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I need your advice.

Valued Member

I need your advice.

I have an auto loan with GM Financial. I got it when my credit was poor. So the apr I have on the car is around 16.5%.  I've been rebuilding my credit and as of today, my auto enhanced fico score are as follows:

 

EQ -- 742

TU -- 749

EX -- 732

 

On a whim, I went to Cap 1 Navigator and using a Jeep Overland (was my dream car) was pre-approved for $39,900 @ 3.99% for 60 months. 

Before I ask my question, I wanted to see if I could re-finance my car, but it is a 2009 Jeep Grand Cherokee Limited. It has 80,200 miles and is in great shape. The only issue is a little tear in the drivers seat, but that tear was there when I bought it used, at 40,000 miles, in 2014. Because of the high interest rate, I still owe $6400.  I've not missed or been late on any payments and have 15 left.

Now for the advice I'm seeking. Since I was pre-approved with Cap 1, I've changed my mind and like the Subaru Ascent a lot better. Would it be prudent/smart to absorb the $6400 into a new loan? Or should I continue to payoff the Jeep for the next 15 months.  I am trying to do what is best for finances.  I forgot to mention that right now, my payments are $584.  If I take out this new loan at $39,900 my payments would be $610. However, I hope not to use the entire $39900 quote.

Thank all who respond in advance.  I just want to do the right thing.

(until December 2020)
10 REPLIES
Valued Contributor

Re: I need your advice.

My advice for what it is worth... as the 2019 Subaru Ascent is the first year of production I would hold off on your purchase and refinance your current vehicle. I have a 2018 Subaru Crosstrek that I love, but Dad always told me never to buy the first model year of a vehicle because all the bugs have not been discovered. 

 

You have done a great job with your credit. I would also hate to see you upside on a new car loan on top of everything else at this point. Refinance and wait until Subaru brings out the 2020 Ascent. That is my advice, take it for what it is worth.

 

Edit note:

Chase bank is Subaru's captive lender and pulls TU for loans. I was told by the dealer if your FICO 8 is 720 or better you will get the best financing rates with Chase. Just wanted you to have all the information to make an informed decision. I leased my 2018 Crosstrek 2.9% which is what my loan would have been if I chose to purchase the vehicle.

 

Edit note 2: PS, Dealers also lie! cheat! and steal! to sell you a car... so take the previous info with a grain of salt.











Credit isn’t just a score, it’s a skill.
Message 2 of 11
Valued Member

Re: I need your advice.

Thank you.  I did look into refinancing the present car, but they were not into refinancing anything earlier than 2010. But the other things you said made a lot of sense.  I'll continue to pay it down.  Just 15 more payments to go!!

(until December 2020)
Message 3 of 11
Valued Contributor

Re: I need your advice.

I would start to research how to purchase a new car now and you will be ready when the time comes. 

 

A couple of quick pointers @Cjaysmom : 

- Don't get caught up in the excitement of buying a new car.

- When shopping for your new car, tell them up front that you are there to test drive only, if they insist on trying to sell you give them one warning and then walk away. Because...

- you want to find the best financing you can find before going to the dealership to purchase the car.

- Remember, that rate shopping for a loan and multiple hard inquiries (HPs) within a 30 day period will count as one inquiry for FICO scoring purposes.

- Negotiate the price of the car out the door, never get into the how much you can afford a month scam. Numbers can be manipulated when the salesperson or F&I manager starts down this route.

- Let the salesperson think you are going to finance through them because they will try to make up for it in their APR kickback when they go to finance you.

- If the dealership can beat your best financing offer then go with it. If not, use your pre-approved financing.

- Remember, you are looking for $XX,000.00 for XX months at X.X% financing, Not $XXX.00 a month for XX months.

- Really give a second, a third and a fourth thought into purchasing extras when you are in the finance office. The "Finance Guy" is their BEST salesperson.  GAP insurance and extended warranties can be purchased cheaper at a later time.

- Get every promise in writing signed and read everything on every piece of paper before you sign. Make sure the numbers match up with what you agreed to.

- Negotiate your trade-in after finalizing the purchase of your new car. Know the private sale value of the car as you will most likely get more money for your old vehicle in a private sale than trading it in.

- If you keep your FICO scores where they presently are, you are in charge, you have the upper hand, you are NOT at the mercy of the dealership. You are doing them a favor purchasing your new car from them, not the other way around. Be proud of your progress and reap the benefits of having GOOD CREDIT!

 

Edit:

Here are two secret weapons you have in your arsenal when playing two new car dealers against each other for the same make model and year of a new car for the best price. Hopefully, you live in a larger metropolitan area with several dealerships selling the same manufacturers vehicles. After you feel you have gotten the best price from two or more dealerships, go to the offer with the second best price and show them the best price you have. Offer them these two things if they will go $500 to even $300 lower than your best offer in hand.

 

First, promise that you will bring them all of your future service and warranty work. Dealerships make good money when fixing the manufacturer's mistakes. Second, promise them that you will give them all five stars on the customer satisfaction survey. This survey is crucial in what rewards and incentives are made available to the dealership.

 

If the second best offer does not take the bait, then go to the best offer and see if you can get an extra $300 off the price of the car for the same promise of warranty work and five stars on the survey. 

 

Best of Luck and Good Wishes when you go purchase your new car.











Credit isn’t just a score, it’s a skill.
Message 4 of 11
Valued Member

Re: I need your advice.

Thank you, thank you thank you. I am going to print this advice. After the advice I've received, I will continue to pay down my car. And when I'm ready to purchase the next car, I'm going to have done my research and will be in a position to use my good credit to my advantage. When I purchased my Jeep, my car was about to die and I had just separated from my ex-husband. My credit score was low (the dealer never told me what it was, however, I couldn't pay credit cards and loans) and the only reason I got approved for the car was that it was a buyers market and I had a job and a bank account.  GM Financial financed me and I walked out with the Jeep (it was snowing that day too.)  The Jeep has been good to me and I feel lucky to have bought it (there has been record snow these past few years.)

 

Again thank you. I like how all of you all have everyone's back in these forums.

(until December 2020)
Message 5 of 11
Valued Contributor

Re: I need your advice.

This is a great forum to learn about credit and better yourself financially. We all have been at the end of our ropes whether starting out or starting over. I just want others to have the benefit of my experience and they can take or leave it for what it is worth. What I like most is the collective wisdom the members of the forum has and can help people with most situations. The advice one gets might not be the advice they want to hear, however, in the end, the forum can come to a consensus and work through most problems.

 

I live in Colorado and Colorado loves Subaru. Subarus are great in the snow and I will be looking at the Ascent when the lease on my Crosstrek is up in 2021.











Credit isn’t just a score, it’s a skill.
Message 6 of 11
Established Member

Re: I need your advice.

I see that you are gardening until December 2020 but what if you received a zero apr new cc with adequate credit line? Couldn't you pay it off and bypass left over interest and blitz that credit card? You'd be ready for a new auto loan in no time. I figure since you were setting up for a hard pull with the auto loan. Just a thought... It will be interesting to see what the pros here think.
Message 7 of 11
Established Member

Re: I need your advice.

I was in the same predicament you are in. I had a 2011 Ford Escape with 106,000 miles and still had 3 years of high interest payments. What worried me was a mechanical issue occurring. Some repairs get expensive and that cost adds to the upside down amount you owe. Electric steering and sensors and stuff that you normally dont think about. Then the regular worries, the engine and transmission going out. 4 wheel drve if you have it can be expensive to repair. If i got in a wreck i wasnt sure if insurance would cover the amount i had left to pay on the high interest loan. At the same time it was ready for new breaks and rotors and tires. The older and more miles the vehicle has on it the less you are going to get on a trade in. So i went ahead and took the loss, which was really a gain. I lost about 6 grand on the trade in but i got twice the vehicle with no miles. For me its easier to deal with a bigger payment with a lot less interest and the 6 year loan reset for a vehicle that will be pretty much under warranty until i decide to trade it in, with GAP insurance this time.. When my credit gets up to the 700's  i may do it again and get even lower interest payments and a  nicer truck.

Message 8 of 11
Valued Member

Re: I need your advice.

 


@FastNickel wrote:
I see that you are gardening until December 2020 but what if you received a zero apr new cc with adequate credit line? Couldn't you pay it off and bypass left over interest and blitz that credit card? You'd be ready for a new auto loan in no time. I figure since you were setting up for a hard pull with the auto loan. Just a thought... It will be interesting to see what the pros here think.

This is something to think about. I really have a lot to consider. I am very mindful of my utilization. Right now I am at 1%. My credit line has risen to $42,250. However I know that amount is only play money....not real. I am keeping an eye on what I really can afford. I am projecting paying off my car, and then using it as a trade for an Ascent. If all goes well, I will be in the market for a new car around January of 2020.

(until December 2020)
Message 9 of 11
Valued Member

Re: I need your advice.


@JesseJay wrote:

I was in the same predicament you are in. I had a 2011 Ford Escape with 106,000 miles and still had 3 years of high interest payments. What worried me was a mechanical issue occurring. Some repairs get expensive and that cost adds to the upside down amount you owe. Electric steering and sensors and stuff that you normally dont think about. Then the regular worries, the engine and transmission going out. 4 wheel drve if you have it can be expensive to repair. If i got in a wreck i wasnt sure if insurance would cover the amount i had left to pay on the high interest loan. At the same time it was ready for new breaks and rotors and tires. The older and more miles the vehicle has on it the less you are going to get on a trade in. So i went ahead and took the loss, which was really a gain. I lost about 6 grand on the trade in but i got twice the vehicle with no miles. For me its easier to deal with a bigger payment with a lot less interest and the 6 year loan reset for a vehicle that will be pretty much under warranty until i decide to trade it in, with GAP insurance this time.. When my credit gets up to the 700's  i may do it again and get even lower interest payments and a  nicer truck.


How did this affect your FICO Score?  How long did it take for your score to recover?

(until December 2020)
Message 10 of 11