Auto Loan Questions/Tips/Advice

[enkei2k]

Hey guys, I'm looking for some advice on who (what lender/bank) to choose for when it comes to taking out an auto loan. I've never taken out an auto loan before so please bare with my newbie-ness.

I'm currently looking into getting a new car soon, and I'm shopping around for who has the best rates. Lately, most of them seem to hover around 2.99-3.49% for 60 months, with excellent credit. I just checked Mortgage Rates Credit Cards Refinance Home CD Rates by Bankrate.com and saw this new one: https://autoclubfinance.com/bankrate/intro.html

They have a pretty good starting rate 1.65% for, I believe, 36 months for the people with the best credit. So I'm guestimating that 60 months should be slightly higher, but not at the 2.99-3.99% range that most are advertising.

I've never heard of them before, so my question is:
- is this company legit and anybody have any feedback?
- should I worry that I've never heard of them before and I might get screwed somehow?
- should I go to a 'bigger' bank (ie: Chase, HSBC, CapitalOne, Wells Fargo, etc) and pay more just for safety of a name bank, if such a thing exists?
- what happens if I apply for a loan, say for 25k, but the total OTD comes out to less than that amount?

For those that have taken out an auto loan, did you just jump to the one with the best rates? I know that if something sounds too good to be true, most likely it is. So I'm just looking for some feedback so I don't make any mistake when taking out a loan.

If you can share what bank lender you have and at what rate, that would be great! Thanks.

[simmode1]

I'm going through the same thing myself right now. But there's now way I'd pursue it through a financier that I've never heard of and wasn't sure of their reputation. I searched out a local credit union and that's the route I'm going.

[Walperstyle]

Personally, I would never go in debt for a car. Auto debt is bad debt. You can get a lot of value getting a used car. If you can't pay it off within its 'good rate' period, I wouldn't touch it. So many open variables for them to screw you over. They can Easily put the percentage to whatever they want.

The only way I would do this is tack the debt onto my mortgage at a super low rate, even then, It would have to be one hell of a deal.

[niscur29]

Dude check your local credit unions. Usually they have very good rates for first time buyers. Plus you get a pre-approval (assuming you get approved) to throw to the dealer when they come back at you with some whack ass rate.

Personally, there's enough credit locally to not waste your time with the internets and get a fixed rate please! I don't feel like bailing anyone else out who took on too much with a variable rate that default when the variable period is over.

[Corbic]

Advice? Don't do it. In a year you'll be pissed.

[ronmcdon]

I also cross shop rates at banks and I've been getting about the same APR rates for 60 months, 3-3.99% APR and I have around 700 pts.
I've never thought to shop rates at smaller banks and I see no reason why it could be bad.
personally I just pay off my auto loan a little quicker to reduce interest.

I'd also look at the manufacturer's website to check if they're offering incentives.
I recall last year ford was offering 0% apr for up to 60 months on the mustang GT.
sometimes those incentives are unbeatable by any outside financing.

good luck and let us know what you end up with.

[driftthis]

The best way is to go into a few banks and speak with someone about applying for an auto loan. I presume you have a savings account with a bank? If so, start at your bank, since you're already a member there. I personally did not like the extra payment each month. Good luck.

[enkei2k]

Thanks for the tips and advice.

I've checked with a few local credit unions and their rates range from 2.45-5.99% for 60 months.

I do have a checking/savings account with one bank, but even with the 'same customer' discount, their rates are average at 3.99%.

I might just end up spending $20 because I am not military, and use that to sign up for a Pen Fed loan. 1.99% best I found so far. Hopefully I can use that as leverage and hope the dealership can find me a better loan.

As for the new car? I'll be sticking in the Nissan family hopefully

[driftsilvias13]

Pen Fed is awesome. Currently have a loan through them as well.

[FRpilot]

any advice on getting a loan to buy an older used car? i think most places only loan you the money to buy a used car up to 7 years old since the underlying asset is the car itself and they don't want to loan you the money when the car they hold as collateral is a a 10-20 year old POS (in their eyes) car.

last year, i bought a 2003 year car. i didn't want to go through the hassle and needed a quick $5,000 cash loan on top of what i had saved since i was planning to take a road trip and buy a car the next morning. i decided to get it through a cash advance from my credit card even those those fee's suck on a cash advance! (5% fee on the cash advance amount right away on top of a crazy ~25% APR).

i'm glad i payed that off in a quick few months and only paid a few hundred dollars in interest. when i get another used older car in the future, is there a better way than a cash advance? i'd like to make smaller payments over 3-5 years at a reasonable rate instead of rushing to pay it off in 3-5 months because i'm being raped by a 25% APR.

[upsdude]

+1 for credit unions start there

[Silverbullet]

check out Pentagon Federal. 1.99% for 2 year auto loan. It is how I am paying for my X-Runner.

[Leetfade]

Most smaller banks sell off their loans to the bigger banks. Not all, but that is common practice.

Even if a bank goes under, their good assets (and even their bad on occasions) are typically bought by another bank so I wouldn't worry too much about that.

For the person that asked about financing older cars, try J. J. BEST BANC & Co..

Auto debt is not "bad debt". It is, however, debt on a depreciating asset and, when you buy new, you get hit the hardest with depreciation. So I can see how it can get labeled as "bad debt", but it is still, typically, the lowest cost of borrowing available and good if you're trying to increase your credit history.

Don't rule out manufacturer financing. There are still a lot of 1.99% and even 0% loans out there! Just beware the duration if you're concerned about the size of the payment. Most of these are through a major bank anyways. It's called indirect lending. Some, like BMW, have their own banks, however.

To qualify for prime pricing you will, typically, need a 740+ FICO score. It's tiered from there so get an idea of what your score is at but remember that just because TransUnion.com or some other score system says one number, it doesn't mean you get that (every bank scores a little different and each debt type has its own score).

Good luck!

[sw20>>s14]

credit unions are the way to go. here, the typical rate is 2.74%-3.75%+ on used cars with some lower than 1.99% on new. and like everyone said, there's absolutely no reason other than preference to buy anything other than used. buying new kicks you in the pants the second you drive off the lot.

Originally Posted by FRpilot

i'm glad i payed that off in a quick few months and only paid a few hundred dollars in interest. when i get another used older car in the future, is there a better way than a cash advance? i'd like to make smaller payments over 3-5 years at a reasonable rate instead of rushing to pay it off in 3-5 months because i'm being raped by a 25% APR.

why not just a normal used car loan or bridge loan? if you have a good amount saved up and are just short a few G's, you can use that money saved to pay a huge chunk and/or put it as a down anyway.

[Okinawandrifter87]

I am military.. not sure what you would qualify for but.. they do offer as low as 1.79%

https://www.navyfederal.org/products...auto-rates.php