Minimum Amount Bank Will Finance

[Anonymous]

So I had my 5 year credit plan worked out. I've taken the first step by getting 2 secured cards and started building credit. 1 year from now I was going to attempt to purchase a car to add that to my payment history. I'll be 21 years old so my insurance will be around $200/month so I was looking for say a 1999-2002 Mercedes/BMW (tired of driving little honda civics) for around 6-8k dollars. I was going to put 3-5k down and put the remaining balance on a 24 month lease to help build my credit. I'm hearing now that banks wont loan on such an old car or for such a small amount... The only reason I'm taking this route is because I want to build payment history while keeping the payments low since my insurance is as much as a car note in itself. Does anyone know if this is a possibliity or do I need to scrap the BMW idea and buy an 04 kia rio for 3k and finanance it?

[Cloudlb]

"put 3-5k down and put the remaining balance on a 24 month lease"

I don't think you can do a "lease"  on a used car, can you?  Have you worked the numbers on a purchase with this much down?

[Creditaddict]

1. Lease is usually for much newer vehicles

2. I think even a loan would be hard to come by for 3-5k 10+ year old car.

3. Do you know how much repair costs will go into a 10+ year old car especially a BMW or Mercedes!!

and really it's not very recommended by any finincial advisor to lease (they say if you can't afford to purchase, then you can't afford the car.

[Cloudlb]

agree.   I know two people with older/used BMWs and they are constantly in the shop, and very expensive shop visits, too!  if it were me, I'd be checking out Consumer Reports' list of reliable used vehicles. 

In the interim year, I think I'd try to develop a relationship with a credit union, possibly discussing your plans with a loan officer, and asking what the minimum they would finance, and how you could increase your success.  Sometimes banks suggest a small secured loan beforehand, to improve your chances.

[Anonymous]

Sorry idk why I said lease. I mean loan and I do realize the possibility of high repair bills.. I have a friend who has a 1989 E class which had something go wrong that cost him 700 to fix but its at 220k miles and no other problems.. I realize the risk involved but I only plan on using the car for 2 years until the note is paid and then buying a new car.. (my credit will hopefully be better and my insurance cheaper) I just don't know if it's possible.

[Anonymous]

FYI; You can lease Used cars. It would be a bank lease and the rates are mostly terrible unless there are special/specific circumstances

[Anonymous]

And @Cloudlb I'm currently a member of my local credit union.. I was actually planning on cancelling that account but maybe I should keep it open and see about getting a loan with them.

[Cloudlb]

credit unions are good sources for car loans, tho

[Anonymous]

I have a friend of mine who "kinda" drives a 1985 Ferrari. I say Kinda since he can never afford the upkeep and it barely runs so I end up picking him up. A lot.

At your age unless you are mechanically inclined and have a facility and tools for your own repairs, I think you are making a very poor car buying decision.

Yes banks and credit unions have minimum amounts they finance.

Do the math yourself on $4000 over 48 months @4.9% and see how much revenue they would generate...not enough to bother with the loan.

Also vehicle age and mileage is another big factor. Why? Well car loans are secured loan there is the expectation that if you do not pay the car note they come take the car and then sell it and recoup what they can. A 100K mile 1999 car or whatever has a much lower rate/possibility of recouping that.

Debt plans are awesome, but sometimes you need to see the big picture.

[Anonymous]

Hmm I see what youre saying and yeah I know you're right but agh I can afford a 25-30k car but I'm trying to make a smarter financial decision (hence the short 48 month loan and building credit so later I can buy that 25-30k car and not have astronomical insurance bills) but I'm SOOOOOOOO tired of compact economical civics etc. I want leather seats and a bigger car!!!