Car Loan Question

[disneysteve]

I need a reliable vehicle (I've had terrible luck buying used vehicles, even ones that are relatively new)

Welcome to the site.

Please don't think I'm jumping on you, personally, but I am SO sick of hearing someone state that they need a reliable vehicle and so they MUST buy a brand new $30,000 (or more) car. Do you know that brand new vehicles start at less than $10,000? There are lots of brand new vehicles that sell for under $20,000. NOBODY needs a $30,000 car! That is a total WANT.

Forget about whether you can or can't buy that car and start looking for the car you SHOULD buy. If you've had some bad experiences with used cars, figure out what you did wrong and move on. I currently drive a 1998 Toyota Camry. I bought it as a dealer-certified used car in August 1998 so I've had it for nearly 11 years. It is as reliable today as it was the day I bought it.

[maclover]

i don't think that would be wise

Disclaimer: I want a new car also. A MINI COOPER S, dressed up it runs a little under 30K. And trust me I still want it. but I'm currently driving a 2002 Ford Ranger that my dad bought new for 12K. Granted it has manual windows, no tape, CD or aux input on the stereo. Only 4 preset stations or is it 5 can't remember.

I would like to think that I'm not as cautious as some of the guys here.... But I believe someone making 41.6/k a year does not need a 30K car.

But definitely, now that you have a job and such. Start working on an emergency fund, start thinking about funding your retirement.

And if you need a car, get something cheaper.

[jujuk8]

As someone who recently turned 25, I can tell you that there is not some magical rate drop when you turn 25.

here in GA it goes down significantly if you have a CLEAN record.

[Pitman]

#1 Please don't buy an American made Car

#2 You can get a lot for a little nowadays. ie: Nissan Altima, Nissan Maxima, Honda Accord, Acura TL, Acura TSX (All within 05 - 06)

#3 Please don't put down $15K on a new car, once you drive the car off the lot, its worth about 40% less than what you paid.

#4 Your young, car insurance companies will have a field day when you walk thru the door

#5 Even though you make good bank now (pun intended), during these times no bank job is secure

#6 Car loans are only being given to top tier credit scores, someone told me around 720 and up

#7 If that car is truly your hearts desire, I would look into lease options.

#8 I hope you make the best decision for yourself.

[wincrasher]

All good advise, but telling a 19 year old not to do something he wants is probably a lost cause.

But you can't afford it.

That particular car is not worth the money. It will have massive depreciation - check edmunds or nada for any 2 to 3 year old Chevy.

If you want to build your credit score, do it with a credit card - charge your monthly expenses and pay it off each month.

A fixed payment type loan will actually hurt your score. Especially being such a large amount of your monthly income. Your ratio will be a mess.

Your insurance rate is also effected by FICO.

You must have a 6 month emergency fund. EVERYONE MUST. You are on a good start.

$41k/yr might seem like a good amount of money to you. It's not.
If you like banking, then do something smart financially to impress the boss. Find a killer deal on a small, practical, used car. Find some awesome investments and talk them up at work.

[prosper]

All good advise, but telling a 19 year old not to do something he wants is probably a lost cause.



If you want to build your credit score, do it with a credit card - charge your monthly expenses and pay it off each month.

This was true for my wife. The only credit she ever had was two credit cards and she was able to obtain a mortgage loan.

[red92s]

here in GA it goes down significantly if you have a CLEAN record.

I lived in Georgia until I was 25. I didn't see some massive drop in insurance on my 25th birthday, nor did any of my friends.

[rizzmo]

Depreciating asset aside...I need a reliable vehicle (I've had terrible luck buying used vehicles, even ones that are relatively new) to commute to work with - I can no longer use public transporation as I simply have too much stuff to accomplish in a day to have a commute that is 1 hour & 15 minutes each way (vs. 15 minutes with a vehicle).

I was sold on the idea that buying a new car would be more reliable. I work in the medical field and missing work really is not an option. My old car had 220k miles and was starting to have pretty regular problems, frustrated by this I decided to buy a brand new Chevy Aveo. It was in the shop 3 times in the first 3 years, which meant 3 days of having to find alternate transportation to work. In the end buying new really didn’t help me avoid missing work anymore than buying a good used car.

And finally, I see this as a great opportunity to improve my credit -- especially since if I get a decent interest rate, I could pay off the loan in three years. I would also maintain full insurance coverage anyway, who knows if I would ever be at fault for an accident even if the vehicle is paid off.

You won’t get a decent interest rate, if you can get one at all. There are better ways to rebuild your credit. I would use a credit card for gas and pay the bill of each month in full, helps a lot. Have you considered the following scenarios?

#1 - You purchase this vehicle with 15k down and finance 15k @11% over 60 months. 6 months later you get laid off/let go or a medical problem prevents you from working for a time. After a few months of missed/late payments the repo guy comes and picks up your car. Now you have worse credit, lost the 15k you saved, and have no car.

#2 - You purchase a used 2008 Chevy Equinox LS Sport Utility 4AWD with 40k miles on it in pristine condition for $13,000. 6 months later you get laid off/let go/ect. Your credit doesn’t suffer, you have 2k still in the bank, and you own a car (worth about 12k).

Which position would you rather be in?