topic Re: 84 month car loan- Strategy in Auto Loans

84 month car loan- Strategy

Anonymous — Mon, 31 Oct 2016 15:08:44 GMT

Hello all, looking for advice on a strategy. Just got a car loan on a 2015 USED Dodge Durango with 18k miles. Amount of loan is $34,100 over 84 months at 6.7% APR monthly payment of $513. My gross income is $68,803. I currently live at home and do not pay rent. My strategy is to pay my monthly amount and add as much as possible to the principal. By the time I am ready to move out, I will refinance my car loan. My only other bill right now are student loans at $450/ month. Please tell me i'm being somewhat smart here. Thank you all for your input.

Re: 84 month car loan- Strategy

darwin_wins — Mon, 31 Oct 2016 15:27:39 GMT

Most people don't agree with what I say about auto loans, few do but here is my take. Don't buy a car with 6.7% APR and is worth 34,100. Cost of the car is almost half your income. By the time you are ready to move out the value of your car may not be what the you to pay back to the bank. Also 7 years car loan in my view not a good idea at all.

How are your scores? Can you get a better APR? If I were to buy a car I wouldn't spend more than 1/3rd of my income because cars can be money pits. Just my 0.02¢

Re: 84 month car loan- Strategy

Anonymous — Mon, 31 Oct 2016 15:29:48 GMT

Over the course of the next year, my plan is to make one large payment of between $7-$10k and then refinance the loan at likely a lower rate for 48-60 months.

They pulled my score which shows 690.

Re: 84 month car loan- Strategy

Appleman — Mon, 31 Oct 2016 15:31:56 GMT

You may want to check out PenFed for a refinance. I have attached their rates. Cutting the interest rate by half will allow you to shorten the length. PenFed will just be one EQ HP to join and you could even apply for a credit card and/or PLOC if you wanted to. You are on the right track to pay as quickly as possible. And re-fi to get that rate down as soon as you can...

1.99% APR	36 months	$500 to $100,000	$572.76
2.49% APR	48 months	$7,500 to $100,000	$438.19
2.99% APR	60 months	$10,000 to $100,000	$359.28
3.61% APR	72 months†	$15,000 to $100,000	$308.28

*APR = Annual Percentage Rate. Your actual APR will be determined at the time of disbursement and will be based on your application and credit information. Not all applicants will qualify for the lowest rate. Rates quoted assume excellent borrower credit history.

¹Loan payment estimates based on a $20,000 auto loan.

†Rate valid for model years 2017 - 2012.

Loan amounts up to $100,000
Easy online application

Benefits

Rates available on all model years up to 60 months. 72-month term available for 2017 - 2012.
Preapproved auto drafts available to qualified buyers
You may even get an instant decision

Re: 84 month car loan- Strategy

Appleman — Mon, 31 Oct 2016 15:33:08 GMT

Not trying to be too nosy, what is keeping the score down?

Re: 84 month car loan- Strategy

Anonymous — Mon, 31 Oct 2016 15:33:25 GMT

Thanks I will definitely look into PenFed when the time comes to refinance.

Re: 84 month car loan- Strategy

Anonymous — Mon, 31 Oct 2016 15:34:18 GMT

Student loans. I am 26 right out of law school. My loans will be under PAYE (10% of my income) and will be forgiven in 10 years granted I stay in the public sector which is the plan.

Re: 84 month car loan- Strategy

surferchris — Tue, 01 Nov 2016 15:06:34 GMT

Congrats on your degree and new job!

Re: 84 month car loan- Strategy

iced — Tue, 01 Nov 2016 16:43:40 GMT

@darwin_wins wrote:
Most people don't agree with what I say about auto loans, few do but here is my take. Don't buy a car with 6.7% APR and is worth 34,100. Cost of the car is almost half your income. By the time you are ready to move out the value of your car may not be what the you to pay back to the bank. Also 7 years car loan in my view not a good idea at all.

How are your scores? Can you get a better APR? If I were to buy a car I wouldn't spend more than 1/3rd of my income because cars can be money pits. Just my 0.02¢

Agree and then some. I think 33% is too high - 10% is responsible and 25% is an upper bound if you have no other debts besides home. Being able to make a payment does NOT mean you can afford the car.

Ideally you should never finance a car. Financing is meant to obtain something now in return for paying a higher cost later, and that model lends itself to investments such as education and real estate. Cars are not investments.

Re: 84 month car loan- Strategy

StartingOver10 — Thu, 03 Nov 2016 12:24:49 GMT

@Anonymous wrote:
Student loans. I am 26 right out of law school. My loans will be under PAYE (10% of my income) and will be forgiven in 10 years granted I stay in the public sector which is the plan.

Student loans wouldn't keep your score down. What else is on your report? Have you checked to make sure your credit report is accurate? Do you have any revolving accounts? Do you have any derogs? I am asking because it looks like you were hit pretty hard with a high-interest rate if you don't have past derogatory info on your credit report. It looks like the finance guy took advantage of you and you may be able to refi more quickly than you originally thought depending upon what the body of your report shows.

Re: 84 month car loan- Strategy

Anonymous — Thu, 03 Nov 2016 13:25:14 GMT

That interest rate is really high for 690. MOst likely because of the term length. You should shop for other loans orr refuse the car at current rate. THe fonance mgr will find a better rate rather than lose the sale.