Whose should get the loan(maybe not even a big difference)

[CaptJOB]

Hello everyone! I'm looking for advice on trading in a vehicle/putting a down payment on a car and getting a loan. Full disclosure I have almost no knowledge of what I'm doing here(aside from skimming the sticky at the top of this forum on how to shop for an auto loan). 

The situation is that DW has a 2016 Mini that's paid off and she doesn't want it anymore. She's looking to trade it in to get a new Subaru Crosstrek(at least for the time being that's the target car but anything in that price range is on the table). I don't think the loan will be for more than 10-15k(after trade-in and down payment). The issue is she has a late payment from three years ago bringing her score down. Our respective FICO 8s are as follows:

     DW 8/21 Experian three report scores(likely won't fluctuate much as account activity is pretty stable)

EX 683 3 inquiries

EQ694 3 inquiries

TU 701 0 inquiries 

AAoA 5y4m

Late is 3y7m ago

     Me 9/10 Experian three report scores(will go up and down a bit with utilization but all will be PIF)

EX 769 4 inquiries

EQ 752 3 inquiries

TU 767 1 inquiry

AAoA 1y

Considering the size of the loan, will it be a pretty insignificant difference in total paid even with a higher APR? Let me know if any more information would be helpful here and thanks for any help!

[Anonymous]

Hello, CaptJOB and welcome! Finance Manager at a car dealership here. I'm gonna throw quite a bit of information at you here so here we go: I can tell you right off the bat a late payment from 3+ years ago is so insignificant that lenders won't even bat an eye. The dealer will throw you on the front of the loan and wife on the back (it would appear as you the applicant and her the coapplicant essentially) and your scores are high enough (anything over 720-730 will put you in the top tier) that you'll automatically score top tier. Where the interest rate increases in YOUR specific case is going to be dependent on the mileage and model year of the car you're financing. As long as it's a vehicle newer than 2015 or so and less than 100,000 miles you're going to get the best rate possible through that lender (unless they mark it up 2 points which the dealer is more than able to do with most banks)

[CaptJOB]

Thanks so much for the help with this. Makes it a lot easier to go into a dealership with the right mindset.

[Gotham-]

Thank you for theHONEST Answer
The Finance Guy!!! ✅

Should he tell them up front about the trade in
And the value of the trade in... just wondering your opinion or insight

[Anonymous]

Y’know, people always say “don’t tell them about your trade until the end of the deal,” but I personally get that out of the way first.
Know the value of your trade - most dealers are going to go by Blackbook which is dealer exclusive - I can provide you values if need be. A good free source is NADA and I would ask and not budge from Clean Trade.

I can’t stress this enough: know what your vehicle is worth. Dealers are always trying to steal good trades. Always.

[Save-n-Invest]

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@Anonymous wrote:
Y’know, people always say “don’t tell them about your trade until the end of the deal,” but I personally get that out of the way first.
Know the value of your trade - most dealers are going to go by Blackbook which is dealer exclusive - I can provide you values if need be. A good free source is NADA and I would ask and not budge from Clean Trade.

I can’t stress this enough: know what your vehicle is worth. Dealers are always trying to steal good trades. Always.

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Good info. Several years ago I called a dealer to get a price on a new car. Mine was in service. Asked that they value my car as a trade and get back to me with a number. The proposed deal would be cash minus the trade. Salesman called with the info. We went in the next day to do paperwork and delivery. Numbers changed, significantly. 

I said that's not what you quoted yesterday. He said there is a problem with the trade. I told him no problem. Take the trade out and I'll substitute with cash for the trade allowance.  He got all foolish saying that's not the way it works. We left. 

We bought the identical car from a different dealer cash no trade for a lower price than originally agreed with first dealer. Sold the trade privately. The trade was a late model, low milage very clean car, same make as the new car.

[Anonymous]

The ONLY reason that wouldn't be "the way it works" is if you were being stipped for your trade in (if you had an active loan on it) by the lender. When appraising your trade there are essentially 4 different values - Rough Trade, Average Trade, Clean Trade and Clean Retail - 99% of lenders use NADA Clean Trade and NADA Clean Retail when calculating LTV. Dealers prefer trades over actual cash because they may ACV (actual cash value) your trade at i.e $25,000, but if they only allow you $23,000 that's $2,000 extra gross in the deal. Dealers are notorious for stealing trades left and right. You could have a super clean vehicle and they'll still start offering $1,000 back of Rough Trade. Take my Lexus for example... I've recently been in the market for a Chevrolet Corvette. My Lexus' Clean Trade value is $29200, but the first dealer offered me $24,000... I managed to work them up to $28500. Don't trust a dealer when they say "I only have a few hundred bucks to discount," or "I don't have that much swing on trades..." In reality my average gross per copy is $6000 right now...

[Save-n-Invest]

No loan on that proposed trade. They just changed the numbers I guess. As we walked away the salesman put his head out of his cube loudly saying are you going to lose this deal for X dollars? I said no you are and kept walking. 

Sometimes a deal just doesn't work for whatever reason. Once there is an agreement even verbal I expect the parties to honor that. If one decides not to it's finished. Too many cars and too many car dealers to fool with one who is shaky from the jump.

I may be just a stickler in that regard. If one dealer doesn't want the money another will happily accept it. Dear old dad often said cash will take you anyplace you want to go.