Down payment

[circatee]

then buy a used car. Or a vastly cheaper car. Do you have money set aside already for a minimum of 3 months worth of payments?

If you're buying new you want to cram as much of the 1st year 20-25% depreciation down the dealer's (or Ford's) throat so you don't have to eat (so much) it. So don't accept a deal that is worse than 15% off MSRP before tax. For things like F150 you can generally get into the 20-25% bracket.

Then if you put 10% down you have a LTV of around 90-95% and you're on the right side of depreciation or close enough that GAP is completely unnecessary.

If you're "stretching" to buy a car, don't. Go pare all your expenses (Instant Ramen with fresh green vegetables, 6 days a week) till you have a tidy pile of cash. The deals will typically get better the deeper into the year it gets. Then don't blow it all on a down payment unless in so doing you dramatically reduce your monthly (eg. pay off 1/2 at one fell swoop) and you still have 3-6mo worth of payments just sitting around in a sock reserved for that express purpose.

Otherwise lease but that one has all kinds of nasty pitfalls that may not be immediately obvious.

Great detail, thanks!

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[circatee]

The more and more I am reading certain posts, it would be brilliant if a Car Sales Person would share how the process (financially) REALLY works, with purchasing a car.

Starting with the margin of discount one should vie for, then interest rate, down payment (if needed), and overall term of the loan.

 

[17Ruby]

If you qualify for 0% then put down 0. If you are going to finance then I think its is nuts to pay interest on tax and license. I would say put enough down to where you do not need to get the gap. Also always go into the dealership pre qualified with another bank or credit union. Gives the dealership a number to beat. I also like to get a one or two year old car that has taken the depreciation and possible comes CPO.

 

[shogun32]

it would be brilliant if a Car Sales Person would share how the process (financially) REALLY works, with purchasing a car.

dude, the are PAID/incentivised to sell cars to people who have NO PRAYER of affording them. All they care about is you signing on the dotted line. That the car ends up in Repo 90 days from now is no skin off their nose. They and the bank got their cut and they get to resell it over and over to an unending stream of people who don't know the first damn thing about personal finance.

RU military per chance?

 

[circatee]

dude, the are PAID/incentivised to sell cars to people who have NO PRAYER of affording them. All they care about is you signing on the dotted line. That the car ends up in Repo 90 days from now is no skin off their nose. They and the bank got their cut and they get to resell it over and over to an unending stream of people who don't know the first damn thing about personal finance.

...touche'.

 

[TexasMetallic5.0]

I found the lowest mileage used car that had everything I wanted. !,9xx miles on it. Went to my credit union, told them the asking price..they said go get it. Went in and told the dealership the price I'd give them with TT&L and to fax the buyers order to my bank. My days of dealing with salesman and finance guys are over, they can either take it or I'll keep on rolling. I don't play the "How much do you want to pay a month" game with them.

 

[circatee]

I found the lowest mileage used car that had everything I wanted. !,9xx miles on it. Went to my credit union, told them the asking price..they said go get it. Went in and told the dealership the price I'd give them with TT&L and to fax the buyers order to my bank. My days of dealing with salesman and finance guys are over, they can either take it or I'll keep on rolling. I don't play the "How much do you want to pay a month" game with them.

Certainly a good approach...

 

[17Ruby]

Generally not a lot off money to be made on New cars unless they are optioned out ( lift wheels) and the person does no negotiations. Or it is a specialty car like a C8

 

[circatee]

Generally not a lot off money to be made on New cars unless they are optioned out ( lift wheels) and the person does no negotiations. Or it is a specialty car like a C8

Probably why more and more are saying one should purchase used, with low mileage.

I learned that dealers can sell a used car, with LESS than 5000 miles, as NEW.

 

[17Ruby]

The more and more I am reading certain posts, it would be brilliant if a Car Sales Person would share how the process (financially) REALLY works, with purchasing a car.

Starting with the margin of discount one should vie for, then interest rate, down payment (if needed), and overall term of the loan.

what questions do you have?

 

[circatee]

what questions do you have?

- If one cannot get zero percent finance, next best option?
- maximum term for a loan on a car?
- if trading in a car, and it still has financing, best time frame to do so (2 years, 3, 4, etcetera)?
- maximum one should ever pay monthly for a car (your average individual)?

Thanks

 

[17Ruby]

- If one cannot get zero percent finance, next best option?
- maximum term for a loan on a car?
- if trading in a car, and it still has financing, best time frame to do so (2 years, 3, 4, etcetera)?
- maximum one should ever pay monthly for a car (your average individual)?

Thanks

All of those questions are unique to each persons standards. I will answer each line.
-if you can’t get 0% I would at least find out when I could get from my credit union. Go into the dealership preapproved. They will do their best to beat that rate. Know the going rates. So many people do not negotiate this. Rate are dependent on the market and your credit.
-Personally I don’t like to go over 5 years. Some lenders will go out to 8 years. If you drive a lot absolutely do not get a long term loan.
- know the value of your car. Probably best to sell private. If you can’t get enough to pay off the loan in a private sale the dealership will transfer it to your new car.
- payment for a car depends on how much you make and preference. Personally I don’t like payments over $350.00. I like 5 year loans and to be able to make double payments to pay them off in 2-3 years. I don’t like car payments. I usually put down 40- 50% on a car. If I can’t get it to that then I need to make another car choice or save more.
I have seen people who make just $5,000 a month and have a $900.00 car payment. NUTS to me. I make a lot more and would not have that payment. Again though personal choice, may be they have a different living situation.
order of importance.
Pay yourself first. Savings,(401) mortgage, family (vacations) cars should be last. They get you from A to B. Unless you are a YouTube personality.

 

[shogun32]

- If one cannot get zero percent finance, next best option?

if you can get Zero you have stellar credit or a desperate moron for a banker. If you can't get under 3% there's something wrong with your financial health. Check with your home bank or CU. Ford Credit may not like you but your local bank might.

- maximum term for a loan on a car?

no more than 5yrs but really you should be paying it off in 3. Four tops. Even if you finance it for 5, make payments to get it discharged in the 3 or 4 timeframe.

- if trading in a car, and it still has financing, best time frame to do so (2 years, 3, 4, etcetera)?

when you're not upside down on it - for many people doing this process poorly it's around the 3 year mark that they've finally caught up with depreciation. If you have to roll a balance into your next loan your finances are F'd and you need to re-think this whole car buying thing.

- maximum one should ever pay monthly for a car (your average individual)?

<15% of take-home. Remember, maint, repairs, insurance are not free. If you're military and living "free" in the barracks then you can cheat on that number some but generally you should be using that "free" housing to sock it away for future big-ticket expenses be it house, retirement or what have you.

 

[circatee]

All of those questions are unique to each persons standards. I will answer each line.
-if you can’t get 0% I would at least find out when I could get from my credit union. Go into the dealership preapproved. They will do their best to beat that rate. Know the going rates. So many people do not negotiate this. Rate are dependent on the market and your credit.
-Personally I don’t like to go over 5 years. Some lenders will go out to 8 years. If you drive a lot absolutely do not get a long term loan.
- know the value of your car. Probably best to sell private. If you can’t get enough to pay off the loan in a private sale the dealership will transfer it to your new car.
- payment for a car depends on how much you make and preference. Personally I don’t like payments over $350.00. I like 5 year loans and to be able to make double payments to pay them off in 2-3 years. I don’t like car payments. I usually put down 40- 50% on a car. If I can’t get it to that then I need to make another car choice or save more.
I have seen people who make just $5,000 a month and have a $900.00 car payment. NUTS to me. I make a lot more and would not have that payment. Again though personal choice, may be they have a different living situation.
order of importance.
Pay yourself first. Savings,(401) mortgage, family (vacations) cars should be last. They get you from A to B. Unless you are a YouTube personality.

...thanks for taking the time to answer those questions. Your answers certainly make sense.

Clearly, my best option right now, is to remain with the EDGE ST (silly mistake I made to trade my GT!), and work on paying it off as quickly as possible.

After all, I am not the first to make a mistake, and will certainly not the last. The point is to learn from this mistake. I can just live vicariously through other owners on the forums

 

[shogun32]

Clearly, my best option right now, is to remain with the EDGE ST (silly mistake I made to trade my GT!), and work on paying it off as quickly as possible.

you didn't say what year your Edge is or what you owe on the purchase. Get a sale/trade quote from the likes of Carvana or Vroom. You might get lucky and they'll net you out and exit out of a sub-optimal situation without big pain.

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