What should I do? Car dealerships are used to working with local banks and credit unions, they know how to send them the Lien info. There's nothing wrong with sitting down with the dealer to see what they can offer. Sounds like it's not dooming you into negative monthly cash flow, but will put a serious damper on your ability to repay your student loans. I'm a bit worried that I've put a large financial burden or risk on myself. Learn about budgeting, saving, getting out of debt, credit, investing, and retirement planning. I was also told by the sales associate that there was a 3-day return policy (which I was told was absolutely not the case by the manager when I did actually go to try and return the car). We are the largest competitor in the current growing marketplace, with a positive longterm outlook. If you had $15k in hand, you probably could have driven off the lot. I can either choose to kick that can down the road or start at least covering the interest payments plus the max principle I can handle. I put $3000 down. Before we get into the question of cash versus financing, a little background is in order for shoppers who haven’t had much experience buying a new car. How to compare exotic car financing. The buying experience, car costs and financing options can vary across these different types of sellers, too. Or like somehow connect my bank? They are okay with settling for less on everything in ways that I wouldn't and would never ever not buy an older used p.o.s. Get the deal in writing, bill of sale, etc at a fair price before you show up. They will throw all kinds of excuses at you like "We have better terms/lower interest/lower payments/free oil changes." Thank you. Best way to finance a used car: Know your credit score and make sure your credit report is up-to-date. I'm a bit worried that I've put a large financial burden or risk on myself. Let’s take a look at the pros and cons of buying a used car from each type of place. I know this is random and not related to what you're requesting help for but where do you get your renter's coverage from? The most important thing is the purchase price, not the monthly payment. It is worth seeing what they're offering; they sometimes have a better rate than your credit union got for you. You can afford the car payment now, but how will that work once you actually start paying your student loans? Do NOT go back to the dealer for this. If you sell it for a loss you still are out $500 AND you don't get the car! Car must have fewer than 100,000 miles and be less than 10 years old ; Only offers loans for refinance and lease buyouts. what part of the country are you located that you're able to find such affordable housing? Have you shopped around for car insurance? I'm aware that the latter is a depreciating asset. Your budget doesn't seem sustainable to me. Once you go to the dealership and find a car, the dealership will likely try and try and try to convince you to abandon your credit union to use "our bank." Looks like you're using new Reddit on an old browser. For reference, my 2010 Civic costs me $330 a half to insure with more coverage than I probably need. At least get rid of the warranty if possible. Join our community, read the PF Wiki, and get on top of your finances! It will be hard to refinance for more than the vehicle is worth, which is why it's important to cancel any extra crap that was added in to the deal. Concentrate on the Out The Door price of the car. But $20K for a degree and $20K for a car? So I paid it off instead, and I drove it to work today. Think of it this way. Throughout this process they (if they're good at their job) will be asking qualifying questions to learn more about you and your intentions. In addition to traditional car loans, Ferrari Financial Services offers an option with a balloon payment. Drop the warranty, save the money in an emergency fund. Hot New Top Rising. How would that affect my credit, if at all? But although these types of car finance might sound similar, there are significant differences between them. I don't think 20k for that car is especially unreasonable after taxes, interest, and buying a warranty. Thank you thank you thank you. The site may not work properly if you don't, If you do not update your browser, we suggest you visit, Press J to jump to the feed. (See Reddit's page on commenting for more information.). Look at something new or used in the $15k price range and take the money you save by not buying this car and putting it towards the premium of the cheaper car or reduce the length of the loan. Get the lowest possible price you can. Sit down, run the numbers, and see what your budget looks like (you DO have a budget, right?). User account menu. Do I do this through their website? Here are some of the limits of 0% APR financing: New cars only. Income After Tax: $1800-2200 (depending on specific hours), Rent: $591.90 Internet: $11.67 Utilities: $35 Renter’s Insurance: $3.80 Electricity: $48.29 Car Payment: $295.01 Car Insurance:$169.06 Health Insurance: $76.77 Phone: $75 Food: avg $300 Gym Membership: $32.84 Netflix: $8.69. The process I went through was that first you talk to the bank/credit union you are interested in using and apply for an auto loan. My long term plan for my student loans, in theory, was to defer it until I was making a large enough salary or wage that I could afford to start paying it back monthly without severely impacting my budget, hence why I'm a little anxious. At the moment, I make $15.50 per hour and the company seems to be growing slowly over time. The site may not work properly if you don't, If you do not update your browser, we suggest you visit, Press J to jump to the feed. Don't mean to high jack OPs post but you seem very knowledgable on the subject. edit: Thanks for the replies and the advice. That was unavoidable. I have never owned a car before and have been in the market for a car for about the last year. They might drop their pants a little lower. It all feels like a gamble, the bachelor's degree, the job, the car, all of which could take me to a much higher station in life than I've ever had previously, or go pear-shaped and leave me destitute. I've heard mixed things about where to get loans and it's really tough to decide what is strictly better on paper. They run the credit check, and get to sell the loan if they can beat the percentage for the desired payment period; otherwise, just use the check from the bank. Here's a key point no one has mentioned yet. For a car that new you should be able to get decent rates assuming you have good credit. I will say here, however, that the hours can be irregular and the market itself is young and volatile and heavily regulated. Used car (dealer): Example: A 5-year, fixed-rate used car loan for $25,000 would have 60 monthly payments of $ 447 each, at an annual percentage rate (APR) of 2.79 %. During those 5 years, if you use it, do keep your gym membership please! It’s worth noting, however, that you can find near-zero APR deals on certified pre-owned (CPO) vehicles. I've talked with my roommate who seems to think that I've made a fairly good choice and an investment in myself and the quality of my life, and at least the decision is a normal or common one to make in the modern era. Oh my god thank you this is exactly the info I wanted. Online bank Ally doesn't offer financing to purchase a car. I am a bot. Love the car. car wholesale on Craigslist. See it's listed for 17, you say I only have 15.5 to spend. The bank in the end will give you a check for the Purchase price of the car. Definitely refinance. Also if the dealership quoted you 5.75% as the APR, and you didn't negotiate it, you can definitely do substantially better at a credit union. That will show them the highest amount you have been approved to spend. Click to share on Reddit (Opens in new window) Image: Two women sitting in a car and smiling. And don't show them a check that says how much you are approved for. If you want to pay less over the course of the loan, refinance to 3-4 years if you can. Only after deciding on the car I want and the final price would you get this blank check out. Don't go ahead with anything you don't understand. I just can't tell if I'm over-stressing myself and getting too emotionally winded to think straight and logical about the situation. If you can bundle car and renter's insurance through the same company you may get a price break as well. FWIW, I financed a 2002 VW Golf in 2006 for 17K at 4% for 72 months (yes, 72!). They say wait I'm just kidding we'll sell it for 16.5. you say nah, I saw one across town for 16, they say look I can do 16,250 and give you a year of oil changes but we have to do it before my boss finds out because he'll fire me if he finds out because we're basically losing money on this. My interest rate is at 6% but my credit has improved slightly over the years. Check with local banks and credit unions to see what rates they're offering. I was told I could refinance in six months and knock that down to $18K, or $16K if I wanted to drop the warranty. You might find they can offer you a more affordable finance plan. It's just that not having a car for so long into adulthood was putting a fairly big strain on the quality of my social life at my age. I'll have to pay the amount left that I owe, then if I ever want another car in the future, I'd pay an amount on it that together might equal what I would've paid if I had just kept this one (and it may not be as reliable besides, or as nice). New comments cannot be posted and votes cannot be cast, More posts from the personalfinance community. We can fund your loan as soon as the day you apply. I picked out a car I like that's in great shape with relatively low miles, it costs about $18k … Shop around for the lowest financing rate at local banks and credit unions. Keep in mind that it's possible for a car to be a good price and also to be too expensive for you. Know what you can afford. Your last options is a private seller. Say what you want about whether or not that was an understandable or horrible choice to begin with, it's the one I have to live with going forward. It was definitely the car I wanted, but now I have to figure out whether or not it was the right car for me, or if I made a mistake, either a fixable one or a bad life choice. (because I'd be, you know, paying it back with the return on the car + money lost). With your warranty and %5.75 rate it is costing you ~5000 to finance the car. Use that rate to negotiate with the dealership. $32/month is a great deal anyway. If I try to sell the car back, my best hope is that after dropping the warranty and gap, the amount I get back will amount to having completely lost my down deposit (which sucks because that represents savings over a few months). I never felt like I knew enough about the guts of cars to go the Craigslist route and buy from a private party. A nice line to use when the issue of financing and payment gets introduced: "Well, I brought my own financing, but if you can beat 2.5% over four years (or whatever percent and payment period you choose), then we can talk about dealership financing.". Once you go to the dealership and find a car, the dealership will likely try and try and try to convince you to abandon your credit union to use "our bank." I apologize if I seem dramatic and wordy. The interest rate is not terrible, but you might be able to refi at a local CU for better. Automakers offer the best deals on the models that they want to sell quickly based on supply and demand. My student loan deferment is up in June. You get the keys and drive home, and in the next couple of days you're loan will be initialized with the bank and you'll start making payments the following month. I'm worried about introducing them to my new car. Work on improving your credit first if your score is below 650. I don't know anything about your driving record or what rates are like for where you live but the last time I bought a car I shopped around and ended up switching companies. I tend to be fairly high-anxiety as a person in general. I researched cars and pricing for a few months in advance and found a 2012 Ford Fusion SEL with 29K miles on it that seemed like a really good fit and a good buy, at least at first. Log In Sign Up. Hope this helps. More than 80% of new car buyers choose to finance their new car by taking out either a personal contract purchase (PCP) agreement or personal contract hire (PCH). Eh. Contact pentium4borg with any feedback. Few lenders do offer interest only car loans wherein you can pay interest during some fixed initial period of … Inform them that you have your own financing. So in theory, if I continue living at the same standard of living that I’ve been doing for the last 5 months, and depending on my work load, I should have between approximately $150 and $550 to split between gas, savings, and miscellaneous expenses. The consensus seems to be that I should just keep the car and drop the warranty and extras, refinance, and shop around for car insurance. Click to share on Reddit (Opens in new window) Image: Parents and son washing their car in their driveway . It's newer so it shouldn't have any problems for a while so long as I don't abuse it, and last for many years to come. All the ones I've been looking at have been closer to $15-20 a month! Hmm... Ok, I don't think you were bamboozled as much as you think you were.

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