New Car - Where to get the loan from?

[rickatheslicka]

Re: New Car - Where to get the loan from?

I used e-loan just to estimate the best rate I could qualify for, and the dealer worked his tail off to match it (two years ago, 3.9% on a used car, just like Hot Dog).

However, for a new car purchase, you might have to choose between incentives like $2000 cash back OR 1.9% financing. It can be helpful to crunch some numbers beforehand. For example, figure out if taking the 6% loan from the credit union and the $2000 cash back is the better deal or if taking the 1.9% financing is the better deal. There are lots of online calculators, or you can use Excel if you're savvy with writing formulas.

If you get 1.9% (or whatever great rate you can find), you might even want to hang onto your $5K and put it into a savings account earning 5%. Then if your new car gets a flat tire or some other mishap occurs, you're covered. Just be sure you really put it into savings...

Here is a link to a podcast (internet audio series) on buying a car that I found really helpful. It's kind of long, but they share a lot of great tips. You can listen to it on your computer, you don't need an iPod. Good luck!

http://www.mywealthmatterspodcast.com/save-big-on-your-next-car

[halfgeek]

Re: New Car - Where to get the loan from?

My fico score is 738. Should i try at eloan or Honda Financials.
Somebody was talking about some refunds cash back.
Should i make a down payment? Would it help. I can upto 5k.

[sweeps]

Re: New Car - Where to get the loan from?

Your best bet is almost certainly going to be the dealer. We got 0.9% on our Honda Civic.

Having said that, make sure you keep car price and financing terms completely separate in your discussions. Don't negotiate on the monthly payment -- it's a trap.

[cschin4]

Re: New Car - Where to get the loan from?

I see nothing wrong with taking the loan at the dealership. They usually have very good rates and many are offering very low interest rates that you won't get at the local bank. Since you are looking at a new car, you should check out the Honda website to see if they are currently offering any finance incentives. You can check the bank as well but I doubt you will get any better deal from them.

[rickatheslicka]

Re: New Car - Where to get the loan from?

Really low interest rates and cash rebates are incentives periodically offered by the manufacturer. You want to know about these before you show up at the dealer.

In addition to the manufacturer's website, you can check out www.kbb.com (kelley blue book) and www.edmunds.com to find out the MSRP and any incentives being offered for the car you are interested in. Ideally, you won't pay much more than the MSRP for the car, sometimes you can even get them to go below MSRP. Unfortunately, it doesn't look like Honda is offering any incentives on Civics.

My advice is:

1) Figure out what the best rate you would qualify for by visiting the e-loan website (don't submit an application). With your credit score, the dealer will almost certainly be able to match it (or do better if there is a low interest rate incentive being offered). I didn't have any proof with me of the e-loan rate, all I said was, "I can get such-and-such with e-loan." and the dealer matched it. FYI, Captial One is offering 5-6% loans on new cars right now.

2) Go to the kbb and edmunds websites, look up the car you are interested in, and print out the prices (including the various trims and options, the sites have some very nice matrix-type charts). Take this with you to the dealer, they will know you mean business.

3) On these websites, there is usually a link to "get a fast dealer quote." This is a good idea because it puts you in touch with the "internet sales manager." The ISM will know you are an informed customer and will skip most of the haggling. They also seem less "sharky" than the floor sales guys, IMHO.

4) Get quotes from at least 2, ideally 3 (or more?) dealers. Play them off each other, or just go with the lowest quote. You may need to email or call regularly, or you may need to visit in person a couple of times to get all of the details (price, model, options, etc) worked out.

5) Once you have settled on a vehicle and the final price, the ISM may pass you off to another person to seal the deal, and pile on the extras. So, decide well in advance if you want an extended warranty, Lo-jack anti-theft system, etc, etc, etc. Otherwise, when all you're thinking is "What if something happens to my beautiful new car?" - you may get suckered into agreeing to thousands of dollars of extras, completely nullifying all the hard work you did to negotiate the price down.

6) On other thing, don't forget to arrange for car insurance in advance. Call around and get quotes on that, too. You may need a VIN number to get a quote, don't worry if it's not the exact car you ultimately end up buying, you just need it for the quote. Once you've settled on the exact car, tell them the real VIN number, and have them fax the ins card to the dealer so you can drive away with your new car.

Good luck!!!

P.S. As far as your downpayment, with your credit score, you probably won't need the DP to qualify for a good rate (but read the fine print on the eloan and Capital One sites to find out for sure). So if you get a good rate, then it is really up to you whether or not you need to apply the DP to lower your monthly payments to a comfortable level, or if you want to use it as an emergency fund, or invest it in a retirement fund - whatever you are most comfortable with. If you think you will blow it, then by all means apply it to the car purchase.

[smartatmoney]

Re: New Car - Where to get the loan from?

I'm surprised no one has brought this up. You should avoid buying a new car if you can help it. It will depreciate very quickly the first 2 years of ownership.

Why take that huge hit? Better to buy a 2 year old honda civic and let some one else take the hit. That's what I would do.

[halfgeek]

Re: New Car - Where to get the loan from?

Thanks a ton, rickatheslicka.
I'm going to follow steps u listed.

hey, Sweep.. U work for HONDA dealship?
Can you explain What is negotiating on monthyly payment?

[MarianneJ]

Re: New Car - Where to get the loan from?

Here are 2 good articles from CNNMoney.com that might help:

Auto Loans: What You Need To Know

http://money.cnn.com/2006/11/01/autos/right_way_to_finance/index.htm?postversion=2006110610\

How To Avoid Car-Financing Traps

http://money.cnn.com/2007/01/08/pf/saving/toptips/index.htm

[halfgeek]

Re: New Car - Where to get the loan from?

Thanks a lot...

Decided on 2007 honda civic ex.. for 20880.. paid 500 for booking.
Haven't talked about financing. they dont have any offers running. just their normal. now might need to check eloan or capital or credit.. or honda itself.
Where u suggest, insurance...
thank lot guyz for ur help.. now i'm considering this forum as a very good site for financial advice..

[vsjhoc]

Re: New Car - Where to get the loan from?

Actually, multiple credit inquiries of a similar type in a short period of time don't count against you. The credit bureaus consider them all as one draw. They understand that people shop around for the best deal.

True, provided the "short period of time" is 14 days or less. Be careful; sometimes the dealers trick you into providing your name, address, and SSN right away so that they can run your credit report without your realizing that you are applying for credit (thereby generating an inquiry).

[instantinfo4you]

Re: New Car - Where to get the loan from?

I would definitely go to the dealer for this. There are many advantage of face to face contact that cannot be negociated otherwise. I also believe that the dealer would give you a better deal because they truly are in the money business.

[rickatheslicka]

Re: New Car - Where to get the loan from?

I have been away from the forums for a while, sorry for the belated reply.

Halfgeek: You are quite welcome. I hope it all worked out for you to your satisfaction. As far as insurance goes, we had our home ins broker look into car ins rates for us, she found us a local company with really great rates (One Beacon).

Best wishes!