Auto Loan Procedure - Tilted Forum Project Discussion Community

iccky · 08-14-2005, 07:46 AM

So I'm working on buying my first car. A big step for someone who didn't get their driver's license until 19. But that's not all. In addition to being my first car, this is going to be the first time in my life I'm going to be taking on a significant amount of debt. That's right, as I shop for cars, I'm also shopping for a car loan of five or six grand.

My question, then is which comes first, the loan or the car? Am I supposed to find a car I want to buy and then go to the bank to get a loan? Or should I get pre-approved for the loan first and then go find a car?

And does anyone have tips on a reliable small high-MPG car I can buy for under 8k that will be relatively trouble free for the next 5 years?

cj2112 · 08-14-2005, 08:39 AM

A used Nissan Sentra will serve your needs well, very reliable, and you should get about 30 mpg out of it. Mine has about 110,000 miles on it, and the only parts that have had to be replaced are things you expect to do to a car w/ this many miles (starter, alternator, fuel pump)

Catdaddy33 · 08-14-2005, 01:49 PM

If you to a dealership to buy the it they will have many options to pay for the car. Most will be banks or captive finance companies (such as Ford Credit, General Motors Finance). If they give you a loan it holds just as much weight as going to the bank and getting the money.

The question main question is..can u go to YOUR bank and ask for a loan? Depending on the bank/credit union they may be able to give you a good rate. But if you are a 1st time buyer there are programs to get you started on your 1st real line of credit thru a bank or finance company..

point is: Don't always go with a Dealership, but at times the comapny the dealer is pointing you to can help you out a lot..for 1st time buyers...

pppg · 08-17-2005, 11:34 AM

I personally like to go through the bank on your financing. That is one less thing to negociate at the dealership, and from being a close friend of a dealership finance man, he suggested the same thing. There are often fees associated with the dealership loan that are not present with the one from the bank. Another plus of going with a loan from your bank is that you can talk face to face if you have questions throughout the life of the loan. Many car dealerships finance though places that are not in the city you are buying from.

What we did was get pre-approved for a $25k loan from our bank. They wanted to know what models we were looking into and then they did the credit check. Another nice thing is that some banks will tell you your score and let you look at your report. Just because you get pre-approved for a certain amount does not mean you need to take that amount. We ended up only taking $21500.

A nice thing about the bank we went through (US Bank) is that you can do automatic withdrawls from your checking account. This eliminates the late payment, and they also offer a free line of credit incase you don't have enough money in your account when the automatic payment is made. Their charges for the line-of-credit are interest only, which is nice. I know Wells Fargo does theirs differently and charge you a fee every time you do it.

handsolow · 09-08-2005, 08:50 PM

My 2 cents.

Instead of asking the loan first/car first issue. Decide how much you care to finance. Is it 5k? 6k? or is it 8k? How long of a loan do you want 3 years? 5 years? How much extra are you paying in interest over the life of the loan? How much do you want to pay a month? I say decide how much you want to spend first. That way you don't start off by looking at a $5000 car, and then the dealer shows you how much better that $14,000 car is... financing offers a quick slippery slope into bad debt if you're not careful.

Next find a car that matches your budget, and the other specifics of what you're looking for (check the TFP motors area in the forum for car advice).

Then look for a loan. When I got my nissan maxima, the dealership offered me a MUCH lower interest rate (9.5%) versus bank of america's 12.5% rate for used cars. And nissan had autopayments as well, it was very easy to do business with them. Your mileage may vary, but feel free to shop around for a loan. The dealership usually loves to finance it themselves, let them give you a quote, then take that quote to other places to see if somewhere else can do better.

dman2 · 09-18-2005, 10:31 AM

Unless you are without transportation, try saving up to pay cash for a car. You don't have to necessarily get the car of your dreams as cars do not appreciate like homes, but they depreciate. Many people want to get the newest and best cars out there because they are turned on by the newest model. What a waste of money. I recommend to either pay cash for a less expensive car or to at least save up enough for a decent down payment to lower your monthly payments. Try to get as short a loan as possible. Recommend 3 years if you can afford it. There is nothing worse than a car payment in my opinion.
I know, I know, not everyone can afford not to have a car payment, but at least limit the time that you have to pay for one by getting a less expensive car or by saving and paying cash for one.

iccky · 09-20-2005, 05:48 PM

Thanks guys for all the advice. As it turns out my dad loaned the money to me, he gets a higher rate then he would at the bank and I get a lower rate then I would from the dealer. I paid 6 grand for a 2001 Chevy Prizm, and made a down payment to my dad of 2 grand with the rest to be paid back over 3 years at 3% interest.

08-14-2005, 07:46 AM	#1 (permalink)
iccky Psycho Location: Princeton, NJ	Auto Loan Procedure So I'm working on buying my first car. A big step for someone who didn't get their driver's license until 19. But that's not all. In addition to being my first car, this is going to be the first time in my life I'm going to be taking on a significant amount of debt. That's right, as I shop for cars, I'm also shopping for a car loan of five or six grand. My question, then is which comes first, the loan or the car? Am I supposed to find a car I want to buy and then go to the bank to get a loan? Or should I get pre-approved for the loan first and then go find a car? And does anyone have tips on a reliable small high-MPG car I can buy for under 8k that will be relatively trouble free for the next 5 years?

09-18-2005, 10:31 AM	#6 (permalink)
dman2 Insane Location: Georgia	Unless you are without transportation, try saving up to pay cash for a car. You don't have to necessarily get the car of your dreams as cars do not appreciate like homes, but they depreciate. Many people want to get the newest and best cars out there because they are turned on by the newest model. What a waste of money. I recommend to either pay cash for a less expensive car or to at least save up enough for a decent down payment to lower your monthly payments. Try to get as short a loan as possible. Recommend 3 years if you can afford it. There is nothing worse than a car payment in my opinion. I know, I know, not everyone can afford not to have a car payment, but at least limit the time that you have to pay for one by getting a less expensive car or by saving and paying cash for one. __________________ I have to exercise in the morning before my brain figures out what I'm doing. ~Marsha Doble

08-14-2005, 08:39 AM	#2 (permalink)
cj2112 Unbelievable Location: Grants Pass OR	A used Nissan Sentra will serve your needs well, very reliable, and you should get about 30 mpg out of it. Mine has about 110,000 miles on it, and the only parts that have had to be replaced are things you expect to do to a car w/ this many miles (starter, alternator, fuel pump)

08-14-2005, 01:49 PM	#3 (permalink)
Catdaddy33 Psycho Location: TN	If you to a dealership to buy the it they will have many options to pay for the car. Most will be banks or captive finance companies (such as Ford Credit, General Motors Finance). If they give you a loan it holds just as much weight as going to the bank and getting the money. The question main question is..can u go to YOUR bank and ask for a loan? Depending on the bank/credit union they may be able to give you a good rate. But if you are a 1st time buyer there are programs to get you started on your 1st real line of credit thru a bank or finance company.. point is: Don't always go with a Dealership, but at times the comapny the dealer is pointing you to can help you out a lot..for 1st time buyers...

08-17-2005, 11:34 AM	#4 (permalink)
pppg Crazy	I personally like to go through the bank on your financing. That is one less thing to negociate at the dealership, and from being a close friend of a dealership finance man, he suggested the same thing. There are often fees associated with the dealership loan that are not present with the one from the bank. Another plus of going with a loan from your bank is that you can talk face to face if you have questions throughout the life of the loan. Many car dealerships finance though places that are not in the city you are buying from. What we did was get pre-approved for a $25k loan from our bank. They wanted to know what models we were looking into and then they did the credit check. Another nice thing is that some banks will tell you your score and let you look at your report. Just because you get pre-approved for a certain amount does not mean you need to take that amount. We ended up only taking $21500. A nice thing about the bank we went through (US Bank) is that you can do automatic withdrawls from your checking account. This eliminates the late payment, and they also offer a free line of credit incase you don't have enough money in your account when the automatic payment is made. Their charges for the line-of-credit are interest only, which is nice. I know Wells Fargo does theirs differently and charge you a fee every time you do it.

09-08-2005, 08:50 PM	#5 (permalink)
handsolow Upright	My 2 cents. Instead of asking the loan first/car first issue. Decide how much you care to finance. Is it 5k? 6k? or is it 8k? How long of a loan do you want 3 years? 5 years? How much extra are you paying in interest over the life of the loan? How much do you want to pay a month? I say decide how much you want to spend first. That way you don't start off by looking at a $5000 car, and then the dealer shows you how much better that $14,000 car is... financing offers a quick slippery slope into bad debt if you're not careful. Next find a car that matches your budget, and the other specifics of what you're looking for (check the TFP motors area in the forum for car advice). Then look for a loan. When I got my nissan maxima, the dealership offered me a MUCH lower interest rate (9.5%) versus bank of america's 12.5% rate for used cars. And nissan had autopayments as well, it was very easy to do business with them. Your mileage may vary, but feel free to shop around for a loan. The dealership usually loves to finance it themselves, let them give you a quote, then take that quote to other places to see if somewhere else can do better.

09-20-2005, 05:48 PM	#7 (permalink)
iccky Psycho Location: Princeton, NJ	Thanks guys for all the advice. As it turns out my dad loaned the money to me, he gets a higher rate then he would at the bank and I get a lower rate then I would from the dealer. I paid 6 grand for a 2001 Chevy Prizm, and made a down payment to my dad of 2 grand with the rest to be paid back over 3 years at 3% interest.