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I've had my original car that was given to me after my grandfather passed away in 2013. It's a 2006, and it's on it's last leg. Surprised I haven't died in it yet, considering the magnitude of mechanical problems. I've spent a good portion of the last seven years building my savings, and now I finally have secured my goal of having $35,000 in actual cash (Amex HYSA) that is specifically an account for a car. Since I already have cash, do I even need to get an auto loan? I ask becasuse, I already have an active (recent) 5 year installment loan with NFCU- would that affect me in getting an approval through them so soon? The only positive I can think of would be having an installment loan reporting that isn't secured, and is an actual auto loan. I don't own any mortgage, and don't intend to, so that will not be on my report for at least a decade. Income is over $50,000 with $145,000 in savings.
At first I was thinking about getting a car through Hertz's bankruptcy sale, but after much thought, even with the great price.. I really don't know the history of those cars. We all know, and I'm guilty of it myself.. people beat rental cars to death. My thought is, if i'm willing to pay close to $19,000 for a 2019 Toyota Camry with 30k miles, why not shell out the extra money to get a brand new 2021? It would be covered by the warranties and I would know it's a brand new car. I'm definitely not one of those people who needs a new car every five years, I see myself keeping this for at least ten to fifteen years.
How does an auto loan application work? I want to put money down, because I have it now and it would be silly not to put money towards something I already expect myself to in the future. A 2021 Toyota Camry that i'm looking at is roughly $26,000- if I were to put $13,000 what do you think my terms and monthly payment with NFCU would be?
Average age of accounts: 8 mos // Oldest: 3 years
Honestly, with your scores, you'll probably be approved for 0%, so I would take the longest term possible and keep the savings earning money. Use it to pay the car every month.
I'd take the 0% financing but also drop what you feel comfortable on the initial payment.
$200 auto payments are much nicer than $400 ones IMHO.
Of course, haggle on the the price.
Never pay MSRP and even haggle on the invoice price.
Don't just take what they give you.
And also don't tell them how much you plan to put down, until you settle on the OTD ( out the door) price. Which includes tax, tag and title.
Get your own pre-approval before you go to the dealership, if you can.
@Anonymous Please do not stress about this and be nervous by stating you have no idea what you are doing....you have already been successful more than many just by having your savings and excellant credit scores. You are sitting very pretty here to get a great deal and great financing.
Disclosure: I have 21+ years of car business experience starting off on the sales floor, then after mkt sales, public relations, sales manager, finance manager, general sales manager and finally general manager all in a major metropolitan city. I state this so you will know my experience background and so you may feel comfortable in asking any follow up questions and I am happy to help in anyway I can. I left the car business approximately 8 years ago so I’m not 100% up to date on current programs, practices, etc....but I’m certain most are the same. @Girlzilla88 is currently still in the car business and I’m sure may be able to lend a helpful hand, too.
This is what I would do if it were me with stats / info you gave:
1. Narrow down what vehicle / price range you prefer
2. Contact NFCU for pre-approval....auto loan rates start at 1.79% depending on term. I’m guessing 1.79 is most likely 36 months. I personally would like this term....let NFCU know you where you would like your payments and how much down it will take to get you to that payment. If you are comfortable with that, then I would put the rest in a savings with them and set up auto pay to make the payment approximately 5 business days before the day the payments are due. This way you have plenty of time to catch and fix any potential glitch should auto pay fail. Yes, 0% sounds great, but many vehicles have rebates (nothing to do with and separate from any MSRP discount) you must give up in order to receive 0%...unless the rebate is VERY small, you will come out ahead taking the rebate and using your 1.79% financing. Also, should you pay the car off early, you will not be paying the full 1.79% in financing fees as it should be simple interest. 1.79% will not really add up to much $$ at all especially if putting down a large down payment and with 36 month term. So at theses numbers if there is decent rebate....you will always come out ahead taking the rebate and going with the low finance rate I have mentioned. I understand the thinking others have commented on upthread, but they are not quite correct on several points. There is no kick back after 3-6 months of financing....if the dealer is only making a nominal amount of finance rate above their buy rate, such as 1/2 - 1 point or even the advertised special rates, most likely they are only getting a flat rate. Might be $100. If they are making several points on you, then yes....that could be a larger fee they receive and could have that fee charged back should you pay off early in 30 - maybe 90 days. ETA: this last part is moot if going with NFCU or any other personal lender and not through dealer.
3. Once you decide which car you want, put in some internet quote requests at several dealers and pick which dealer has a great price....you do not always have to go with the lowest price....unless of course it’s hundreds or thousands different. I’m referring to many times quotes can come back the same or $50 or $100 or $200 difference. At this point, I would look at how close the dealers are to my home or work, their reputation and do you like them? In other words, if quotes are extremely close....don’t let a few bucks keep you from buying from where you get the best warm fuzzy just because you have beat them for $100. That $100 could be well worth it if you have a great dealer with great service, etc.
4. Have fun, try not to stress....this should be a fun and exciting purchase most people do not make very often as you stated you even will keep this car a while. There is nothing better than new car smell. I do understand the anxiety and despair so many have when shopping for cars, the car business does not have the best reputation and let’s face it.....they did that to themselves and their reputation over the years. I do want you to know there is also some great people in the car business that are not just “out to get you”, they really do want to help you and at the same time earn a living.
ANY question you have, please feel free to ask and I am happy to help anyway I can if you like....just please make sure to tag me in any comment so it will alert me so I do not miss your questions/comments. Good luck, have fun and enjoy....you got this!! 🛳💙🚗
@Anonymous My apologies, I neglected to assist for one of your main questions and just remembered. Regarding what payments may be with financing 13k....if you go to NFCU website and click through to Auto Loans, they have a loan calculator you may use by plugging in numbers, rate and term and that will give you the payments. Keep in mind if the 26k you noted as purchase price may not include tax, title and license...you may either pay that down, too or roll in with financing making payments slightly higher.
@Anonymous wrote:@Anonymous Please do not stress about this and be nervous by stating you have no idea what you are doing....you have already been successful more than many just by having your savings and excellant credit scores. You are sitting very pretty here to get a great deal and great financing.
Disclosure: I have 21+ years of car business experience starting off on the sales floor, then after mkt sales, public relations, sales manager, finance manager, general sales manager and finally general manager all in a major metropolitan city. I state this so you will know my experience background and so you may feel comfortable in asking any follow up questions and I am happy to help in anyway I can. I left the car business approximately 8 years ago so I’m not 100% up to date on current programs, practices, etc....but I’m certain most are the same. @Girlzilla88 is currently still in the car business and I’m sure may be able to lend a helpful hand, too.
This is what I would do if it were me with stats / info you gave:
1. Narrow down what vehicle / price range you prefer
2. Contact NFCU for pre-approval....auto loan rates start at 1.79% depending on term. I’m guessing 1.79 is most likely 36 months. I personally would like this term....let NFCU know you where you would like your payments and how much down it will take to get you to that payment. If you are comfortable with that, then I would put the rest in a savings with them and set up auto pay to make the payment approximately 5 business days before the day the payments are due. This way you have plenty of time to catch and fix any potential glitch should auto pay fail. Yes, 0% sounds great, but many vehicles have rebates (nothing to do with and separate from any MSRP discount) you must give up in order to receive 0%...unless the rebate is VERY small, you will come out ahead taking the rebate and using your 1.79% financing. Also, should you pay the car off early, you will not be paying the full 1.79% in financing fees as it should be simple interest. 1.79% will not really add up to much $$ at all especially if putting down a large down payment and with 36 month term. So at theses numbers if there is decent rebate....you will always come out ahead taking the rebate and going with the low finance rate I have mentioned. I understand the thinking others have commented on upthread, but they are not quite correct on several points. There is no kick back after 3-6 months of financing....if the dealer is only making a nominal amount of finance rate above their buy rate, such as 1/2 - 1 point or even the advertised special rates, most likely they are only getting a flat rate. Might be $100. If they are making several points on you, then yes....that could be a larger fee they receive and could have that fee charged back should you pay off early in 30 - maybe 90 days. ETA: this last part is moot if going with NFCU or any other personal lender and not through dealer.
3. Once you decide which car you want, put in some internet quote requests at several dealers and pick which dealer has a great price....you do not always have to go with the lowest price....unless of course it’s hundreds or thousands different. I’m referring to many times quotes can come back the same or $50 or $100 or $200 difference. At this point, I would look at how close the dealers are to my home or work, their reputation and do you like them? In other words, if quotes are extremely close....don’t let a few bucks keep you from buying from where you get the best warm fuzzy just because you have beat them for $100. That $100 could be well worth it if you have a great dealer with great service, etc.
4. Have fun, try not to stress....this should be a fun and exciting purchase most people do not make very often as you stated you even will keep this car a while. There is nothing better than new car smell. I do understand the anxiety and despair so many have when shopping for cars, the car business does not have the best reputation and let’s face it.....they did that to themselves and their reputation over the years. I do want you to know there is also some great people in the car business that are not just “out to get you”, they really do want to help you and at the same time earn a living.
ANY question you have, please feel free to ask and I am happy to help anyway I can if you like....just please make sure to tag me in any comment so it will alert me so I do not miss your questions/comments. Good luck, have fun and enjoy....you got this!! 🛳💙🚗
Thank you so much. I will take you up on that, so watch your PM box in the coming days lol. Really needed that boost of confidence.
I'm pretty well set on a 2021 Toyota Camry if I buy new, even if I were to buy used- it would still be a Camry. My second choice would be a new or used Honda Civic. I've spent my time researching them, i'm not a car guy. I just need something that gets good gas mileage, minimal maintenance and can handle Midwestern winters (ice, 3-12 inches of snow, rust underneath the car). I currently have an SUV thats a v6, but I don't think I need a v6 or an SUV anymore, and I find the v4's really attractive for their mpg. Definitely not a Toyota Prius person, I like a car with some oof.
@Anonymous wrote:@Anonymous My apologies, I neglected to assist for one of your main questions and just remembered. Regarding what payments may be with financing 13k....if you go to NFCU website and click through to Auto Loans, they have a loan calculator you may use by plugging in numbers, rate and term and that will give you the payments. Keep in mind if the 26k you noted as purchase price may not include tax, title and license...you may either pay that down, too or roll in with financing making payments slightly higher.
Assuming I get the 0% offer you guys seem to think, is 60 months a good term? I'm willing to put $25,000-$30,000 down on a $40,000. If I don't use the full $40,000 what happens to the rest of the money? Can I pay down ths auto loan to 93% and keep making monthly payments for the 60mos?
@Anonymous If you are looking for the 0% specials, that will be with the Manufacturer's lending (Toyota)....no, you will not be able to pay down and keep loan at 60 months if I'm understand you correctly. I'm reading your question as you want to do auto loan similar to NFCU's ssl loan feature. You can pay the auto loan down, but you will still have same original payment due each month until balance paid. Will not stretch out 60 months if you immediately pay that much to loan.
You can use $16.67 per $1,000.00 financed for 60 months to easily calculate what a payment will be at 0%.
@Anonymous
" If I don't use the full $40,000 what happens to the rest of the money?"
Your loan would only be for the amount needed less your down payment....would not be for 40k if car purchase price is 26k. Loan would be 26k plus TT&L minus down payment.