Down payment on a new car: How much?

[SlamMan]

I'm saving my pennies for a down payment on a new (slightly used) car. I've got about $2k saved right now, no trade in though. I'll probably be spending around $25k. How much do you think I should put down? Also, what about saving a little more to get some nice rims before I buy the car?

Just lookin for some input. Thx.

[john]

As much as you can possibly put down. Interest payments are the devil.

My last few cars have been purchased outright, as I refuse to pay interest on a car loan.

[myshtern]

as much as possible

dont buy with 2k, save more

[STIBungy]

Michael, do some research and find some loans on your own beforehand. If you dont, a dealership will try to screw you over the interest rate.

[Mudd]

I would put down a minimum of at least 30-40 % of the purchase price, more if you can swing it. If you don't, you will very quickly end up upside down on the car which is something I have never had happen, but have some friends who are. Then every time they want a new car they roll over the difference into the payment of the new car, which makes those payments much higher then they should be.

Mudd

[chrisbarnett01]

ZERO.

Take the money you were going to put down, and pay off that many payments.

If you can pay the first 20 payments the first month, you're set. Then continue to pay a payment each month like normal. If all goes well, you pay the car off about 20 months early(or however many you pay). You would end up paying a bit more than if you paid the money down up front, but not by too much if you can get a decent interest rate. You'd still pay less than the total amount of interest calculated at the beginning of the loan.

The reason is simple. If you lose your job, or get robbed, or whatever, you have a 20 month(or however many) cushion.

You'd be surprised at the number of cars repossessed after a few months , even though the buyer put down 30-50% at time of purchase. Maybe those people lost their jobs, maybe not. But if they had used my method, they would have had plenty of time to get back onto their feet.

Just my opinion. Some people have different ways of thinking, but I'd rather pay a little more money and have a cushion, rather than pay more money and risk problems if you have a financial crisis. Plus, your credit would look better using my method. You would have a bigger % of the loan payed off from the start. When you put money down, that money isn't figured into the loan, so when someone looks at your credit, they see you owe almost the entire amount after the first month.


EDIT: If you can afford to buy the car outright, do so. But, finance it for a year and then pay it off immediately, so your credit looks better. Buying cars with cash doesn't help your credit.

And if you try, you can get good interest rates from dealers. I had 1.9% back in 1998 on my neon, with zero credit before that. I had been 18 for less than 2 months. Over 4 years I think I paid $600 total in interest. I did pay it off almost a year early though. What is that, $10 a month? Who cares about $10 a month.

[myshtern]

You would end up paying a bit more than if you paid the money down up front, but not by too much if you can get a decent interest rate.

He wont get a decent interest rate because he isnt putting any money down.

[chrisbarnett01]

He wont get a decent interest rate because he isnt putting any money down.


I didn't put any money down, and I still received 1.9%, when the economy was fine. And I had just turned 18.

Any moron with decent credit history can get a great interest rate on a new car loan from a dealer.

Not everyone gets 0%, but you can get 0.9%-3.9% pretty easily if you try hard enough.

If you can't haggle on price, don't expect to haggle on interest rate. Most dealers won't give you the best rate you qualify for because they won't get kickbacks from the lending institution. Fight for it, you can get it.

[SlamMan]

What about buying from a dealer versus buying from a private seller? If I buy from a private seller I don't think I can get an interest rate as low as 1.9 can I? I was leaning toward private seller because I figured I could get a better deal.

I have a 782 credit score last I checked so I should be able to get the best APR possible.

Chris-
Your method is to jump ahead on the loan payments to create a cushion? Wouldn't they just put that extra money towards your principle and your next months payment be due anyway?

[STIBungy]

I dont even have 1.9% on mine. :p

What about buying from a dealer versus buying from a private seller? If I buy from a private seller I don't think I can get an interest rate as low as 1.9 can I? I was leaning toward private seller because I figured I could get a better deal.

[Dustin]

He wont get a decent interest rate because he isnt putting any money down.

The amount you put down doesn't have anything to do with the interest rate.

[myshtern]

The amount you put down doesn't have anything to do with the interest rate.
It has a whole lot to do with the interest rate. If you pay for 50% of the car down, bank will be much more comfortable with your finances and will probably give you a very low rate if you decent credit.

[Dustin]

It has a whole lot to do with the interest rate. If you pay for 50% of the car down, bank will be much more comfortable with your finances and will probably give you a very low rate if you decent credit.

NO, it doesn't.

I suppose if you have marginal credit it might. (Depending on the lender) But people with excellent credit it doesn't matter. I work in a financial institution ;)

[Shakespeare]

Is there a sales tax in CO? Keep in mind you have to pay sales tax on Blue Book value along with title. 5% in Mass. I'm personally waiting to save $6k before I get a $15k car.

[ricewizard]

HOLY FUCKIN BUNCH OF DUMB ASSES!!!!!!!!!!!!!!!! YES I FUCKING KNOW THE CAPS LOCK IS ON DICKS

[SlamMan]

I dont even have 1.9% on mine. :p
Got any suggestions where to look for a loan? Where did you get yours? You bought your STi new, right?

[Dustin]

Got any suggestions where to look for a loan? Where did you get yours? You bought your STi new, right?

http://www.bankrate.com/brm/rate/auto_home.asp?link=5

[STIBungy]

You will probably get the best rates by going through your bank or credit union. I went through Chase and got 4.7 or 4.75%. I can remember, off the top of my head, how many months the loan is for.

[LeonZ]

I got the Subaru 1.9% for 63 months.

[SlamMan]

I checked Bellco. I'm looking at about 4% for a used car loan. I don't think I'll get much better than that on a used car loan.

[chrisbarnett01]

Chris-
Your method is to jump ahead on the loan payments to create a cushion? Wouldn't they just put that extra money towards your principle and your next months payment be due anyway?


Ever purchased a new car? They give you an envelope and payment stub for each months payment.

Send in 20, or 30 of them upfront(and SEPERATELY), and your first 20 or 30 payments are paid.

If you send it all at once, yes it applies towards the principle balance, and you'll still owe next months payment.

In reality I imagine it differs from lender to lender, so ask first.

[STIBungy]

If you go through the bank which you're a member of, they'll just take it out of your bank acct every month.