buying a car...

[Saggy Aggie]

Gonna be buying my first car soon, what do all you old timers have to say as far as advice goes?


Keep in mind that while I do have good credit, I dont have any previous auto loan history and so my interest rate isn't going to be THAT great. I do qualify for a lot of the 'new graduate programs' that help you get a better rate and discounted price and whatnot, so its not all bad. I'm looking for a used (preferably certified pre-owned) 4 door car with <50K miles... I'd prefer around 30-35K miles and a 2010-2011ish vehicle if i cant get it, but those are really hard to find for what i want to spend. I'm buying used mainly so I'm not the one who has to take the hit on the depreciation right out of the lot.

I feel that I can afford 25K or so, but I'd prefer to stay closer to 22K if possible. Some type of luxury sedan is what i prefer, i.e bmw 3 series, audi a4 etc. I also prefer a manual, but thats not a deal breaker. Current interest rates I've been quoted for around 3.5-4.8% depending on where I go. Also, I've already quoted insurance to be around 150-170/month for full coverage and have considered this in my budget. The budgeting i've done is extensive and im comfortable with the price range. Also, I guess itd be helpful to know that I'm looking at putting 3K down and a 5 year payment. I'm not in any hurry to buy and I'll wait on a deal that i feel like I cant pass up before I buy. I've already turned down about a half dozen offers.

You guys have any thoughts? Previous experience you might wanna share?

[MUSTANG69]

I work for a Ford dealership and we see this situation quite often. With no car credit you may not beat the 3.5-4.8 % rate. One option you may have is a cosigner. Ask if this will help your rate. We have parents co-sign quite often for a first time buyer. Also, if you are willing to settle for less car you might consider NEW instead of Pre-Owned. Better rate sometimes. Please don't settle for a term longer than 5 years. You will be upside down the rest of your life. In my opinion anything over 3 years hurts you. I hope this is of some help.

[Saggy Aggie]

I work for a Ford dealership and we see this situation quite often. With no car credit you may not beat the 3.5-4.8 % rate. One option you may have is a cosigner. Ask if this will help your rate. We have parents co-sign quite often for a first time buyer. Also, if you are willing to settle for less car you might consider NEW instead of Pre-Owned. Better rate sometimes. Please don't settle for a term longer than 5 years. You will be upside down the rest of your life. In my opinion anything over 3 years hurts you. I hope this is of some help.

Don't really want a cosigner, because if for some reason down the line i cant make my payment, i dont wanna screw up someone else's credit, though I will ask about it.

And thanks for the advice on the 3 year option versus 5 year. It obviously increases the price per month significantly, but does stretching it out to 5 years really cause you to be upside down? I think I take pretty good care of my vehicles and dont put too many miles on them (~10K/year). Its my understanding that the best way to keep from being upside down is to not buy new, right???

Also, would you recommend gap insurance?

[regaleagle]

SAGGiE.....find yourself a good credit union and make a deposit to open an account with them. Tell them what you want to do, make an application with them for preapproval for a dollar amount, THEN you can search for that vehicle that fits the loan amount. When dealing on terms, ask for payment quotes at 42, 48, and 60 mos. and at what interest rates for each term length. Automatic debit payment method using your deposit account is highly recommended for repayment to safeguard your good credit and to give the credit institution something else to sink their teeth into. You may secure a better interest rate this way.

Go online and do your due diligence in searching out reputable established credit unions that actively advertise their services. You want to look at years in business, number of members, and locations in Texas. Locally or Texas-based is preferable.

[Saggy Aggie]

SAGGiE.....find yourself a good credit union and make a deposit to open an account with them. Tell them what you want to do, make an application with them for preapproval for a dollar amount, THEN you can search for that vehicle that fits the loan amount. When dealing on terms, ask for payment quotes at 42, 48, and 60 mos. and at what interest rates for each term length. Automatic debit payment method using your deposit account is highly recommended for repayment to safeguard your good credit and to give the credit institution something else to sink their teeth into. You may secure a better interest rate this way.

Go online and do your due diligence in searching out reputable established credit unions that actively advertise their services. You want to look at years in business, number of members, and locations in Texas. Locally or Texas-based is preferable.

All good things to think about. thanks for your input regal.

I have been looking into independent financing and i'll go that route if i can secure a better rate.

[bwdlionfan]

All good things to think about. thanks for your input regal.

I have been looking into independent financing and i'll go that route if i can secure a better rate.

I bought my first car in summer 2012 (actually bought it for my wife but neither of us had bought a car before). I actually got qualified for used car financing at 2.99% through First Financial Bank in Abilene (I live 2 1/2 hours away from Abilene though but that doesn't matter). I wound up getting a certified pre-owned Mercury, and at the time of the purchase, Ford was offering 1.99% on pre-owned certifieds.

But anyway, I had no car credit (though I do have very high credit scores from paying off college loans and overpaying my house every month).... but I had a great rate on the table through First Financial Bank. You might give them a try. I know rates have gone up a bit but I wouldn't have thought they'd be that much higher.

[MUSTANG69]

All good things to think about. thanks for your input regal.

I have been looking into independent financing and i'll go that route if i can secure a better rate.

Sometimes you can get a better rate doing the indirect lending route thru your dealer. Ask them their rate and compare to the direct lending rate.

[MUSTANG69]

Don't really want a cosigner, because if for some reason down the line i cant make my payment, i dont wanna screw up someone else's credit, though I will ask about it.

And thanks for the advice on the 3 year option versus 5 year. It obviously increases the price per month significantly, but does stretching it out to 5 years really cause you to be upside down? I think I take pretty good care of my vehicles and dont put too many miles on them (~10K/year). Its my understanding that the best way to keep from being upside down is to not buy new, right???

Also, would you recommend gap insurance?

Taking care of your vehicle definitely helps but sometimes certain vehicles just don't hold their value. If 3 year payments are to steep consider 4 years. 27 years in the car business, I seen to may deals go south because someone was upside down on the trade.

I would always recommend Gap insurance. You never know when your car is going to get totaled and believe me, the insurance companies are only going to pay what they have to. You can always negotiate with them but it is not always enough.

[44INAROW]

sounds like you're buying a car the right way and not rushing into it! Congrats on that!!!! I have a few suggestions.
1) When you are getting insurance quotes - ask if they offer the "new car replacement" endorsement - ie - they guarantee a year model 1 year ahead of your current car. (you total a 2012 - they'll put you in a 2013);

2) ask the insurance agent if you can get OEM for replacement parts - meaning the insurance company has to (is supposed to anyway) approve NEW parts, not used

3) foreign cars are usually higher rated due to availability of replacement parts (I don't think it is as bad now as it was a few years back)

4) if you live in a rural area and are buying a BMW, Lexus, Mercedes Benz, Audi - make sure you can get it serviced locally (Unless you are able to take a day off easily to drive to a certified dealer)

5) be sure and get "rental reimbursement insurance" in case of a loss - it doesn't cost much and you'll be glad you did in the unfortunate chance you have to file a claim

6) I suggest you carry a high deductible for collision - minimum of $500 - and some might disagree but I insist on Uninsured Motorist coverage.. You'd be surprised how many 'parking lot' claims we do a week.. ie some jackass hits your car and leaves the scene, you come out and find your rear quarter panel hanging on the ground. If you file a Collision claim - it counts against you and either $500 or $1000 deductible. Uninsured Motorist claim shouldn't count against you and the deductible is $250

Good Luck!

[MUSTANG69]

sounds like you're buying a car the right way and not rushing into it! Congrats on that!!!! I have a few suggestions.
1) When you are getting insurance quotes - ask if they offer the "new car replacement" endorsement - ie - they guarantee a year model 1 year ahead of your current car. (you total a 2012 - they'll put you in a 2013);

2) ask the insurance agent if you can get OEM for replacement parts - meaning the insurance company has to (is supposed to anyway) approve NEW parts, not used

3) foreign cars are usually higher rated due to availability of replacement parts (I don't think it is as bad now as it was a few years back)

4) if you live in a rural area and are buying a BMW, Lexus, Mercedes Benz, Audi - make sure you can get it serviced locally (Unless you are able to take a day off easily to drive to a certified dealer)

5) be sure and get "rental reimbursement insurance" in case of a loss - it doesn't cost much and you'll be glad you did in the unfortunate chance you have to file a claim

6) I suggest you carry a high deductible for collision - minimum of $500 - and some might disagree but I insist on Uninsured Motorist coverage.. You'd be surprised how many 'parking lot' claims we do a week.. ie some jackass hits your car and leaves the scene, you come out and find your rear quarter panel hanging on the ground. If you file a Collision claim - it counts against you and either $500 or $1000 deductible. Uninsured Motorist claim shouldn't count against you and the deductible is $250

Good Luck!

Very good response. I wish all agents would explain this to their customers. We get a lot of people in our body shop who don't have the coverage they thought they did.

[44INAROW]

Very good response. I wish all agents would explain this to their customers. We get a lot of people in our body shop who don't have the coverage they thought they did.

Thanks - believe it or not - some of the biggest hassles we have are with people who 'think' they have rental reimbursement but don't. Another sticky issue is the folks that want "only what the law and bank require" - that is UNTIL they have a wreck.. Then they say they wanted everything.
We were in Florida this past weekend and rented a car (2013 Escape - $93 for 3 full days pretty good I think) anyway - the guy checking me in etc never even asked if I had liability insurance. I thought that was odd. He of course wanted me to buy their collision waiver insurance and I promptly rejected it.

[MUSTANG69]

Thanks - believe it or not - some of the biggest hassles we have are with people who 'think' they have rental reimbursement but don't. Another sticky issue is the folks that want "only what the law and bank require" - that is UNTIL they have a wreck.. Then they say they wanted everything.
We were in Florida this past weekend and rented a car (2013 Escape - $93 for 3 full days pretty good I think) anyway - the guy checking me in etc never even asked if I had liability insurance. I thought that was odd. He of course wanted me to buy their collision waiver insurance and I promptly rejected it.

We see a lot of cheapskates who buy their insurance thru these discount insurance companies. Boy are they surprised when they need that insurance.

[Saggy Aggie]

Well, I think I struck a deal today on a 2007 BMW.

Wasn't planning on buying a little older vehicle but it only had 48K miles in 6+ years so hardly driven. Clean history and extremely well priced IMO. Felt like I couldn't pass it up. Negotiated the price down about 1000$ extra dollars and a bunch of minor cosmetic repairs. Pending my approval of all of that and the banks financing, I'll have a car at the end of this week. Thanks for all the input guys and the insurance info is much appreciated!

[Saggy Aggie]

Dealership came back with a 7.9% interest rate. I said no thanks. Called my credit union to see about independent financing. They told me I had a credit score of 724 and I qualify for 1.99%.

Looks like I've got myself a great deal guys

[BwdLion73]

It will be hard to beat that BMW. I had an X-5 that I got at 5000 miles. I drove the wheels off it and traded it at over 200,000 with just battery change and regular maint. Make sure you find a good BMW dealership and don't forget...wave at the little kids and smile at the girls.