Financing a USED vehicle

[Naterenfo1]

well, I am soon to be a college grad, and looking to get a 1/2-3/4 ton pickup for myself, so I will be able to haul my toys around (AKA the MJ, my fourwheeler, and other vehicles later on in life). I am wondering on how to go about not only vehicle financing, but the search process.

 

I have never financed a vehicle, or any other mode of transportation in my entire life, so obviously I have little/no credit, but I don't have a bad credit history following me like some folks do. Yes, I have student loans and such but have made on time payments thus-far, but supposedly that takes quite a while to build up a score with.

 

I found a nice '99 Ford F-250 at my local dealership with a Turbo 7.3L Diesel 150k miles for 10 grand, a little overkill for what I need but hey, I'm a diesel mechanic and a good solid truck with a reliable motor is all I could ask for. I test drove the truck, and besides having a cab light out, speakers being blown, and some slop in the steering (the dealership said they would fix said problems immediately) the truck seems great to me. I looked on craigslist and saw similar trucks for around 2 grand less

 

So, I am trying to figure out what I can afford. I was looking for a payment between 200-275 a month (obviously the closer to 200 the better) and I ask the salesman roughly what kind of interest I was looking at and what a guesstimate on payments would be. Of course the car salesman starts throwing out numbers like 5% interest and $200 payments, and a new pony and god knows what else. I didn't make an offer on the vehicle, and asked him just to use the company information and see what an average deal would be on the loan (trying to get some loan shopping done). He sat me down with a financing department member, who had the idea that I was going to buy the truck and was ready to finance. I told him I wasn't ready to buy and I was considering making the purchase at the end of february, and of course he got crabby with me. I asked him to guesstimate my financing without running my credit report. He explained to me that going through the dealership was the only cost effective way to get a vehicle loan, and said that even if I were to go "loan shopping" nobody would finance me because the vehicle was too old and had too many miles.

 

Today I got a phone call saying that they ran my credit report and could get me a 5.1% interest rate for a 48 month loan. I was at school and did not want to shout at him (for running credit), so I asked how long the loan was good for and said I would call back later. I am a little pissed that they ran my credit - I asked them not to, and it probably wrecked the very little credit that I actually may have had.

 

so my questions are as follows:

How do you go about used vehicle shopping? is asking about pricing and payments going too far? Did I go about this in the right way? because apparently asking about payments means your interested in purchasing... Has anyone heard of problems with lenders loaning money for too old of a vehicle?

 

Any and all help is appreciated.

[tbrand]

The following is my personal opinion, gathered from my own experiences. Your mileage may vary. Any similarity to any actual person, living or dead, is entirely coincidental. All rights reserved. This may not be reproduce, re-transmitted, or rebroadcast without the express, written consent of the National Football League.

 

Er, right. My thoughts.

 

-I would be surprised if you could walk into a bank or a credit union and get a loan to finance that truck, as the lender will have a hard time getting their money out of the vehicle if you can't make the payments. Dealers will sometimes be willing to take a risk on someone, especially if they make a big profit on the initial sale, because they can repo the truck, clean it, and put it back on their lot. Banks have a lot more hassle to go through.

 

-5.1% interest isn't great, but it's not bad for a first-time buyer on an older truck. And the credit pull probably only knocked 2-10 point off your score. The real danger is when someone goes from dealer to dealer trying to get financed, and gets his credit run ten times.

 

-Don't forget to budget in money for insurance. In most states, a lender will require you to carry full coverage on a vehicle you don't own outright. I don't know what your driving history is like, but I saw prices for full coverage from $125/month (what I bought) to $250/month (my first quote) on a 2001 A4 back in '07.

 

-You're a diesel mechanic, which should save you a ton in labor, but don't forget to save money towards repair parts you'll eventually need (or, let's be honest, upgrades you'll want to to). I'd suggest a minimum of $50/month for fixes, more if this will be your baby.

 

-Once you ask about price (and especially payments) it's their sale to lose, so they'll push you for it. A buyer who isn't sure he can get financed anywhere is more likely to take an offer of financing from the dealership. If you know you can only afford $200 per month, stick to that. Walk out if they try to give you a $300 payment.

 

-Figure out what you can afford (including gas, insurance, truck payment, and maintenance) and don't fudge the numbers because you want the truck. Nothing sucks more than your shiny new truck becoming a boat anchor on your finances because you lied to yourself about how much it would cost. Down payment will help your monthly payment be less.

 

Whew... that's a novel. Hope some of it helped.

[shelbyluvv]

That is outstanding advice!

 

About exactly what my experience has been. Only I have a foreclosure on my credit report so my interest rate is slightly higher. I knew I had to buy a vehicle to help rebuild my credit history so I bit the bullet and financed my 07 Cummins for $438 a month for 5 years. Plus, I got a really sweet truck out of the deal.

[Lemmon714]

All good advice so far.

 

For payments search "Amortization Chart or Amortization Calculator." You can input total loan amount, interest rate, and total months. This will help you determine payment and time to payoff the loan. You don't want the salesguy to quote you a seven (7) year loan just so you can make the monthly payment at $200.

 

I have financed vehicles through my Credit Union where the rates are usually better. You can check local bank and credit union rates online to see budgetary interst rates.

[dasbulliwagen]

The last used car I financed was through my credit union. Banks and Credit Unions will finance used cars but its usualy at a higher interest rate than it would be for a new car, and they will not finance a used car for any more than its book value. The one I bought was on the dealer lot for $5900. I offered them $5000... they told me that they could not go below $5100. At that point I was ready to walk out over $100 difference, but they caved. I was later told by my credit union, that high book on the car was $4900, and that they usually won't finance any more than that, but I had good credit and a history with them, so they let me get the loan for the $5000 plus tax title and tag. And 5% on that used car finance sounds GREAT! As long as the payments are where you want them. Good luck.

 

Edit.... and running your credit is the ONLY way they can give you an accurate estimate on your payments. That happening once or twice should not affect you adversely.

[Blue88Comanche]

the only reason i got my WK was because of the damaged parts... the front door handle was broke and it was a $750 part, so I got him to knock that off and i fixed it the next day for $20 from the Junk yard. that bumped my monthly payments below $200.. Check how much it would cost you to repair the truck and that may save you some money and lower the monthly rate.

 

dad co-signed for me witch a good interest rate, so if you know someone with a great credit score (like parents or grand parents) see if they can co-sign.

[Blue88Comanche]

and be willing to walk away THAT was the biggest factor on the final price for my WK is that we walked.. They called me 5 min. later with a lower price and better interest rate.

 

if they didn't make us wait 4 hours to start the paperwork we wouldn't have walked in the first place.

[tbrand]

I'd be careful about using a cosigner. If you can't pay the loan for any reason, your cosigner is responsible for the rest of the payments you owe. Pick someone whose relationship with you wouldn't be ruined if they had to take on $9k of your debt, if you absolutely must go that route.

[Jeep Driver]

I personally will never borrow another penny on a new or used car......foolish. What I got I own.

[dasbulliwagen]

Banks lending rules are a lot tighter now than they used to be making it much tougher for ANYONE to get a loan. Ill be in the makrket for a new car in another year or so. I hope I don't have the problems youre having.

[Jeep Driver]

BTW I seriously doubt our economy will survive 2012, let alone our nation as we have known it, but that's another matter. This is the worse time to take on debt.

 

Our immediate future is bleak.

[tbrand]

Well, yeah, buying cash is preferable to buying on credit, but our young gentleman asked about buying on credit.

[Jeep Driver]

Amortization Schedule

Payment Principal Interest Balance

1 $258.04 $41.67 $9,741.96

2 $259.12 $40.59 $9,482.84

3 $260.20 $39.51 $9,222.64

4 $261.28 $38.43 $8,961.36

5 $262.37 $37.34 $8,698.99

6 $263.46 $36.25 $8,435.53

7 $264.56 $35.15 $8,170.97

8 $265.66 $34.05 $7,905.30

9 $266.77 $32.94 $7,638.53

10 $267.88 $31.83 $7,370.65

11 $269.00 $30.71 $7,101.65

12 $270.12 $29.59 $6,831.54

13 $271.24 $28.46 $6,560.29

14 $272.37 $27.33 $6,287.92

15 $273.51 $26.20 $6,014.41

16 $274.65 $25.06 $5,739.76

17 $275.79 $23.92 $5,463.97

18 $276.94 $22.77 $5,187.02

 

Payment Principal Interest Balance

19 $278.10 $21.61 $4,908.93

20 $279.26 $20.45 $4,629.67

21 $280.42 $19.29 $4,349.25

22 $281.59 $18.12 $4,067.67

23 $282.76 $16.95 $3,784.91

24 $283.94 $15.77 $3,500.97

25 $285.12 $14.59 $3,215.85

26 $286.31 $13.40 $2,929.54

27 $287.50 $12.21 $2,642.03

28 $288.70 $11.01 $2,353.33

29 $289.90 $9.81 $2,063.43

30 $291.11 $8.60 $1,772.32

31 $292.32 $7.38 $1,479.99

32 $293.54 $6.17 $1,186.45

33 $294.77 $4.94 $891.69

34 $295.99 $3.72 $595.69

35 $297.23 $2.48 $298.47

36 $298.47 $1.24 $0.00

 

© 2011 - myAmortizationChart.com • Disclaimer & Private Policy • Contact Us

[Jeep Driver]

Don't forget to include sales tax, tag, title, dealer prep, delivery fee. Yes they will insist on all these fees......approx $1800 worth. Fees are cash out or incorporated into the loan.........now you have a $12,800 10 year old used truck.

 

OP stated he knows he's paying $2K++ over non-dealer prices.

 

 

It's a lose lose.

 

 

Yeah, well, I know what he asked for.........what he got was wisdom.

[b16gsr]

Buying on credit can have its goods and bads. I have killer credit, have bought and sold 10 cars with loans in the past 3 years. Always making money on each, saving enough each time to pay cash for 3 cars that I currently own. Still have one loan at an extremely low interest rate (1.99%) at Pentagon Federal Credit Union. Today if I wanted to buy a really high priced vehicle, I click 2 buttons on PenFed and it is a done deal, check in the mail in 2 days.

 

You have to be smart about it. I pay all my bills 15 days early and loans twice a month. It is habitual at this point, I never see most of it as it is all bank draw.

 

Trust me you have to start somewhere, get a loan, buy the truck, just be smart about how much you truly NEED to spend. Be careful on the interest rates as well, you do not want to walk away with the new truck upside down. Also look at GAP coverage to make sure that you will be covered if it is totaled.

 

I too was once in your shoes, but you can really better yourself by being strict and budgeting.

 

Try Pentagon Federal, worth a shot.

[jpnjim]

BTW I seriously doubt our economy will survive 2012, let alone our nation as we have known it, but that's another matter. This is the worse time to take on debt.

 

Our immediate future is bleak.

 

 

I am surprised how many people feel exactly this same way,

and it has nothing to do with any 2012 Mayan Apocalypse predictions

(I actually think the predictions are being used to ridicule the people who can see the economy collapse coming with crystal clarity).

 

I agree some bad juju is coming our way,

but have a slightly different take.

 

If the dollar is going to collapse,

as in hyperinflation killing all value

(wheelbarrow full of $$$ for a loaf of bread type hyperinflation)

 

then the thing to do with any money you have now is to spend it while it still has value.

Having real assets in time of hyperinflation is better than having devalued funny money.

 

 

As far as having debt,

if it stops you from properly preparing for a crisis,

then that may be bad debt.

 

But if it's something that helps you, or has intrinsic value, no mater the situation,

then that might be worthwhile debt.

 

Either way,

since you brought it up,

:USAflag: Hope for the best, prepare for the worst :USAflag:

[jpnjim]

That is outstanding advice!

 

:yes: I agree.

:cheers:

[Jeep Driver]

I am surprised how many people feel exactly this same way,

and it has nothing to do with any 2012 Mayan Apocalypse predictions

(I actually think the predictions are being used to ridicule the people who can see the economy collapse coming with crystal clarity).

 

 

Has nothing to do with the Mayan calender.........LOL

 

 

For decades I have been watching (and warning others) as our society implodes......We will get exactly what we deserve.

 

That is a discussion that won't be allowed here.