Discussions
Explore the latest discussions related to this domain.
Smartest way to go about a car loan
Main Post:
I'm about to buy a car for about $24k, and I only have about 6k that's liquid and available for the down payment. I was going to go with a 72-month loan from the dealer, making my monthly payments around $360. Whenever I have extra cash I plan to dump it toward the car loan, hopefully reducing the length of the loan significantly. (*ETA: This is not a brand-new car but a dealer-certified 2021 with 16k miles)
BUT: I am completely new to the world of car loans, and frankly ignorant. In the past I've always bought cheap used cars outright for cash. (My last one bought for 8k, and the one before I bought from my sister for 3k. The days when these kinds of deals were possible are over, and I'm also at a point where I need a more reliable vehicle.)
Would like to hear about what mistakes I may be making with my proposed strategy, or what other options I should be considering.
Context: Salary 87k, I own a house with payments (mortgage, condo fee and utilities) adding up to about $1900 a month. Excellent credit.
ETA: Through the course of the conversation below, I've concluded that the strategy I was considering (above) is in fact one of the stupidest ways to go about this, and I'm going to look into other options. I've got some good advice here, and I'm thankful for it!
Going forward I'll be looking into other paths that may involve saving up more for the downpayment, using a credit union for a loan, and lowering my standards on the car I choose — or any combo of those three.
Top Comment:
Always get a loan pre-approval from a local credit union.
Once you have that in hand, start shopping for the car. DO NOT mention how you plan on paying for the car until you have an agreed upon OTD price inclusive of taxes and fees. Then see if the dealer can beat the terms of the credit union. If they can, great. If not, you already have a loan lined up with better terms.
Buying new car- loan or outright?
Main Post:
I’m not sure if this is the right sub for this so I apologize if not. I’m 25, make 45k a year. I need to buy a new car because mine is going to die any time now. I have ~60k in savings. The car I’m looking at is about 30k. I’ve been looking at loans and it feels like a waste to pay interest when I can pay for the car in whole. I own my house so building credit isn’t super important to me. Does anyone have any suggestions on if it would be best to buy the car outright, put a chunk down and get a loan for the rest, etc? Not sure what to do.
Top Comment:
If you are buying a new car from a dealership, do not tell them you aren't going to finance it until you negotiate the price of the car. Get it in writing. Trade-in should also be negotiated after. Dealerships make most of their money on financing and warranty add-ons.
Car and Driver: You’re Right, It Is Very Expensive to Finance a Car These Days
Main Post: Car and Driver: You’re Right, It Is Very Expensive to Finance a Car These Days
Top Comment:
I know a guy I met at cars and coffee who financed a base model Hellcat for 96 months at $970 a month
Why do people recommend financing a car?
Main Post:
seems like a terrible idea most of the time, especially right now but I always see people saying that’s the best option and such?
Top Comment:
Because having a reliable vehicle is so vital to most people and, especially with the current shortage in used car stock, it's often the only choice most people have.
Also, if you can get good interest rates, it can be more economical (or efficient, at least) to pay the low interest rate, put the rest of the money into an interest bearing account, and actually make a bit of money.
Is financing a car worth it?
Main Post:
I’m looking to spend 15-25k on a used car. Is it worth the trade-off of having less money in the market to pay up front and not have to worry about paying interest? Also looking to buy a house in the next few years so considering the credit building potential of an auto-loan.
Love to hear your thoughts.
Top Comment:
I saw you know this, but yeah, used cars are nuts now.
I got a 100k mile used vehicle for 15k last month. My credit union has a 60 month 1.5% (1.25% if fuel efficient) loan rate. I don’t know why you wouldn’t take that if you can get similar. It’s $800 extra for me over 5 years! What’s 15k in, say, Vanguard Total over 5 years gonna return? More than 1.5%.
Edit: also wanted to say that, right now, getting new seems maybe as good depending on what’s in your area, model/size needs, bc of reliability and the dealer warranty, etc. 2 years ago I would have thought differently, but today...