Auto Loan Help

[mominwestlake]

I have some questions about auto loans. We haven't take one out in over 20 years but find ourselves in a situation where we need a loan. Our car was totaled in an accident yesterday and we are looking to buy a new one. Forgive me if these are dumb questions

1. Is it better to go through the dealer or a bank?
2. What requirements do we need to meet to qualify for a loan? Unfortunately, due to the economy, we have credit card debt and also a mortgage. Business has picked back up so we do have decent W-2s to show. If we already have debt will we be able to qualify for a loan?
3. Does a down payment have any impact on the ability to qualify for a loan? We have a few thousand in cash plus anything we might get from the insurance co.

 

[BriarfoxinWA]

Try the dealership first. They usually have better loan rates that most banks if your credit score is ok. I'd also go ahead and try a bank or credit union if you want to get pre-qualified. You can also prequalify with Ford Credit or any of the others online if you know what kind of car you are going to shop for.

 

[mominwestlake]

Can I find out our credit scores now before going to the dealer/bank? Is it free?

 

[wdwmom2]

I have some questions about auto loans. We haven't take one out in over 20 years but find ourselves in a situation where we need a loan. Our car was totaled in an accident yesterday and we are looking to buy a new one. Forgive me if these are dumb questions

1. Is it better to go through the dealer or a bank? Depends on who is offering you a better rate. Check the banks, check the dealers. From the TV commercials I see, some auto manufacturers offer 0% financing. We bought a Honda, 3.9% from the dealer. No bank was offering that.
2. What requirements do we need to meet to qualify for a loan? Unfortunately, due to the economy, we have credit card debt and also a mortgage. Business has picked back up so we do have decent W-2s to show. If we already have debt will we be able to qualify for a loan? We have a small amount of cc debt and a mortgage. I checked our credit score before hand and it was very good. No problem qualifying for a loan.
3. Does a down payment have any impact on the ability to qualify for a loan? We have a few thousand in cash plus anything we might get from the insurance co. Not sure. We did put money down on the car. Not sure how this does or doesn't affect financing.

My $.02

 

[wdwmom2]

Can I find out our credit scores now before going to the dealer/bank? Is it free?

You want your FICO score. I went here, paid around $12. I googled FICO coupon code, found one, and entered it at checkout to get the discount.

http://www.myfico.com/Products/FICOOne/Description.aspx

 

[Bren's Mom]

I would first shop around and find what you want to buy. If you talk to a salesperson discuss ONLY the price of the car, NOT financing AT ALL.

And really discuss the price of the car, not 'monthly payments'. (You can figure monthly payments all on your own.)

When you're ready to buy, go to your bank/credit union and get pre-approved. They'll tell you the interest rate and length of loan and you can easily figure the monthly payments from there. (bankrate.com has a free loan calculator if you need it)

With that approval in hand, and with a final price for the vehicle set in stone already, THEN you can talk financing with the dealership. Ask them what they're best deal is. You will want to know the interest rate and rate of the loan. I brought with me a spreadsheet that I could glance at, it had the price of the car and various interest rates and loan lengths, with different down payments, and what the monthly payments would be. The salesperson might try to tack on, make the loan longer, etc...so be sure you're getting all the info. And then, if the dealership really can beat the bank, great. If not, you're all set to purchase with the bank loan.

I think you'll be able to get a loan. Before you start anything you might want to call your bank and pre-qual if you're really concerned.

 

[lspst8]

I think typically unless the dealership is offering 0% or 2% interest rates (that you still have to qualify for - usually I see that you need a very good credit score for these) a back or credit union will offer better rates.

I was approved for a car loan through my bank this summer, and I have a mortgage, small student loan, and an existing car loan. They were willing to loan me up to $45,000 for a car!

You can get a free copy of your credit report at annualcreditreport.com, but it doesn't include your credit score. That costs extra.

 

[SC Minnie]

By all means check your local bank or credit union rates before going to the dealership as well as what is covered in those loans. The last car we bought the dealership matched the rate our credit union was offering.

Go with the lender that has the best rate.

 

[mominwestlake]

Thank you for all the good advice I've gotten so far. I did check our credit reports. My credit is good but currently I am not working- I am in school to renew my teaching license. So I have no income.

DH's score isn't the best. When I looked at why it is because he owns his owns business (incorporated) and 3 or 4 of the business credit cards with balances are showing up on our credit card and they have rather large balances. They are large but when he pays them he pays them in large chunks. They have always been paid for by the business but they are in dh's name. During the past 1.5 years he was late with payments a few times- due to the economy, but now business is picking up.

So, now I am worried we won't good a car loan because it looks like we already have a lot of credit being used. Dealer loans are good if you have good credit.

I was wondering if anyone has used Capital One for their new car loan? I feel like I have a good history with them so maybe they'd approve us.

 

[AKL_Megs]

I bought a brand new car 4 months ago.

GM was offering "0% Financing", although I don't know who in the world qualifies, because I have perfect credit and GMAC turned me down. Anyways, I went through a local credit union and got a decent rate... the same rate my bank was offering. (The funny thing is, by not getting qualified by GMAC for the 0% rate, I qualified for $2500 in other rebates instead. My payment if I would have qualified for the GMAC financing at 0% would have saved me only $1500 total, but by using the credit union and qualifying for other rebates, I saved $2500 total! Now how stupid is that for GM!)

I don't think downpayment has anything to do with getting approved, because I was putting down $5000, and like I said, was still denied financing through GMAC... but no issue with a credit union.

Check out Edmunds.com for current rebates.

 

[dakcp2001]

I just did all of this reseach over the summer!!!


There are a few known ways for a car saleman to get you on the price. Financing, trade in and down payment are the areas where they tend to "play" with the numbers to increase their bottom line.


Get your OWN financing BEFORE you go to the lot. Do not answer the question "How much do you want to pay per month" just discuss total car price. Do not tell them about any trade in that you have. Tell them you are not trading in until after you get their bottom line price. Then if you want to trade in, ask them about it then. If you totalled your car, you may not have to deal with a trade in, but if you do, then be sure to go to kbb.com and know the value.

Go online and look up the KBB if buying a used car to see what it is worth, and make sure to look up MSRP AND Invoice price before you buy. You can also search online and find what other people are paying for the same make and model.

 

[bumbershoot]

Do you *need* a new, or expensive car?

If not, what about looking for a quality used car that could perhaps cost just the few thousand you have and the insurance payment?

Since you already have CC debt it just doesn't seem like fun to have more debt. lus, if you have a loan, you have to have serious insurance and probably GAP insurance as well...if you buy it outright, you can do what you (and the law) feel comfortable with, insurance-wise.