Car loans?

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agp
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Car loans?

Postby agp » Fri Aug 16, 2013 10:10 am

I have no idea how car loans work, since I have never bought a car on credit before, so I have some questions I was hoping CCFers can answer for me:

1. I have quite a few credit card applications, usually an application round every four months, each time 2-3 credit cards. This will be viewed negatively by many, but is this worse in the eyes of credit unions like Penfed, or big banks like Chase?

2. Do you have to determine which dealer you buy from before you apply for a loan? Or is the loan check sent to you?

3. Balloon payments? Que?

Any help is much appreciated!

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Midori
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Postby Midori » Fri Aug 16, 2013 1:14 pm

Does your auto insurance offer car loans? Mine is USAA; they do loans as well as insurance. We really ought to have gone with them the last time we bought a new vehicle, but it was a Friday-night-engine-explodes-Saturday-gotta-buy-a-vehicle-today-no-matter-what kind of thing, and we just ended up financing through the dealership instead of thinking, "You know, let's shop around on the loan side of things..."

Anyhow, if you have a preexisting relationship through your auto insurance, you might call them up, have a chat, and see what they can do for you and what they need from you beforehand.

Obi-dan
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Postby Obi-dan » Fri Aug 16, 2013 2:07 pm

When I worked for a bank it worked like this: You would apply for a car loan first then go look for a car and we would issue you an approval letter. The bank would cut the check directly to the dealership once they received a purchase order. I would use a credit union or USAA. Stay away from the bank.

However, if you have preferred credit and are dealing with a reliable dealership, the financing offered by the dealership can be a pretty good deal. Just don't let a dealership run your credit until you are ready to buy. And stay away from Santander. IMO they nickle and dime clients and have horrid customer service. The finance guy at the dealership can tell you who they use or who is making offers.
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agp
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Postby agp » Fri Aug 16, 2013 4:18 pm

I am insured by Geico. I am a member of USAA (for trading and investments) but the website says I do not qualify for the auto loan product.

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Obi-dan
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Postby Obi-dan » Fri Aug 16, 2013 4:43 pm

Try a credit union you are eligible for or the dealership.
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jrv
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Postby jrv » Fri Aug 16, 2013 11:31 pm

[quote="agp"]I have no idea how car loans work, since I have never bought a car on credit before, so I have some questions I was hoping CCFers can answer for me:

1. I have quite a few credit card applications, usually an application round every four months, each time 2-3 credit cards. This will be viewed negatively by many, but is this worse in the eyes of credit unions like Penfed, or big banks like Chase?

If you're overextended on your accounts or close to your limit? Yes.

2. Do you have to determine which dealer you buy from before you apply for a loan? Or is the loan check sent to you?

All you need to know is the amount you're willing to spend, length of the loan & whether it's a new or used car. Once approved the bank will mail a blank check up to your requested amount to your home. Therefore, I would always recommend applying before even stepping foot in the dealership. If you know the exact make & model of car, I would also recommend calling around to see who will give you the best deal. In other words get a quote from dealer A & use it against dealer B & vice versa.
Personally, I have made many deals over the phone just like this without any problems. If a dealer does give you any problems, move on to the next one.

3. Balloon payments? Que?

In a balloon payment if the car your buying is $25,000 and your monthly payments are $250 for the first three years, your final payment or balloon payment will be around $16,000. This is not factoring interest on the loan by the way.
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agp
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Postby agp » Sat Aug 17, 2013 6:36 am

Okay I'm going through Penfed. But what if the loan I get is way more than how much I end up paying for the car? And what if it's less?

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jrv
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Postby jrv » Sat Aug 17, 2013 12:57 pm

agp wrote:Okay I'm going through Penfed. But what if the loan I get is way more than how much I end up paying for the car? And what if it's less?


If you get a loan for 30K and you only use 25K, 25K will be reported to the credit bureaus & that will be the amount financed and calculated for your monthly payment.

If you get a loan for 20K only & you need 25K, you will either have to cover the difference out of your own pocket or shop for a less expensive vehicle.
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jrv
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Postby jrv » Sat Aug 17, 2013 1:10 pm

agp wrote:Okay I'm going through Penfed. But what if the loan I get is way more than how much I end up paying for the car? And what if it's less?


I see you also have AMEX BCE in your signature. You can try the AMEX Auto Purchasing Program to take the hassle out of it. This is their link: https://amexnetwork.truecar.com/main.html?referrer_id=ZAMX000027&intsearchct=3%7Ca5e9ec8970863aca8ffdf189e61fd6a1

For new cars they are great. For used cars you might be better off doing what I said in my previous post.

Just be aware that whatever price is quoted to you on that certificate the dealer must abide by it. If they try to pull any funny stuff, WALK OUT.
Main:
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AMEX Blue 15K
PenFed 11K
PNC Visa 20K
First National Bank Omaha Platinum Visa 25K
Citi Simplicity 11K
Drawer:
50K Total

agp
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Postby agp » Sat Aug 17, 2013 9:08 pm

jrv wrote:If you get a loan for 30K and you only use 25K, 25K will be reported to the credit bureaus & that will be the amount financed and calculated for your monthly payment.

If you get a loan for 20K only & you need 25K, you will either have to cover the difference out of your own pocket or shop for a less expensive vehicle.


For the first option... Doesn't Penfed cut me or the dealer a check before I purchase the vehicle? How would they know that let's say if 30K is cashed, that the actual car was only 25k?

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