Question for the Sig Forum brain trust. I know that for home loans, it's traditionally been the practice of putting 20% down and then financing the rest. Is there an equivalent percentage that gets put down for auto loans? Thanks!
There are some situations where the lender may require a certain amount down on an auto loan (like if you have a lower credit score), and putting a certain percentage down can sometimes unlock a better interest rate, but generally there is no set requirement for a set percentage down payment like with most home loans.
Putting a large down payment on a car is more an optional tool for the borrower to be able to get an interest rate, monthly payment, and term that they prefer, to save on total interest cost over the course of the loan, and to avoid being upside down on the loan.
Credit score is the key. Some lenders (credit unions) will finance at low rates and 110% of the purchase price of a new vehicle (covers underwater trade-ins, etc.). If it's a low percentage rate (particularly 0.0%) and you have other higher rate debt, it makes sense to put down as little as possible (as long as you use the savings to pay down that higher interest debt).
It depends. A bank's normal rates can be lower than a dealership's normal rates. However, dealerships will often run special financing promotions with things like 0% interest, etc., which your bank cannot match.
You'll need to shop around and compare. Don't just look at the dealership and your current bank either. You can often find even better deals than either of those by going with an online lender, or by opening a new account at a local credit union.
One handy extra part to getting outside financing is that it removes one factor from what the dealership can haggle over. So you're only having to wheel and deal with them on price alone, not financing rate as well at the same time.
I have usually let the dealership finance. I always am pre-approved before I walk on the lot, but most of the time the dealership is able to secure financing for less.
Credit score means everything when financing a car. If you have an 800+ score, you’ll get the best rates available, or better than published rates.
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Originally posted by sigmonkey: I'd fly to Turks and Caicos with live ammo falling out of my pockets before getting within spitting distance of NJ with a firearm.
Lots of zero percent stuff on new. If you can fog a mirror And your credit score is reasonable, generally you’ll qualify for a new car loan. Look at banks and credit unions. Most will discount the rate for automatic payments and a good relationship.
I'm sorry if I hurt you feelings when I called you stupid - I thought you already knew - Unknown ................................... When you have no future, you live in the past. " Sycamore Row" by John Grisham
Be careful with Zero Interest loans . There's no money in it for the dealer so they get it back on the sales price . My Credit Union offered a special rate on new vehicle loans . Two percent less than whatever the dealer offered . We refinanced a brand new truck and got the lower rate .
Posts: 4423 | Location: Down in Louisiana . | Registered: February 27, 2009
Originally posted by RogueJSK: It depends. A bank's normal rates can be lower than a dealership's normal rates. However, dealerships will often run special financing promotions with things like 0% interest, etc., which your bank cannot match.
You'll need to shop around and compare. Don't just look at the dealership and your current bank either. You can often find even better deals than either of those by going with an online lender, or by opening a new account at a local credit union.
One handy extra part to getting outside financing is that it removes one factor from what the dealership can haggle over. So you're only having to wheel and deal with them on price alone, not financing rate as well at the same time.
Also, you have to check the rebates. A lot of time 0% interest is in luei of a rebate. So might be cheaper to go through your local bank and take the rebate. Get pre-approved at your bank and see what interest rate you'll get there, then research the rebates on the car your interested in, then see what rate the dealer can get you.
Originally posted by HuskySig: Any thoughts on getting a loan from one of the banks where I'm currently a customer or going through the dealership?
What vehicle are you looking at? If the dealer is offering say 0%/60 months financing, the decision becomes a no brainer.
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Originally posted by selogic: Be careful with Zero Interest loans . There's no money in it for the dealer so they get it back on the sales price .
Only if you're dumb enough to go along with that. I've bought a few cars for family members and we completely finished the price negotiation for the car before any discussion of financing was had. Biggest rule in handling dealers is to not let them mix different attributes of buying (i.e. purchase price, financing, trade in value, etc). Take them one at a time and keep it simple.
----------------------------- Guns are awesome because they shoot solid lead freedom. Every man should have several guns. And several dogs, because a man with a cat is a woman. Kurt Schlichter
Originally posted by bigdeal: ...Biggest rule in handling dealers is to not let them mix different attributes of buying (i.e. purchase price, financing, trade in value, etc). Take them one at a time and keep it simple.
Bingo. They are three separate transactions. Once you let the dealer start mixing them, you can't make valid judgement.
In my case, a while back, I bought a Nissan Frontier. I put down about $6K, not because I had to, but for peace of mind. If the SHTF personally and I had to sell it, I figured I wouldn't be upside-down.
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Posts: 3372 | Location: Grapevine TX/ Augusta GA | Registered: July 15, 2007
Don't buy something you can't pay off in 48 months or less. You are buying something that will be declining in value most of the time you own it and you don't want to be upside down (owe more than the wholesale value). The only thing worse for your financial future than a big auto loan is a credit card balance.
Depending on the lender, they may require you to get GAP insurance on the loan unless you put enough down. Similar to the 20% down to avoid PMI on a home loan.
Are you able to shop a loan through a Credit Union? Check all of your options when you can.
Posts: 9558 | Location: Somewhere looking for ammo that nobody has at a place I haven't been to for a pistol I couldn't live without... | Registered: December 02, 2014
Originally posted by HuskySig: Any thoughts on getting a loan from one of the banks where I'm currently a customer or going through the dealership?
When we bought my wife's Tahoe, after a deal on price had been made, I informed the dealership that I would be using my own financing. He asked if I'd be willing to go with the dealership's if he could beat my bank's rate. I said sure. He asked what rate I was getting then went to his office to work up numbers. He came back with a rate better than my bank's so I went with their's.
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I walk in with outside financing pre-approved. I haggle on price and once that’s done we talk financing. I let them know I have outside financing and that they need to bring their best offer right quickly. If they ask what I’m holding I chuckle and tell them we both know that’s not how the game is played. If I go with their financing I try to get service stuff thrown in as part of the deal.
Posts: 4370 | Location: Peoples Republic of Berkeley | Registered: June 12, 2008
