19 years old, assistance with auto loan

[Anonymous]

Hello! 

I am looking into purchasing my first car, this will be the first car under my name, the car I have now is under my mothers name. 

I am trying to figure out an estimate on how much I should spend on a car. This forum seems to give very good advice to decided to try to get some advice so I don't dig myself into a hole. I am currently 19 years old, 653 credit score, 5 total accounts open $3500 Student loans (I dont have to begin paying for another 3 years), American Express CC, Capital One CC, Ashleys Homestore CC and an AU on my grandmothers JCPENNEY CC. I have 100% payment history and 12 months of credit hstory.

I only make $950/mo $700 after bills. My mother will be paying the Insurance on the car.

Whats an estimate MSRP I should apply for on my loan, do any of you have an estimate on how high/low my APR will be considering the details I included? I would be willing to pay up to $380/month for a car payment. 

My mother would like me to do a 3-year loan. I have $1500 to put down. 

Please give me any advice, because I really get anxiety with these types of things! Thank you. 

[pinkandgrey]

Kind of subjective, but I would say no more than 10k. I bought a 10k car when I was in a similar financial situation to you. Ultimately only you can make the determination.

[Anonymous]

$380 a month at %0 interest (don't get excited not getting 0%) with a $1,500 down payment would give a total out the door amount of $13,680 meaning all inclusive of tax, title, fees.

That's at 0% interest.

At 5% interest that would give you $12,678 as the most you can spend out the door all inclusive and keep payment to $380/year for 3 years.

At 10% interest that would give you $11,776

at 15% interest that would give you  $10,962

at 20% interest that would give you $10,225

How long is your credit file, what is the average age of your accounts, oldest account?

I would try and find a reliable certified pre-owned car with warranty but at $10,225 to $12,678 out the door after tax, title, license you may not be able to get certified with warranty it may have to be a little older but still a very good car esp for a 19 year old.

I don't know that I see anything wrong with a longer loan as long as you will stay rightside up.  This means never owe more than it's worth.  The higher the interest rate and the less you put down the more likely that is to happen (going upside down) where you are stuck and can't even refinance it if you owe a lot more than it's worth.

Also look into GAP insurance.  Should the car be totalled they will cover the loan even if upside down.

Check your local credit unions or maybe DCU.

[Anonymous]

I would say $10-$15k. 

Why 3 years? Doing 6, but paying it off sooner will give you more flexibility. Unless that 3 year loan has a substantially lower (1% or more) apr, I recommend doing a longer loan. I dont recommend any down payment unless your loan requires it. GAP is subjective, Ive never used GAP ever - but its really up to you on if you want that protection.