldn

No disrespect intended ...although you may have been a Desk Mgr and GM ... it may have been a bit .. .but even just 5 years ago til now is a big difference .... worlds of difference from the days of undisclosed leases etc ...

Not tryin to go "there" just saying thats all ...

Re: HELP PLEASE!! First Time Car Buyer

Anonymous — Sun, 08 Mar 2009 08:14:39 GMT

Based on the replies in this thread here is what I plan to do (please let me know if you have any other suggestions):

- I will go to my CU and apply for a auto loan

- then I will apply for an auto loan through Nissan for comparison

In addition to working full-time, I am a full-time graduate student. And I graduated from undergrad in 2007 which qualifies me for Nissan's SignatureGRADUATE program ($500 cash back, 90 deferred payment option for Tier 0-3 credit for loans up to 60 months)

Questions:

1) What is considered Tier 0-3 credit?

2) If financing through a dealer (or any bank), are you only allowed to pay the minimum payment due or are you allowed to pay more than the the minimum payment due? I would only consider a loan term over 48 months if I am allowed to overpay.

Re: HELP PLEASE!! First Time Car Buyer

MattH — Sun, 08 Mar 2009 12:53:17 GMT

@Anonymous wrote:
Based on the replies in this thread here is what I plan to do (please let me know if you have any other suggestions):

- I will go to my CU and apply for a auto loan
- then I will apply for an auto loan through Nissan for comparison
...

1) What is considered Tier 0-3 credit?
2) If financing through a dealer (or any bank), are you only allowed to pay the minimum payment due or are you allowed to pay more than the the minimum payment due? I would only consider a loan term over 48 months if I am allowed to overpay.

Applying at both your CU and the dealer is a good idea, especially if you tell the people at the dealership "I've already been approved by my CU but I'd like to compare your offer to theirs before deciding." However (1) do NOT tell them any details about what your CU has offered before learning full details of their offer and (2) do NOT bring up the subject of financing until after the purchase price and all fees have been negotiated. If they attempt to bring up credit before you have a final "if my rich uncle writes a check tomorrow what would be the amount of that check?" number then steer the conversation back to total purchase price including taxes and fees -- and keep them wondering whether you have a rich uncle for as long as possible. Dealers love to play games with financing deals such as talking about the monthly payment instead of the total price.

Have another person with you while shopping, preferably whoever among your friends and family is the most knowledgeable about cars and/or finances.

Do not give them your full name or your Social Security number before you are ready to have them pull your credit, and make it clear that you are not giving them permission to run your credit until the actual moment when you apply for credit. Some dealers like to trick prospects into signing something that can be construed as permission to pull your credit in order to learn more about you, while you want to delay their learning anything about you for as long as possible.

Look out for junk fees and options that cost more than they are worth.

As for your two questions:

I don't know what scores are currently considered to be various credit tiers today, I hope others on this board will jump in.

As for your second question: with your CU almost certainly you will be allowed to pay the loan off early without any penalty. With financing arranged through the dealer you should be offered a deal that allows you to pay off early without any penalty. What you say to the people at the finance desk is, "I won't take any loan that has a prepayment penalty clause." And of course any document they hand to you, you should ask the other person who is helping you shop to help you understand it.

Before you visit the dealer, you should have gone to sites like edmunds and consumer reports to get an idea what the car you have in mind should cost. For full access to Consumer Reports you will need to pay a modest fee unless you already subscribe to the printed magazine; pay that price because it could easily save you much more. Also, once you have the loan offer from the CU in hand (not just a conversation on the phone with somebody, an actual physical visit to the office and making a formal application with a written offer in hand), use this calculator to run loan scenarios. Be sure and also use the "Show/Recalculate Amortization Table" button and study the output closely, you will learn a lot that way.

Note: if you are good at mathematics then you could do the calculations yourself with Excel or with a hand calculator, as the formulas for compound interest and amortization are not terribly complicated, but for many people the Bankrate calculators will be much more convenient. I myself am such a geek that I even reverse-engineered the exact rounding algorithm used by my mortgage lender by tweaking my formulas in Excel until I got my numbers to agree exactly with theirs, but since the cumulative difference due to their rounding algorithm was about twelve cents only a geek like me would care! For all practical purposes the Bankrate calculators are excellent, depending on rounding errors the payments calculated by the lender may be off a little but not enough to matter.

Bring hardcopies of the scenarios and a small calculator with you to the dealer, so when you learn the total price you can then recalculate the monthly payment from your scenarios. For example, suppose you estimated the car you want will cost $24K with tax and title, you have $4K in cash available, and your CU offered you a 10% rate on a 48-month loan. That comes to a payment of $507.25 per month according to the Bankrate calculator. Well, there are some extra fees that the dealer will not remove even when you threaten to walk, so the actual total cost comes to $25,675.93. You whip out your pocket calculator and compute 21675.93/20000 = 1.0837965 and then 1.0837965 times $507.25 equals $550.05.

Note that adjusting your scenarios in real time this way will not be exact, but it should be close enough! When I ran $21,675.93 at 10% for 48 months through the Bankrate calculator I got a payment of 549.76 instead of $550.05 due to roundoff error.

Here is another excellent auto loan calculator on Bankrate:

http://www.bankrate.com/brm/calc/downpayment.asp

And here are all their calculators:

http://www.bankrate.com/brm/rate/calc_home.asp

Message Edited by MattH on 03-08-2009 08:53 AM

Re: HELP PLEASE!! First Time Car Buyer

cabarkeep — Sun, 08 Mar 2009 18:45:08 GMT

Great advice Matt!

Although the one thing I would disagree on would be not telling the dealer about what your credit union has approved you for.

I would personally love to have the person come in and tell me they were just at their credit union and are approved for this x.xx percentage for xx months and up to this amount. This is the car that I want to buy, I have no trade in, I have xx,xxx down payment. How fast can you get me out of finance?

Whew wouldn't that be nice lol

Most of the time you will not get the run a round if you in fact do have an approval at a credit union that has all of the variables taken into consideration. The main problem that I see is that when the people go to a credit union they fail to take into consideration how much their trade-in is really worth ...if there is negative equity this can change your credit union approval in an instant... it could mean the difference in just rate or the entire approval... just be aware of that

If the dealership knows what rate you are approved for and the term ..the rest is just math ..they cannot "lie" about the payment ...it will come out on the contract and it better add up right otherwise there will be some legal issues ... I agree on being careful just don't be paranoid ...

If you have a friend in the business or someone who is well versed in buying cars then I would definitely bring them along for support. Bottom line is that if you indeed know your credit and all of the parameters involved in a car purchase it can be very simple and you don't have to worry about being led astray...

Sometimes as dealers we do know of better rates offered thru another credit union that you may want to use(your choice) ...sometimes it can be considerably lower which could save you a money both in interest and payment ...not all dealers are looking to take advantage of people ... not to say there aren't those out there that will!

Anyways ...good advice for the most part Matt ..... just promise me that when you come see me you bring your rich uncle with you and make selling you a car simple lol ...

Message Edited by cabarkeep on 03-08-2009 11:45 AM

Re: HELP PLEASE!! First Time Car Buyer

MattH — Sun, 08 Mar 2009 19:03:35 GMT

@cabarkeep wrote:
Great advice Matt!

...

Anyways ...good advice for the most part Matt ..... just promise me that when you come see me you bring your rich uncle with you and make selling you a car simple lol ...
Message Edited by cabarkeep on 03-08-2009 11:45 AM

Thanks, I'm probably not gonna buy a car before 2010 if then because my 2000 Camry remains reliable and comfortable, and when I do buy it's likely to be used. I don't expect to need either a loan or a rich uncle whenever I do go car shopping: my wife and I could buy a new car tomorrow, but in the current economy we're hanging onto cash. Our emergency fund is enough right now to last us over eight months, but we won't start feeling safe until our emergency fund is enough to last us over a year.

Re: HELP PLEASE!! First Time Car Buyer

Anonymous — Tue, 17 Mar 2009 16:27:32 GMT

I was just approved for an auto loan with Bank of America for $20,000 @ 4.74% for a 12-60 month term!!! I am so excited..they beat my credit union!! I wonder if its because of my longstanding relationship with them because I didn't expect that rate with my score. I have a checking, savings and 2 credit cards (paid off of course) with them Sorry to ramble but I'm so excited and wanted to share. Now I can begin car shopping!