How the heck do I finance a car???

Question

I am 29 and single. I desperately need a new car, since my Subaru is getting too costly to fix. I will buy a car, not lease since I plan to have New Car for the long haul.

I do not belong to a credit union, nor have I ever gotten a loan from a bank, but I do have squeaky-clean credit.

What are my options for financing a new car? More specifically, what are my BEST options? What's going to be worth it in the long-run--financing from the car co., my bank, or joining a credit union (and if so, how the heck do I join a credit union?). Borrowing money from family is NOT an option because they will screw me over--I know from the School of Hard Knocks.

Can I use my Subaru as a down payment? Can I pay tax, title and license as part of the overall package?

Thanks in advance for your insights and stories!

Answer 1

Whether you can use your old car as a down payment is a separate issue from getting a car loan and is up to the dealership. If it still has any value, they will probably let you use it towards a new car, though you might get more by selling the car on your own.

As for the car loan, I'd start by going to Lending Tree (http://www.lendingtree.com/) as it'll give you a good overview of what rates are out there. Once you find a lender, you can talk to them to nail down the details. It's worth shopping around and playing lenders off of each other.

This might help you, too: http://www.credit.com/slp/chapter12/Shopping-for-Car-Loans.jsp

Answer 2

A car is one of the worst investments you can make...

On the other hand you have to have a car. So my suggestion would be to buy from a used car from a dealer. Probably one thats only a year or two old. All the warranties should still be valid and it cost more the 20% less then a new one.

Dealer financing packages can be useful but you should look at other possibilities before you head to the car lot.

Your best bet though would be to get a bank loan yourself as the dealer financing is usually not very competitive. Banks can include things like life insurance or disability insurance for free. The important thing (and what my mother still tells me) is to shop around. No on the spot crap or any other quick decisions. Also, the shorter the term of the loan the better.

As for credit unions, they are always a good idea. Finding one is as easy as opening up the yellow pages and calling. Most are open to anyone who lives in a certain county or city.

Good luck

Answer 3

My advice is to go to a few banks and credit unions. Let them know you are shopping for a NEW car and you want to get a NEW car loan. Ask them how much they can offer you and at what type of rates. They will typically ask what the cost of you're looking expected new vehicles will be. I recommend estimating a little on the high side.

For credit unions, many will allow you to join simply if you live in a certain region, or work for a particular company. As your HR to see if your company belongs to a specific credit union. The majority of time a credit union can offer a better rate than banks, but not always.

Based on the best deal you can get from the bank/credit union. Find the car you want and first negotiate a good price for the vehicle. If they ask if you'll be financing, let them know it's a consideration, but lock in a price for the car before negotiating the loan terms. Tell them you've already secured financing so get the best price on the car first, then ask them what they can offer you on a loan. After getting the best price you believe you can get, then ask what type of terms they can offer you on a loan. If they can offer a better deal than the bank/credit union, go with the dealership on financing. If they can't give you a better deal, they you've already secured financing through a bank/credit union.

You can use your trade in as part of the down payment. You can negotiate with or without the trade. Trading in a car is easier since you're just getting rid of the car, but typically you can get a few hundred more if you tried to sell the car yourself. (However this will require your time to advertise, show the car, and meet strangers which may not always be the best thing).