Car loan through bank or dealer?

[hopefull]

Ok...my fiance needs a car. He has an checking account with Wachovia Bank. Should he apply for a loan through them? Or should he go through the dealer. Its Sloane Ford in Exton, PA. His score around 580.

Thanks!

[LadynRed]

Why does he need a car he has to make payments on ? With a score of 580, he's going to be paying thru the nose in interest IF he can find a lender who will give him a loan at all. Going thru a dealer is generally bad, often very bad. Getting a car loan where you bank is also not a good strategy. If he misses a car payment, they WILL take the money from his checking account, and they don't have to ask or notify him first.

Shop for a car loan at other banks or credit unions, get pre-approved before you EVER step onto the car lot.

[hopefull]

Thanks! I'll tell him.

[Focus2069]

get preapproval, then goto the car dealer, say if you can beat this rate/deal then i will finance thru you, if they cant, just use your pre approved loan.

my sister did that...pre approved for 4.xx rate, and the dealer gave her 2.9....she had pretty good credit though.

[isislc]

Be very careful though, sometimes if you decide to just go through your preapproval the dealership will pull your credit anyways. Then you end up with like 8 pulls that you never approved on your credit report.

I agree with Lady, shop around and if you can handle it for now, just try to outright buy a beater for under $1k then get the new car when your credit is better. I had the same issue where my Fico was about 450 but needed a vehicle badly so they were able to get me financing since they were submitting several good credit loans along with it. Ended up paying almost 25% for interest on the loan. Hadn't realized it was that much since I've had a lot of turmoil in my family life during the past year so just got around to looking at my loan papers and found out about it. Was able to get my car refinanced with a much better rate than the 25%. You're better off waiting if you can.

[Focus2069]

Be very careful though, sometimes if you decide to just go through your preapproval the dealership will pull your credit anyways. Then you end up with like 8 pulls that you never approved on your credit report.

But...dont those all the pulls in a 14 day timeframe only count as one if your shopping for a loan??

[isislc]

Yes it does but if you're already approved with someone that you're going to work with, why take all the extra hits for no reason? I don't remember who it was, but someone here had gotten 36 hits for a car loan. I believe it was 36, was a huge number I remember, yet they already had someone they were going with. Once you get those inquiries on your report, anyone can tell you here that some of them are damn near impossible to get off before 2 years.

[hopefull]

Thanks everyone. My fiance and I talked last night about this...I was telling him when I got my car three years ago, my interest rate was 16% and my score was like his. I have Americredit. I'm going NBA credit union soon (I start a new job this Monday and they offer them) so I'm going to try and refinance through them.

He doesn't mind going through his bank because he has all his bills direct debited from his account and he wants to do the same for his car. He's working a lot this week so he'll apply with Wachovia before the end of this week. Hopefully it'll all work out.

Thanks again!

[Moneedshelp]

good luck

[McG]

I have had really good experiences with Cap1 Auto Finance and bad experiences with eLoan and Chase. Cap1 has a "Custom Finance" division that approves people with problem credit - check out some of my posts about this:

http://www.debt-consolidation-credit-repair-service.com/forums/showpost.php?p=608610&postcount=4.php?p=608610&postcount=4

http://www.debt-consolidation-credit-repair-service.com/forums/showpost.php?p=891925&postcount=5

[isislc]

The only downside with Cap1 though too is that they pull all 3 credit reports. For some people, this would be a big factor in deciding who to get for their car loan.

[MountainDude]

IMO, most people don't realize how much money they waste in interest every year, whether it's student loans, credit cards or car payments. Always keep in the back of your mind, that the money you pay in interest on a luxury item could go to principal on a necessity.

Luxury items and necessities differ from person to person, just be sure to give every purchase the thought it deserves, and really decide how important that purchase is to you.

If you approach every major purchase with this in mind, you'll find the best deal.

[AboveAverage]

IMO, most people don't realize how much money they waste in interest every year, whether it's student loans, credit cards or car payments. Always keep in the back of your mind, that the money you pay in interest on a luxury item could go to principal on a necessity.

Luxury items and necessities differ from person to person, just be sure to give every purchase the thought it deserves, and really decide how important that purchase is to you.

If you approach every major purchase with this in mind, you'll find the best deal.

I believe Methuss said this in another thread, but from what I remember, it depends on where you live. If you in a place where public transportation is sparse, you need a car. If you're in NYC, for example, then a car is a luxury. Unless you work very far, of course, then a car is a necessity. The only cars I'd consider luxury items would be Lamborghinis, Ferraris, Porsches, Aston Martins, Rolls Royces, etc....I think you get the idea.

I get the jist of your point though and it is very valid, but sometimes folks need to get that ride at that ridiculous rate so that they can pretty much continue to provide for oneself and his family.

[isislc]

Right now I need to get a 2nd car but since I got the first car which was a necessity to be reliable most of the time, I can easily afford to get a $500 clunker for the DF till it dies. Then my plan is for my first car to replace the 2nd vehicle and purchase a brand new vehicle to be my main. My credit will be so much better and I should be able to squeek out a prime interest rate for that one.

[Houdino]

Thanks everyone. My fiance and I talked last night about this...I was telling him when I got my car three years ago, my interest rate was 16% and my score was like his. I have Americredit. I'm going NBA credit union soon (I start a new job this Monday and they offer them) so I'm going to try and refinance through them.

He doesn't mind going through his bank because he has all his bills direct debited from his account and he wants to do the same for his car. He's working a lot this week so he'll apply with Wachovia before the end of this week. Hopefully it'll all work out.

Thanks again!

If you cosign for him (not always a good personal choice, no offense meant) and assuming your credit has improved substancially since you got your loan 3 years ago and you have $1500-$3000 to put down, you probably could get a 0% loan from a dealer. Cars sales are slow right now and many are offering this. That rate comes from the manufacturer, so you would have to look around and see who is offering 0% on a car that he would want and could afford. The $1500-$3000 you would use to buy a beater would get him into a real car with a new car warranty. Just make sure you DO NOT get talked into a higher monthy payment than you can really, really, REALLY afford!

This advice should only be considered if you truely believe it is the wise thing to do. I wouldn't advise a monthy payment that is greater than about 10-15% MAX of his monthly gross pay AFTER taxes.

[betam4x]

About that high interest...

If you have the extra money to 'blow' then sometimes it is worth paying an arm and a leg for a car. ESPECIALLY if you have bad credit. Know what a paid auto loan does to your credit scores?

Also, states like NJ have strict inspection laws. You won't find clunkers here. No rust on the body, no cracked windows/windshields, strict emissions (if you haven't had a recent tuneup on an older car you will FAIL emissions.)

You MIGHT find a somewhat decent car for 3-5k, but if you live in north jersey and have a lengthy commute you are likely to run it into the ground within a couple months. I spent 14k in used vehicles in the space of 2 years. Yes my friends, i learned my lesson. I bought new, paying sky high interest, but i'll be damned if i'm left beside the road or get another ticket for risk of accident again.

[AboveAverage]

I wouldn't advise a monthy payment that is greater than about 10-15% MAX of his monthly gross pay AFTER taxes.

Wouldn't that be his net, then?

[Magdalen77]

About that high interest...

If you have the extra money to 'blow' then sometimes it is worth paying an arm and a leg for a car. ESPECIALLY if you have bad credit. Know what a paid auto loan does to your credit scores?

Also, states like NJ have strict inspection laws. You won't find clunkers here. No rust on the body, no cracked windows/windshields, strict emissions (if you haven't had a recent tuneup on an older car you will FAIL emissions.)

You MIGHT find a somewhat decent car for 3-5k, but if you live in north jersey and have a lengthy commute you are likely to run it into the ground within a couple months. I spent 14k in used vehicles in the space of 2 years. Yes my friends, i learned my lesson. I bought new, paying sky high interest, but i'll be damned if i'm left beside the road or get another ticket for risk of accident again.

PA's vehicle inspection and emissions tests (at least in the Philly area) are at least as strict as NJ's. I lucked out with my hooptie, but you are likely correct that the 3-5K is the lowest you could go for an used car and still get something able to pass inspection. Maybe the OP has a mechanic friend like my daddy does (and whom I got my $1153 hooptie from).

[CleverCynic]

It seems maybe most of the cars on the road are late model or close, people apparently love their car payments.... but I still think there's more cars than people out there, so a new car to me of any sort is a luxury item of preference.

Doesn't mean the alternative is to drive a POS... if properly maintained, with 3 months worth of payments you could get a brand new paint job, you can get countless accessories with a single payment, nice wheels with 3 payments or so.. basically YOU control how much you're going to spend on your car, a lot or very little. The extra $300 to $500 a month you can use to buy an aweful lot of nice things or dine out or just have more freedom in general. So I wouldn't advocate a new car unless you accept it as a personal preference that was stronger than the best sense. Once you choose, you're stuck... I prefer options. Actually this is very similar to my anti-tatoo argument lol.

[Magdalen77]

It seems maybe most of the cars on the road are late model or close, people apparently love their car payments.... but I still think there's more cars than people out there, so a new car to me of any sort is a luxury item of preference.

Doesn't mean the alternative is to drive a POS... if properly maintained, with 3 months worth of payments you could get a brand new paint job, you can get countless accessories with a single payment, nice wheels with 3 payments or so.. basically YOU control how much you're going to spend on your car, a lot or very little. The extra $300 to $500 a month you can use to buy an aweful lot of nice things or dine out or just have more freedom in general. So I wouldn't advocate a new car unless you accept it as a personal preference that was stronger than the best sense. Once you choose, you're stuck... I prefer options. Actually this is very similar to my anti-tatoo argument lol.

I'll never buy a new car again, but I have no objections to late model used at a reasonable payment. Though, I have to admit I've been enjoying the hell out of three payment free years. Heck, if, when the hooptie dies, I can buy another good car for cash, I'll do it.

[Houdino]

Wouldn't that be his net, then?

Why I otta...

It had been a long day...

...Actually this is very similar to my anti-tatoo argument lol.

CC no wanna pimp his hide? Saves the dough to pimp his ride?

[Houdino]

... Know what a paid auto loan does to your credit scores?...

Even after it just ages it still gives a good kick where it counts!

Yes my friends, i learned my lesson. I bought new, paying sky high interest, but i'll be damned if i'm left beside the road or get another ticket for risk of accident again.

Great second point! No way I want my babe in that situation. While CC, Mag et al make good points and their "Hoopties" work out for them and, yea, the extra $200-300/month can pimp your hooptie or come in handy for other goodies, to me the reliability of a new (or low milaged used) is to important. And as beta pointed out, a paid auto is as good as gold on your CR.

May your hoopties always get ya where you're going!

[AboveAverage]

Now this is a great debate. Hoopties vs. "New Hotness". ["Men In Black 2" reference for a new/late model car]

As someone who has always owned Hoopties (the Brown '85 Ford Tempo [in 1995], the 1986 Grand Prix, The 1988 Hyundai Excel (man the nightmare that car wrought on me) and countless others) I can definitely say they all had one thing in common...a high maintenance bill. Unless you are a mechanic, or know a good one personally, owning a hooptie can seriously be a pain in the a$$. My one alternative to owning either...public transportation. I've had a license for almost 15 years, never had a DUI or any of that crap. The bus, trains, subways definitely works out well if you do it for 3 years. But after awhile, it starts taking it's toll. You find you can't get to certain places without depending on a friend. You want and need that freedom to get the heck out or get the heck in.

But I want something reliable to do that. New Hotness definitely promises that. Sure, it could break down. But that's what warranties are for...especially when you are promised a loaner while New Hotness is getting serviced. My whole thing is, if you are responsible and can make a reasonable payment on the car note, then definitely do it. Yes cars depreciate quickly...but you have the ability to get around. If and when my scores improve to the point where I can get New Hotness at a reasonable rate, I'm jumping for it. And I welcome it. It would serve my purpose of ultimately getting a mortgage when the time comes, so long as I'm not late of course.

So all-in-all, if you can maintain a Hooptie, God Bless you. But as someone who as dealt with them most of his driving life, I'd rather take a bus.

[Magdalen77]

Great second point! No way I want my babe in that situation. While CC, Mag et al make good points and their "Hoopties" work out for them and, yea, the extra $200-300/month can pimp your hooptie or come in handy for other goodies, to me the reliability of a new (or low milaged used) is to important. And as beta pointed out, a paid auto is as good as gold on your CR.

May your hoopties always get ya where you're going!

I don't "pimp the hooptie". It remains in its original hooptie-ness. It's actually, even at 17-18 years old not a bad looking car. I'll admit to a lot of luck with it and I'm practical as well. I have AAA plus and a cell phone that I keep charged. My one new car was pretty much a disaster, payment wise and repair wise. I got one of the few crappy Toyotas. Everytime I needed to get it fixed it was a $600+ repair at minimum.

Like I said, though, I'm not opposed to a late model used car with a reasonable payment. But no payment, that's just wonderful.

[Moneedshelp]

I think we all agree, if you can avoid the payments, it is the best thing to do. My payment now is low, but I wish I didn't have one at all. And to think a few months back, I was thinking about getting a larger SUV. The gas alone would be kicking my butt right now. I am so glad I changed my mind. The larger vehicle would have meant increased insurance, higher car payments, as well as more fuel. Yikess