Need Help Understanding Car Buying

[hapagrrl]

Hello, Everyone --

Please forgive my ignorance and the length of this message, but I want to make sure I don't get and/or feel screwed when I buy a new car.

After being unemployed for nearly a year, I finally got a job! I'll be relocating across country. I don't have a car at all right now (it went up in flames this past Spring) and I'll definitely need one where I'm going. I'll rent a car for the first while so I can get to work, etc. I'm thinking I'll need to collect a paycheck or two to come up with a down.

The apartment I applied for pulled my score and they said it was 622 -- don't know which bureau. This means I've dropped a few point in the last few months (I ran out of my savings and paying bills on unemployment benefits is.. Challenging. I stayed on top of my bills as best as I could and I've got 10 less pounds on me to prove it! ;p). But I may pull my scores again from FICO next week/end of the month and see how it looks...

I'll be bringing home about $4200/month and my rent will be $800/month. I have other obligations (student loans, tax debt) that I'll need to factor in. I haven't had a new car in 15 years (paid on time, no repo, no lates, etc.), so I doubt I have an Auto Enhanced score. Although, I seem to recall Quizzle? or one of those telling me it was 830+, but I took it with a grain of salt.

I'm looking at a Subaru Impreza Sport. It's a bit higher caliber than what I originally wanted (a Mazda 3), but I've never driven in snow/rain storms and I'm scared enough about it as it is; I want something safe and reliable. Oh, and my dog and I are avid hikers, so we'll need a good car for that, too. The price their website says $23, 310.

So, for all you out there who are waaay more knowledgeable about this stuff:

What kind of APR can I *reasonably* expect to be offered?

I'd rather not pay for a car for five years, but I also don't want a $400 or $500 payment -- is this realistic?

I think I can realistically put $2,000 down; if I wait a little longer, maybe $3,000. But that means renting the car for longer, which gets pricey...

Bottom line -- how do I make sure I don't get too upside-down with the financing?

I'm just scared to death of getting in over my head with a new car/financing and really don't want to feel like I'm getting ripped off.  At the same time, I'm sick of driving ratty cars that break down -- or set ABLAZE -- at random.  ANY advice, suggestions, etc. that you can offer would be so deeply appreciated!!

PS -- I have a credit union account in my current state (CA) and will open a credit union account in the new one (PA). I don't know which, if any, will approve me for an auto loan.

[Cloudlb]

There are plenty of very informative sites out there you can use to help you figure this out.  Learn how to run the numbers yourself to see what you can afford at bankrate.com. For understanding the car buying process, I like carbuyingtips.com

My suggestion would be to find a place to live very close to your job, or accessible by public transit, and put off buying a car for a while.  More downpayment = less paid overall for the car, and lower monthly payments. 

[hapagrrl]

Thanks for the sites! They look very useful - this will help alot!

I hear what you're saying about forgoing buying a car for a while and yes, I do live close enough to work to walk (45mins or so). But I have a dog that needs to be exercised rigourously twice a day -- and we'll have to drive to get to the hiking trails. If I don't want to pay thousands in vet bills and apartment repairs because my dog got bored and ate half the stuff in the house, then I *must* exercise her properly. She's just not a "quick walk around the block" kind of dog.  So, if it was just me, I could suffer through it for a while -- that's just not the case here.

[Anonymous]

Congrats on the job!!

1- At risk of sounding mean, you are going to be at a disadvantage from any lender by being unemployed for the last year. Most places want you to have a year under yo belt at your current employer or X years of unbroken employement. This means that if you do get approved, you may not get a best possible rate.

2- You may have better luck attempting service with a company that has loaned to you in the past, a bank/credit union you have an existing relationship with or by going ahead and seeking out more lenient lenders.

3-You need to accept the fact that if you get an interest rate below 10% you are both lucky and standard. Most interest rates in the wild are about 5%+. Banks that offer lower are doing so for best customers. Most places in the wild do not offer rates lower then 2.9% (yes they do exist out there- will you qualify? probably not)

4-The general rule of thumb is, that for every $1000 financed over 5 years your payment will be roughly $20.00 a month, so you have say the cost of the car at $17,000, tax title fees taking you to $20,000 and you are putting $2,000 down you are going to be at $350-$370 a month. 

5- Quit pulling your scores from myFICO, most lenders are going to use autoenhanced scores which are not available for purchase from this site so you are throwing money away by purchasing your FICO for purposes of a car loan.

6-If you are worried about negotiating attempt to purchase a car under non negotiable pricing like FORD AXZ plan, or some manufacturers plan, or through sometrhing like COSTCO's auto buyers plan.

---

@hapagrrl wrote:

Hello, Everyone --

Please forgive my ignorance and the length of this message, but I want to make sure I don't get and/or feel screwed when I buy a new car. 

After being unemployed for nearly a year, I finally got a job! I'll be relocating across country. I don't have a car at all right now (it went up in flames this past Spring) and I'll definitely need one where I'm going. I'll rent a car for the first while so I can get to work, etc. I'm thinking I'll need to collect a paycheck or two to come up with a down.

The apartment I applied for pulled my score and they said it was 622 -- don't know which bureau. This means I've dropped a few point in the last few months (I ran out of my savings and paying bills on unemployment benefits is.. Challenging. I stayed on top of my bills as best as I could and I've got 10 less pounds on me to prove it! ;p). But I may pull my scores again from FICO next week/end of the month and see how it looks...

I'll be bringing home about $4200/month and my rent will be $800/month. I have other obligations (student loans, tax debt) that I'll need to factor in. I haven't had a new car in 15 years (paid on time, no repo, no lates, etc.), so I doubt I have an Auto Enhanced score. Although, I seem to recall Quizzle? or one of those telling me it was 830+, but I took it with a grain of salt.

I'm looking at a Subaru Impreza Sport. It's a bit higher caliber than what I originally wanted (a Mazda 3), but I've never driven in snow/rain storms and I'm scared enough about it as it is; I want something safe and reliable. Oh, and my dog and I are avid hikers, so we'll need a good car for that, too. The price their website says $23, 310.

So, for all you out there who are waaay more knowledgeable about this stuff:

What kind of APR can I *reasonably* expect to be offered? 5.9%-12.9% anything lesser is GREAT anything greater may be necessary due to time on job/score. 

I'd rather not pay for a car for five years, but I also don't want a $400 or $500 payment -- is this realistic? There are many car payment calculators out there. Plug some numbers in and see.

I think I can realistically put $2,000 down; if I wait a little longer, maybe $3,000. But that means renting the car for longer, which gets pricey...I rented a car for 1 year due to the 1 year at employer rule.

Bottom line -- how do I make sure I don't get too upside-down with the financing? A hefty downpayment along the lines of 30% and taking the loan out for 4 years. ie- a new car depreciates tremendously in the first year so it is very hard to do.

I'm just scared to death of getting in over my head with a new car/financing and really don't want to feel like I'm getting ripped off.  At the same time, I'm sick of driving ratty cars that break down -- or set ABLAZE -- at random.  ANY advice, suggestions, etc. that you can offer would be so deeply appreciated!!

PS -- I have a credit union account in my current state (CA) and will open a credit union account in the new one (PA). I don't know which, if any, will approve me for an auto loan.

---

[hapagrrl]

Thank you, USMC!!!!! This is *just* the kind of information I was looking for. 

And no, you didn't sound mean -- this is just what my reality is right now, and I appreciate your honest insight. Just so you know, I'm not crazy enough to think I'm gonna get .09% at this juncture - and I do intend on doing a re-fi in a year or two.

Again, thank you very, very much! I'm saving your response for printing later,when I have my printer again.

All the best you!

[Cloudlb]

Mr. Usmc has excellent advice, always. 

I tend to disagree with this part a bit:

"5- Quit pulling your scores from myFICO, most lenders are going to use autoenhanced scores which are not available for purchase from this site so you are throwing money away by purchasing your FICO for purposes of a car loan."

Although it's true that lenders may pull auto enhanced scores, and therefore from a pure cost standpoint, he's right, I think pulling your own scores ahead of time reduces the uncertainty, nervousness, and possible shame (speaking from experience) involved in negotiating for a loan.  It gives you confidence, and enables you to refute any errors or tricks they may try to pull on the uninformed.  Also, when I went through this process earlier this year, I made an appointment with my CU loan officer ahead of time, brought my own credit reports, and gave them to her.  She was very impressed.  I'm not sure if that made any difference in the long run, but I'm all for impressing people who you are asking to lend you money!

As a final thought .. . have you considered a cat? 

[hapagrrl]

Cloud--

LOL!! Actually, yes - I have one of those, too. And no - he's not "high energy" and doesn't need to hike every day, ROFL!

I agree with you *and* with Mr USMC about pulling the scores -- my cash situation is *extremely* tight right now, so not having to spend it on yet one more thing would be nice.

But --  I've closed out a revolving a/c (a secured loan that reported "paying as agreed" every month) and will be bringing the util on my 2 secured, small limit cards down to 0% and I'd like to see how that looks (in comparison to the 622 right now).

And you make a *great* point -- having your act together with folks you want money from is probably a really good thing!

Thank you!! (and I'm still laughing about the cat; yeah --  they're WAY less maintenance than dogs!)

[Cloudlb]

Some further comments:  Don't fall in love with one car.  More options gives you a better chance to make a good deal.  Also, you need to figure in taxes, title, license, and possibly gap coverage, and those option packages can add up.  I think there are more vehicles out there which might be cheaper--even reliable ones with good winter handling.   If it makes sense to you, look for a good deal on a certified or couple-year old car. Look at Consumer Reports, TrueCar, Edmunds, etc.  

In your situation, sometimes you have to take a hit on the interest rate and other terms, and you will be upside down if you don't put 20% down on it.  But it you pay this one off, you'll be in a better position for the next one.  My goal is to pay all cash for my next one. 

[hapagrrl]

Cloud--

On your advice I'm looking at other makes/models; they all seem to hover around $18-23K. If I add in the options that come standard on the Subaru, I get about the same price, basically, so we'll see. In any case, I've started my spreadsheet on it all and it includes slightly older models.

I understand I'll take somewhat of a hit because of being unemloyed, etc., but I'll refi in 18 months or so. In the meanwhile, can we blame me for wanting to go into this armed with good info.?

Thanks so much for the advice!

[demi]

Not sure about Pennsylvania and dog parks, but you might want to check out the possibility of being within walking distance, plenty of exercise opportunities (my two and I go almost every night).  If you can wait and come up with a bigger down payment, it might be worth it. 

Also, just had to rent a car while mine was in the shop (btw, may be car shopping soon as well, informed need new transmission in the next 6-12 months at the tune of $5,800, which, concidently, is the blue book value of my car) and I had to sign special forms stating I would not have a pet in the car.

Good luck, and congratulations on the new job.  Moving can entail a lot of expenses, especially such a major one.