Joined: 16 Jan 2017
Advice about purchasing a vehicle please!
I have never had positive credit until recently, due to some poor decisions when I was younger. I want to purchase a new vehicle but I don't want to get in over my head and end up in financial trouble again. I have children and bad luck when it comes to used vehicles. So buying new w/ warranty is what I would like to do. I need some advice as to how much I should/could spend and what kind of interest rate is considered "good". I have never been in the position to obtain a car loan so I'm unsure of what interest rate I should walk away from or accept. AFTER all of my bills are paid I'm left with approximately $2800 per month. Any advice would be greatly appreciated. Thank you in advance for responding.
Mon Jan 16, 2017 7:34 pm
oldguy Senior Member
Cash: $ 715.00
Joined: 21 May 2006
quote: So buying new w/ warranty is what I would like to do. I need some advice as to how much I should/could spend and what kind of interest rate is considered "good". I have never been in the position to obtain a car loan so I'm unsure of what interest rate I should walk away from or accept. AFTER all of my bills are paid I'm left with approximately $2800 per month.
Interest rates are in the 2.75% range currently. As far as how much of your $2800/m that you wish to spend - only you can decide.
Eg, I just bought a 2017, $37,000 loan, $652/m payment for 60 months. If I wanted a lower payment, I could have paid $18,500 down, taken a $ 18,500 loan, and reduced my payment to $326/m. Or I could have paid cash and had a zero loan.
As for how much car to buy - buying more car than they can afford is one of the most common financial mistakes - there are almost always cars involved in bk's. They buy "new" and then trade cars too often. Modern cars will provide 200,000 miles of trouble-free service, yet many people only use them for 100,000 miles. (So they have to buy twice as many cars).
As for buying 'new' just to get a warranty - the warranty is only good for the first 36,000 miles, then you have 160,000 miles to go with no warranty. A better answer is to buy cars that don't break. Avoid the 'cute' cars, they are designed to be 'cute'. Avoid the euro performance cars, they are designed to provide optimal performance, that requires running the engine near its design limit, parts need to be light weight (weaker). And they are tuned to run within a narrow tolerance range. (they need lots of $1000 tune-ups). When you buy a used car, check the carfax to see if its been in a wreck - look it over carefully. Returned lease cars are often a good deal, the dealer provided 'free' service to encourage proper maintenance.
Tue Jan 17, 2017 2:33 am
GardenCat Full Member
Cash: $ 11.60
Joined: 07 Dec 2014
First, I agree that a return lease vehicle can be a good deal.
Also, first thing is you need a good, reputable, reliable and honest independent mechanic. They can do a "buyer's check" on any potential used car you want to buy, weather from a dealer or private party. The check up will be bumper to bumper mechanical and visual checkup. This approach has worked for us for many used car purchases and "passes on that one" over the years! It will cost you under $100 and can save you thousands!
Find a good mechanic that works on foreign cars, toyotas, hondas, kias... They will know what to look for and what has failed. They may even be willing to give you some before-hand advice on which cars to avoid, because they come into the shop all the time.
As far as interest rate...check out a local credit union before you start searching for the car. You can get pre-approved for a loan amount and %. Then if you end up wanting a car from a dealer you have something to compare their offer with.
Check out cars.com for your area to see what is on the market and prices. If you end up at a dealership you should be able to get the car for much less than their original asking price, unless it is a high demand and short supply model. Do NOT let a dealer talk to you about monthly payments as to what you can afford as the determining factor on the deal, keep your eye on the price of the car, and DO NOT be afraid to walk away from any deal.
There are resources out there, find and use them! Good Luck