Establishing Credit?

[kv968]

@DisneySteve 2000-2500? Maybe higher than that? Basically.. For the one car I am really interested in it for me to be able to afford it. (IF I stayed at the same job) would need to be: 10% interest rate, 2000$ down. Within 84 months. That's if I went with a brand new standard Forte. So, really hoping this landscaping jobs goes through. I'll get paid more than just minimum wage.

Which 84 months is a long ass time..

What do you mean by 84 months? Is that the loan term you're looking at? If so FORGET IT!!!

Say you got the car for $15,000 with taxes, tags and everything included. Even if you put down $2500 you'd have a loan for $12,500. If you got an 84 month (7 year ) loan at 10% your monthly payment would be $207.51 which might be doable for you but you'd end up paying $4931.24 in interest. That's almost 33% of the original price you paid for the car in the first place. If you financed $13,000 with $2000 down that be $5128.49 in interest or almost 35% of the price. That's WAY too much to be paying for a depreciating asset like a car.

Save your money and get the idea of a new car out of your mind. You simply can't afford it unless you can save up a much bigger downpayment. And then you'd still be better off paying cash (or financing a little bit) for a used car.

[disneysteve]

kv beat me to it.

You say to "afford" the new car, you need to borrow at 10% interest for 7 years. To quote a classic movie, when you say afford 'I do not think it means what you think it means.'

There is a huge difference between being able to make the payment and truly being able to afford the purchase. 10% for 7 years is NOT something you can afford.

Stick to the standard rule of thumb. Your car payment should be no more than 10% of your monthly income for no more than 3 years. Considering that your current car will be almost 13 years old when you intend to replace it, you shouldn't have any difficulty finding something newer with lower mileage in your price range. You'll have $2,500 to put down plus whatever you can get for your current car - perhaps another $1,500. So $4,000 down. That alone would put you in a better car. If you borrow another 3 or 4K, you will have a comfortable, affordable payment of about $100/month, even at 10%, for 36 months and you'll have a much newer car.

[Truvidien]

kv beat me to it.

You say to "afford" the new car, you need to borrow at 10% interest for 7 years. To quote a classic movie, when you say afford 'I do not think it means what you think it means.'

There is a huge difference between being able to make the payment and truly being able to afford the purchase. 10% for 7 years is NOT something you can afford.

Stick to the standard rule of thumb. Your car payment should be no more than 10% of your monthly income for no more than 3 years. Considering that your current car will be almost 13 years old when you intend to replace it, you shouldn't have any difficulty finding something newer with lower mileage in your price range. You'll have $2,500 to put down plus whatever you can get for your current car - perhaps another $1,500. So $4,000 down. That alone would put you in a better car. If you borrow another 3 or 4K, you will have a comfortable, affordable payment of about $100/month, even at 10%, for 36 months and you'll have a much newer car.

You do make a good point. I'm not sure if the car could get $1,500 for trade in value. It's a 01 Mirage has over 188k miles. The only thing with that is I would have to go to the bank and see if I could pull out that much for a loan. I wouldn't wanna go to my parents for that type of money. If I were to check on Kia's website about trade in value for my car will that go against my credit or anything when I put my information in? I'm new to all of this basically. The forte I looked at was 15,900 but they were gonna reduce it more than that if I had more money at the current time for a down payment to work with my price range. It was a certified used car with 15k miles.

Also with taking out a bank loan I would need to see if I could afford everything and not have a really high interest rate with them either. I'm not sure how it all works to be honest.

[jpg7n16]

My interest rate is 22%. That's what the dealer told me when I went to Kia. So right now other than a car being like 12k I cannot afford it. I pay for online schooling. Paying my parents rent. Insurance from work. (Right now at 7-Eleven) I may have a new job lined up for me doing landscaping. Which I really hope goes through. I'm not even sure if I could drop from 22% to 10% in one year?

"Your" interest rate is not tied to you. More accurately, it is the dealership's interest rate. It is what that dealership will lend to you at. Which 22% on a car is pretty much predatory lending IMO.

Go to a bank or credit union and refi your car with them. If they approve the refi, your interest rate could fall below 10% in much less than 1 year. Maybe next week.

[Truvidien]

"Your" interest rate is not tied to you. More accurately, it is the dealership's interest rate. It is what that dealership will lend to you at. Which 22% on a car is pretty much predatory lending IMO.

Go to a bank or credit union and refi your car with them. If they approve the refi, your interest rate could fall below 10% in much less than 1 year. Maybe next week.

Sorry, what exactly is a refi? I see. You mean to refinance. My car is already paid off though. If I were to go to Kia's or any other website for a free car trade in value would that hit my credit score?

[kv968]

Sorry, what exactly is a refi? I see. You mean to refinance. My car is already paid off though. If I were to go to Kia's or any other website for a free car trade in value would that hit my credit score?

Getting a trade-in quote won't hit your credit score. The dealership may deluge you with a bunch of emails afterwards though.

You can also go here to get an idea of what your car is worth:

Kelly Blue Book

[phantom]

I'm not sure if the car could get $1,500 for trade in value. It's a 01 Mirage has over 188k miles... If I were to check on Kia's website about trade in value for my car will that go against my credit or anything when I put my information in? I'm new to all of this basically.

I don't know how getting a quote on trade in value from Kia's website works. But, I think the best way to figure out what your current car should be worth is to go to Kelley Blue Book (KBB) and look at both the private party value and the trade in value. The trade in value should be pretty close to what a dealer would give you for it. The private party value will tell you how much cash you could probably get if you could find a person to buy it off you. KBB is also a good tool for figuring out how much you should actually pay for the car you want to buy.

We just replaced my husband's car last week. We negotiated with 3 dealers before making a purchase. Two of the dealers offered to give us less than KBB for the trade in on his old car, but they all ended up in the same range once we told the ones that were low that we thought they were too low. But, the weird thing about dealing with a trade in value is that, for the most part, neither you nor the dealer cares as much about how much the final paper says your trade in as worth as you both care about how much money you'll pay in addition to handing over your old car. So, a dealer might say he'll pay you an extra $1000 for your trade in, when what he's actually doing is sacrificing $1000 of the markup that was tacked on to the car you were buying.

[kv968]

We just replaced my husband's car last week. We negotiated with 3 dealers before making a purchase. Two of the dealers offered to give us less than KBB for the trade in on his old car, but they all ended up in the same range once we told the ones that were low that we thought they were too low. But, the weird thing about dealing with a trade in value is that, for the most part, neither you nor the dealer cares as much about how much the final paper says your trade in as worth as you both care about how much money you'll pay in addition to handing over your old car. So, a dealer might say he'll pay you an extra $1000 for your trade in, when what he's actually doing is sacrificing $1000 of the markup that was tacked on to the car you were buying.

One of the best ways to deal with a situation like that is to just negoitate the price of the car without even revealing that you're trading anything in. Once you get a good price on the car you're buying then tell them "oh yeah, I'd like to trade this in" and then work on price for that.

That way it keeps the two prices from getting muddled together.

[disneysteve]

I'm not sure if the car could get $1,500 for trade in value.

Forget trade in. You want to look at private sale price. You'll do much better that way.

The only thing with that is I would have to go to the bank and see if I could pull out that much for a loan.

I'm confused. You are talking about buying a 15K car. I'm talking about buying a 6K car. If you can get a loan for the costly new car, surely you can get a much smaller loan for the used car.

If I were to check on Kia's website about trade in value for my car will that go against my credit

No, looking up the value of your car doesn't affect your credit. You don't want Kia's site, though. Go to kbb.com and get the value there.

Also with taking out a bank loan I would need to see if I could afford everything and not have a really high interest rate with them either.

Again, if you can get a loan for the 15K car, you can certainly get the loan for the 6K car.

[phantom]

One of the best ways to deal with a situation like that is to just negoitate the price of the car without even revealing that you're trading anything in. Once you get a good price on the car you're buying then tell them "oh yeah, I'd like to trade this in" and then work on price for that.

That way it keeps the two prices from getting muddled together.

That sounds like good advice. Maybe we'll try it when it comes time to replace my car.

But, I really can't complain about how everything worked out negotiating both parts at once. We went in knowing how much we thought our car was worth, how much we thought the car we wanted was worth, and how much we thought we should pay when subtracting the former from the latter and adding tax. In the end, what we paid was very close to what we expected to pay.

[kv968]

But, I really can't complain about how everything worked out negotiating both parts at once. We went in knowing how much we thought our car was worth, how much we thought the car we wanted was worth, and how much we thought we should pay when subtracting the former from the latter and adding tax. In the end, what we paid was very close to what we expected to pay.

That works too as long as you know your numbers. It's just when negotiating a price, after awhile with so many numbers being tossed around, it sometimes gets hard to keep the price of the car and the price of the trade-in separate. Salespeople can be very good at wearing you down and turning your brain to mush

[papa_squat]

Most people here have already offered great advice, but you seem to be back-pedaling to justify buying a car you can't afford, so I'm going to try to help spell it out to you.

An interest rate of 22% for a car loan is HORRIBLE.

Cars are NOT an investment, even when it's paid off.

If you have a car that runs well and you plan to trade it in for a slightly newer car, you will lose money on your current car.

Spending any time over 36 months (3 years) paying off a car means you cannot afford the car and should NOT take out ANY loan for it. The longer the car loan, the crappier the interest rate PLUS the longer youhave to pay that crappy interest rate.

I'm not as golden as some of the people in here about paying for a car with cash only, but I whole-heartedly agree with them that you must do the math on the payments and save to put as much cash upfront as possible. But if you do it right, getting a car loan CAN help you build credit.

If you take a car loan, make sure the payment is budgeted with all your other monthly expenses before you sign any paperwork. You should be able to pay it off in 3 years or less (if not, delay buying the car until you save more downpayment). And finally, if you take out the loan, make sure it get paid ON TIME EVER MONTH. Otherwise, it will hurt your credit.

Here's some anecdotal advice: until last year, I drove a '97 Honda Civic with peeling paint, a dying alternator and a cracked engine block (I'm 28). I finally bought a car last year and had the ability to pay for it in cash, but it would have made money tight for a few months after. I decided instead to put 60% down and take a loan instead, but only because we wanted cash for home improvement projects and the interest rate offer was 0.9%. Yes, you're reading that right. I do have excellent credit, but my husband and I are not loaded; we saved for almost three years for this car. The more cash you can put down, the more likely you will get a good loan. Don't just apply with the dealership either. Check with your local bank for for a rate offer; in any case, 22% is possibly the worst interest rate I've heard of for a car loan.

A 2007 Kia Rio base model is about $5,800-6,000 acrossing to my rushed Kelly Blue Book search. $2,500 would be a smart downpayment IF you had great credit that afforded you a good interest rate on a loan. You would be much better off setting a goal now to save $6000 by the time you want to buy the car. So to buy the car outright by June 2013, You would need to save about $425/month to buy the car outright. Aim for that, but if you come up short, then consider the value of trading you car in. Remember you will likely get more money for it if you sell it yourself, but again that takes time and research and you may rather pay for the convenience of just trading it it.

As for our beat up old Honda? We didn't trade it in. We keep it around for short trips or hauling things that could get the new car dirty, but we try not to go far in case it breaks down. We may sell it if we have a friend with a teenager willing to make an offer, but until then it's still useful to us.

[Truvidien]

As much as these answers I do not wanna hear or do not like reading.. In the long run it is better for me. So I am going to continue saving. I was mistaken. IF everything goes well I'll have 3900 saved up if that counts for anything. Also, I just been informed my secured banking card has just been shipped to the wrong address. So I'll have to wait for a phone call and WHEN I can get mine in the mail.

Today is just not my day, but I do thank you all for your inputs.

[kv968]

As much as these answers I do not wanna hear or do not like reading.. In the long run it is better for me. So I am going to continue saving. I was mistaken. IF everything goes well I'll have 3900 saved up if that counts for anything. Also, I just been informed my secured banking card has just been shipped to the wrong address. So I'll have to wait for a phone call and WHEN I can get mine in the mail.

Today is just not my day, but I do thank you all for your inputs.

Unfortunately all the advice you'll get may not be something you want to hear but it's just people being honest with you and giving you their take and/or experience on the matter at hand.

Is it always right? No. Does it always fit your particular situation? Definitely not. However, more often than not, I find someone's opinion or take on things may be something I haven't considered and that gives me a different way of looking at it.

No one is here to bash you or necessarily tell you you're wrong (although it does happen). All they want to do is lay out whatever plans or ideas you have to you and offer their best suggestions as they see fit.