Learn me on Financing

"Justino6969" (justino6969) 04/18/2017 at 14:36 • Filed to: None

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It looks like I’ll be picking one of these up this weekend. I’ve been working out the final details with the dealership all day. This will be my first (almost) new vehicle, and I will be financing. What should I look out for? What is an appropriate rate (60 months, $30k loan, 750 credit score, $60k/year salary)? Is there a preferred company to go through? Who has had luck with what?

Thanks in advance Oppo.

Sir Halffast > Justino6969 04/18/2017 at 14:40

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If you have good credit, you will frequently be able to get your best rates through the dealership. For 60 months, you can usually find a rate at 2.9% or lower (even 0.0%). If you can’t get something that low from the dealer with 700+ credit, then try a credit union. They usually will allow non-members to apply for auto loans (try USAA, for example), and their rates are often better than a standard bank.

Highlander-Datsuns are Forever > Justino6969 04/18/2017 at 14:41

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I would expect rates in the 1-5% range depending on used vs new and if it’s a GM backed loan. The MFR backed loans usually have very low rates.

Ash78, voting early and often > Justino6969 04/18/2017 at 14:41

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Dealers usually offer great financing (often at their peril today, since they’re more willing to go out on a limb). However, I’d expect you to be able to get well under 2% on those terms. Maybe even 0%, but you might have to forego some incentive cash. If you’re shopping for financing outside the dealer, though, credit unions are your best bet 99% of the time, and they often come with extra perks and the ability to work with them if your situation changes (eg job loss). Good luck!

Future next gen S2000 owner > Justino6969 04/18/2017 at 14:44

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Depending on your credit history I would think you would be 3% or less, money is cheap right now. Credit unions may be less. 60 is a standard term with 72 a reasonable option. I choose a 72 but pay at the 60 month rate. This gets me ahead and I have the option to drop down to the lower payment if I want. 48 months is a better option if you can swing it.

Ensure there is no penalty for early payback. This is standard with most banks.

Get an approval from a local bank, have that in your back pocket as a backup to the dealer sourced financing.

Justino6969 > Sir Halffast 04/18/2017 at 14:46

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My sister-in-law’s father is retired Navy, so I signed up for Navy Federal credit union. Their rate is ‘as low as’ 2.59 on 60 months for a used vehicle (truck is a 2016 with 5000 miles). Thanks for the info!

Justino6969 > Highlander-Datsuns are Forever 04/18/2017 at 14:46

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Used 2016 with 5,000 miles. I’ll have to see if the dealer can get a GM backed loan. Thanks for the heads up.

Justino6969 > Ash78, voting early and often 04/18/2017 at 14:48

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Thanks! Used 2016 with 5000 miles, so I don’t think I can get anything at 0%. I’m getting a pretty good deal on the truck anyway. Under 2% would be great, but the rep at the dealer I’m working with said he hasn’t been able to get anything at under 2% lately, especially on a used vehicle.

Sir Halffast > Justino6969 04/18/2017 at 14:48

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That’s a pretty good rate on a used car. Compare to Chevrolet financing first, but that may very well be your best bet.

Justino6969 > Future next gen S2000 owner 04/18/2017 at 14:50

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I signed up for Navy Federal credit union, but haven’t applied for an actual loan yet, as I wasn’t sure of the consequences on my credit score before the dealer takes a look. I’m shooting for 2.5% or under, at 60 months. I would also like to pay more than required if possible, so I’ll have to look for penalties. Thanks for the heads up on that.

Sir Halffast > Justino6969 04/18/2017 at 14:54

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FYI, it’s extremely rare for a loan to include prepayment penalties these days. Still good to check, but with rates so low, it really doesn’t benefit the lender to charge you a penalty for paying ahead.

Nothing > Justino6969 04/18/2017 at 14:56

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Even if used, USAA considers a 2016 a “new” car for financing. You’d get 2.49% from them right now. Multiple pulls in a short period for the same purpose (car loan, mortage) don’t hurt. Just don’t go applying for credit cards, personal loans, a mortage, and an auto loan at the same time.

You’re safe to apply for loans on your own, or let your dealer shop your rate. I prefer to go in approved with a guaranteed rate. Then if the dealer can beat it, perfect. If not, you’re all set.

haveacarortwoorthree2 > Justino6969 04/18/2017 at 14:58

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You can also use a service like Lending Tree as a backup to make sure you are getting a good rate. I actually ended up going with one of the companies that submitted an offer through LT a few years ago because it beat what I could get through my bank and what the dealer could get.

Funktheduck > Justino6969 04/18/2017 at 14:58

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It’s supposed to work like this: getting loan quotes for a car is only supposed to count as one hard inquiry as long as they’re all within 30 days.

I got approved by a credit union first. Then when I went into the dealership they offered me a higher rate. When I said no thanks I’ll take the offer from my credit union the lady hopped on the phone and matched it. I took it because I would’ve had to come back the next day with a check from the CU instead of then and there. (1.69% for 60 months. Score around 720 at the time)

functionoverfashion > Justino6969 04/18/2017 at 14:59

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We just financed a car for the first time recently, too. It was a 2012, so that’s like, ancient to the car financing world by comparison. We still got 2.44% from a local credit union, partly because we weren’t buying from an OEM dealer. Anyway, that’s my 2 cents.

Snuze: Needs another Swede > Justino6969 04/18/2017 at 15:00

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NFCU is absolutely the best to work with for loans. I’ve used them for several, then did dealer financing for my last car and regret not going back to NFCU.

NFCU doesn’t have a penalty for early pay off, so no worries there.

themanwithsauce - has as many vehicles as job titles > Justino6969 04/18/2017 at 15:03

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Biggest thing is to deal in the total cost of the vehicle, not the monthly payment. I’ve been dealing with dealers trying to help my girlfriend get a new car and you’d be amazed how often a 10,000 dollar sticker price becomes 12,000 when you multiply the monthly payment by the term length....

Ash78, voting early and often > Justino6969 04/18/2017 at 15:03

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Gotcha, I just assumed new (wasn’t mentioned in the post). FWIW, my credit union treats all cars under 3 years old as “new” and you’d easily be able to get 1.9% or less. Just ballparking.

Justino6969 > functionoverfashion 04/18/2017 at 15:17

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And I appreciate your $0.02! Thanks!

Justino6969 > themanwithsauce - has as many vehicles as job titles 04/18/2017 at 15:20

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I’m pretty happy with the price we’re working on. I’m essentially getting the truck for what it was advertised for; which means I’m basically not paying tax, title, doc, etc. I haven’t even bothered with monthly yet, I’m only looking at total out the door cost, and what percentage rate I can get for financing.

Justino6969 > Ash78, voting early and often 04/18/2017 at 15:21

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Being considered new definitely helps. Thanks for the reply!

(No to be pedantic, but the post said “This will be my first (almost) new vehicle,” but I can see where this can be construed as being new/not used.) 

Ash78, voting early and often > Justino6969 04/18/2017 at 15:23

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Ah, I read that quickly as it would (almost) be your first new vehicle. As in, maybe you had owned one before. I still struggle that it’s already 2017...

Justino6969 > Ash78, voting early and often 04/18/2017 at 15:24

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I hear you. I dated something as 2016 today, too.

themanwithsauce - has as many vehicles as job titles > Justino6969 04/18/2017 at 15:26

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Right, but that’s what I’m saying - when you get to signing paperwork in the finance department, make sure they only talk about that final price and make sure the monthly payment you agree to adds up correctly.

Textured Soy Protein > Justino6969 04/18/2017 at 15:27

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I did a quick check on USAA right now and they’re advertising 2.99% for up to 72 months, or 2.49% if you go through the USAA car buying service. I got a loan through them about a year ago and I want to say it was 2.99% for 60, because I bought the car from a private party. My credit is around 780 according to Credit Karma, might have been slightly lower when I got the loan last year. So I’d say shoot for that 2.49-2.99% ballpark.

MyJeepGetsStuckInTheSnow > Justino6969 04/18/2017 at 15:40

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My credit union is 2.74% at 60 months.

BahamaTodd > Justino6969 04/18/2017 at 15:59

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So what’s the backstory on it? I’m always weary of such new vehicles on the used market.

Also, is it really that good of a deal compared to new? They’re supposed to be practically giving away new trucks at the moment. Especially GM since they are falling behind Ford and Ram in the sales race.

Justino6969 > BahamaTodd 04/18/2017 at 16:19

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I am weary, too, but the CarFax is clean. A thorough test drive will be in order. There are a few low mileage trucks for sale around here, this one is just the color I want. I guess some people just change their mind.

Even searching by lowest price on cars.com (which always include a bunch of rebates that I wouldn’t qualify for), I’m beating the price by a good $4k+, compared to other dealers I have been in talks with. 5k miles for $4k off? I’m happy with it.

With this price, I’m essentially not paying for tax/title/doc/fees.

KusabiSensei - Captain of the Toronto Maple Leafs > Justino6969 04/18/2017 at 16:19

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Heck with that kind of credit score (i.e. a prime score), you can sometimes qualify for the interest rate deals that places advertise.

But always look at the total cost. For example, when I bought my Mini, I had 2.05% on a new car from my credit union. I told the dealer that if they could beat that rate, I’d take their financing. I ended up with 0% for 48 months.

I could have done 0.9% for 60, but the difference in payments was not worth the carrying cost of money, so I pay a little more each month, but the overall cost is just the cost of the car, because I’m paying nothing to the bank to carry the loan.

WiscoProud > themanwithsauce - has as many vehicles as job titles 04/18/2017 at 16:35

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That’s a good think to know, but unless you can secure 0% financing, the total amount paid will always be over the initial cost. The difference is what you’re paying to do payments. If you can get less than 3%, the difference once you factor in the time value of money (inflation) is negligible.

Justino6969 > KusabiSensei - Captain of the Toronto Maple Leafs 04/18/2017 at 16:35

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Yeah, I only look at out the door cost, which is what we’re going back and forth on. As others have pointed out, a 2016 with 5k miles is considered ‘new’ in loan world, so the rates will be a little better than I thought. I signed up for Navy Federal and can get 2.19% for 60, so I’ll probably apply for that and see if the dealer can beat it.

themanwithsauce - has as many vehicles as job titles > WiscoProud 04/18/2017 at 16:52

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Right, but when you have a 3% loan secured, don’t accept the dealer’s offer if it works out to 15 to 20% interest because they “made the monthly payment smaller”

KusabiSensei - Captain of the Toronto Maple Leafs > Justino6969 04/18/2017 at 17:00

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MY17 and 18 vehicles are 1.95% for 48 months from my local CU. I also try not to get 5 year loans because you may want to switch out sooner than that.

I had one with my used BMW that I bought, but I wouldn’t do another 5 year loan unless I was being given 0% financing. Even then I might not do it.

Because if you have a lienholder, you generally have to have full insurance. I will probably end up dropping collision and comprehensive on my BMW since it’s now 10 years old.

Chris@Carlypso > Justino6969 04/18/2017 at 17:03

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Go to www.wikilender.com —- use a credit union WAYYY before dealer financing. Good rates are 1.49-2.99% at most for 750 FICO. Also ensure the dealer doesn’t stuff the deal with other items rolled into financing.

WiscoProud > themanwithsauce - has as many vehicles as job titles 04/18/2017 at 17:18

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Of course not. Don’t ever shop for the lowest payment, shop for a low interest rate.

Bozi Tatarevic > Justino6969 04/18/2017 at 18:02

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Your credit score is excellent so you should not have any issues getting a great rate. At worst, I would expect to see about 2.25% on a 48 or 60 month loan and about 2.75% or so on a 72 month loan. Try a local credit union and get a quote on a rate then take that rate to the dealer.

In most cases, the dealer will be able to beat it when shopping with their lenders and might be willing to lower the price just a bit more if they are getting a spiff from their lender.

Justino6969 > KusabiSensei - Captain of the Toronto Maple Leafs 04/18/2017 at 18:56

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It’s a MY16, so we’ll have to see. I won’t switch out; I plan on buying a dependable vehicle and keeping it for 10+ years. I also plan on paying double monthly if I have it, as to pay it off ever sooner, but not necessarily HAVE to in case something comes up. I’ll want full insurance until after at least 5 years anyway.

Justino6969 > Bozi Tatarevic 04/18/2017 at 18:58

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I can get a loan through Navy Federal, which will most likely be the best deal. According to their website, I can get ‘as low as’ 2.19%, which I would be happy with. If the dealer can work in some kind of 0% for so long, even better.