Help - I've never had a car loan - a little guidance?

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP again. And let's say I get a 3 year loan but at the end of year one I get a nice bonus at work and want to throw $5000 toward the car, do auto loan typically allow that without penalty and helping save interest?

You’ll need to read the contract section about prepayment penalty.

I have NEVER seen a car loan with one, however. Just check to be sure there isn’t one.

[Anonymous]

Thank you so much for all the tips! Just knowing the lingo "out the door price" and knowing to look for a prepayment penalty is great. And let's say the dealer ends up matching the credit unions financing deal. Is it better/easier/more advantageous to go ahead and finance with dealer (assuming terms are the same)?

[Anonymous]

I highly recommend Consumer Reports’ car buying guide. Also, if you can afford not taking a loan, I recommend that as well. Just pay for it cash (in that case, you negotiate the price, everything included, and show up with a cashier’s check and drive away).

[Anonymous]

I'm going to go ahead and speak for all of the repliers to date. Have fun and congratulations on doing new things!

[Anonymous]

Anonymous wrote:I highly recommend Consumer Reports’ car buying guide. Also, if you can afford not taking a loan, I recommend that as well. Just pay for it cash (in that case, you negotiate the price, everything included, and show up with a cashier’s check and drive away).

I wish I could. I've always paid cash for cars in the past, but just can't now. I have $10k liquid that I can put toward a car purchase but must finance the rest. I do plan to pay it down aggressively --op

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP again. And let's say I get a 3 year loan but at the end of year one I get a nice bonus at work and want to throw $5000 toward the car, do auto loan typically allow that without penalty and helping save interest?

You’ll need to read the contract section about prepayment penalty.

I have NEVER seen a car loan with one, however. Just check to be sure there isn’t one.

Prepayment penalties are illegal in Maryland. Not sure about DC and VA.

[Anonymous]

If you decided what car you want Google an online forum dedicated to that car. There is almost always one and they would usually have a discussion of prices paid recently. So you would know what you can reasonably negotiate out the door. It could be a little different by state. State tax is of course different but also the dealer fee. In MD it is lower than VA so you may save a few hundreds buy buying from an MD dealer.

Regarding a loan it is best to come with your own. Some banks have online apps that would preapprove you and you can do that without climbing out of your bed. Then if the dealer can beat your rate great otherwise just stick with your loan.

And whatever you do don’t buy an extended warranty or other things they will try to sell you other than the car. They overprice these things sometimes 200-300 percent. You are tired after negotiating the car price and loan and that is when they get you with extended warranty, car paint protection and such at ridiculous prices. If you wish you can buy them later at a fraction of the price

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP again. And let's say I get a 3 year loan but at the end of year one I get a nice bonus at work and want to throw $5000 toward the car, do auto loan typically allow that without penalty and helping save interest?

yes. As a PP upthread noted, you want to weigh the pros and cons based on the interest rate, but you can do this usuallyl

My lord, people. OP is in his/her 50s. They are not asking you about rate arbitrage or opportunity costs. They are asking whether this is a simple interest loan and whether car loans can be prepaid without penalty.

Yes and yes.

[Anonymous]

Anonymous wrote:Thank you so much for all the tips! Just knowing the lingo "out the door price" and knowing to look for a prepayment penalty is great. And let's say the dealer ends up matching the credit unions financing deal. Is it better/easier/more advantageous to go ahead and finance with dealer (assuming terms are the same)?

If you have a rate at a Credit Union the only reason not to use them instead of the dealer is if the dealer is willing to reduce the car price or add on (without cost!) extended warranties or other freebies. In the absence of that kind of concession my advice is not to use the dealership's financing arm even if they "match". The reason is that the "Business Manager" in whose office you will sit with the door closed will try and play games regarding term, down payment, etc. They get commissioned by trying to get more of your money. They will say anything to get their money, but there is (sadly) a delta between what they say and what's on the page. If your credit union gave you a rate you know what that is. By the time the dealership gets done spinning and dancing you won't actually even know if the rate is a true match.

By way of background and why I feel this way, I bought a new car last week. I had forgotten just how slimy car dealerships were. We paid cash and still had to go through 3+ hours of nonsense. I asked why the accessories were not given the 10% discount they were due. He left the room to "investigate" whether the manager would offer the 10%. I stopped him to correct him; it wasn't a question of "whether" it was application of the discount owed. There was the hard credit pull that we didn't authorize and then his lying about the fact that it was a hard and not soft pull. Then there was the obligatory sales pitch on extended and special service packages and warranties. And all of that was without financing.

If you have a loan from a credit union and you like the rate, use that. The less you have to deal with unscrupulous F&I dealership personnel the better.

[Anonymous]

Not all car dealerships like the above. And if you get there late around the closing time the slimy finance guy would want nothing more than to go home asap. They are required by their dealership to offer you all that extra crap but they will be happy for you say no and get tf out of there

[Anonymous]

Thanks for posting OP! I am also in the same boat and appreciate the PP tips!

Can I ask - is there an expectation in car loans about how much money one has to put down? For what kind of rate? (like with mortgages?).

For example, if OP puts down 10K on a car should that help her get a low rate since the loan would be on a car with a positive equity from the start? Is there a minimum amount one is expected to put down in a car loan?

[Anonymous]

In general a high score and down payment would qualify you for the best rate. Like mortgage. But the auto loan market is not as standardized as mortgage market. So there are a lot of variations across lenders. Check with the bank what you need to qualify for the best rate. Don’t ask the dealer. They will mislead you either out of ignorance or to take an advantage

[Anonymous]

Anonymous wrote:Not all car dealerships like the above. And if you get there late around the closing time the slimy finance guy would want nothing more than to go home asap. They are required by their dealership to offer you all that extra crap but they will be happy for you say no and get tf out of there

No clue how this response is helpful to OP. S/he asked about financing at the dealership vs credit union. They are nervous about the process. And your answer is to get there late so the experience is rushed? Which, I'd note, doesn't address where to finance.

I'd also note that the fact that you felt the need to suggest ways to stop F&I from preying on people in and of itself confirms what I wrote about slimy dealerships. If they weren't slimy, you wouldn't need a strategy for how to avoid them.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Not all car dealerships like the above. And if you get there late around the closing time the slimy finance guy would want nothing more than to go home asap. They are required by their dealership to offer you all that extra crap but they will be happy for you say no and get tf out of there

No clue how this response is helpful to OP. S/he asked about financing at the dealership vs credit union. They are nervous about the process. And your answer is to get there late so the experience is rushed? Which, I'd note, doesn't address where to finance.

I'd also note that the fact that you felt the need to suggest ways to stop F&I from preying on people in and of itself confirms what I wrote about slimy dealerships. If they weren't slimy, you wouldn't need a strategy for how to avoid them.

Oh boy aren’t you a peach. An argumentative one.

[Anonymous]

Op here. I'm genuinely appreciative of all the bits of advice, relayed experiences, and wisdom everyone has offered. Truly. Thank you.

I spend a lot of time in Delaware. No sales tax there. Does anyone have insight about whether it would be advantageous to buy there as opposed to MD?