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Old 03-10-2014, 07:17 PM   #31
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I had a long detailed reply typed last week after you posted and then my internet went down and I lost it; have been meaning to respond ever since. You have gotten a lot of good advice on the thread with most pointing you the direction I was trying to tell you to go. Right now unless you have someone with good credit willing to co-sign for you then you are probably stuck for a little while paying the exorbitant interest on your car loan.

Sounds like you are trying to build credit from scratch so here is what I would do. Dump the secured credit card and go to a local credit union and open a checking/savings accounts. Get their debit Visa card for convenience. Have your checks direct deposited into your checking which in essence shows them how much you make over a period of time. Talk to them about a refi car loan and what their underwriters look for but you probably won't qualify quite yet for that kind of money. See if you qualify for a signature loan - maybe $500. If so, take $300 of that and put it into your savings account. Make all payments on that loan on time and do not have any NSF transactions. Although it's convenient to bank online I would go into the actual credit union to make your loan payments and transacting business. Get to know them. Always be courteous with them as you want to build a relationship with the credit union itself NOT with some credit card company. Allow some time to go by - maybe 6 months. Reapproach them about the refi car loan. At that point they will know you, they will see you still have your job, they will see that you've made all your loan payments on-time and at that point may be willing to take a little more risk with you. Continue to build on that relationship and sooner (hopefully) or later you'll be able to get what you want.

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Old 03-10-2014, 07:30 PM   #32
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Solid advice has been given here but yes, you normally can refinance your loan. There will or should be options such as extending the time and lowering the interest rate to really reduce the payment or just lowering the interest rate, keeping the same time, and saving that way. I had some wiggle room to get a lower rate 2 years after I bought my truck. At 6% I knew I could get lower after 24 months of on-time payments. I elected to keep the term the same but I lowered the interest giving me some savings. Had I been in a rough position financially, I would have taken their $200 savings plan which was lower interest and an added year on my loan. The best choice is always to keep the same term but lower the rate but again, if your financial position has changed over time then perhaps adding a year to the contract will be useful. It all depends.

When buying I had something going for me; no state license. I had just moved and walked in with the intent to buy but the license kept me very grounded. Upon returning with the license I needed, I walked up to someone who looked slightly hungry to sell a car. After haggling, there was no way he was going to move on the price. I was already getting $6k off the sticker, which wasn't as much as I wanted off. I left, waited for the auto maker to post their annual report which was slated to reflect a loss, and then returned. At that point they want to sell me a car just a bit more. I ended up paying what I wanted so that at the end of my loan the total true cost of the truck was just slightly higher than their sticker price. I had a # in mind which acted as my tolerance so that I didn't walk out on a good deal by mistake or get into a bad position because they sat me right in front of that new shiny truck.

Buying a car is tough sometimes. These sales people aren't in the business to save you a dime but you will hopefully continue to pay, build your credit (no credit is similar to bad credit) and refinance that car to get your rate down to something a lot less criminal. And yes, I do think 16% for an automobile that cannot be seen as a recreational vehicle (motorcycle) is criminal.

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Old 03-10-2014, 07:46 PM   #33
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To buy a new car you need to know dealership cost though it's practically impossible to know the real number with incentives and holdbacks. They can sell below invoice and still make money a lot if the time. Put in the research to know what their cost is and your target price is usually a couple hundred bucks over that number.

I've also taken the time to build a relationship with the finance manager and always go to the same salesperson when we look to buy a car as we like Toyotas and have bought 5 of them now (my kids totaled some growing up) I still do my homework but it's almost too easy of a process now. The finance manager immediately tells me his best deal and asks if that's better than our credit union - usually yes but sometimes no. The salesperson gets the invoice out on whatever we want and usually says she'd take $300 over as her starting point. Arbitrarily picking a number to get off the sticker means nothing.


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Old 03-11-2014, 04:24 AM   #34
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Save some money and refinance the car.

Having said that, now I can lecture a bit.

Not all salesmen are crooks. I use to sell cars and never lied to anyone, or anything shady for that matter. If you bought at w/e price and at 16 percent, guess who that falls on? You got it. With no credit, you aren't going to get the best rate outside of a few exceptions. Some people are lucky to even get a loan at any rate.

My advice: don't bite off more than you can chew, live with your decisions(pay your bills), and play smarter next time.

EDIT: Looking at threads like this reminds me of how little I liked dealing with certain types of customers. lol

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Old 03-11-2014, 05:59 AM   #35
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One thing you should do right now if you haven't already is make sure your insurance offers gap coverage. The last thing you want is to find yourself in a situation where you owe more than your car is worth if you get in an accident, due to your high interest rate and instant depreciation hit.

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Old 03-11-2014, 02:38 PM   #36
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Quote:
Originally Posted by Facinerous View Post
As soon as a buyer walks onto a car lot most car salesmen have a sales plan which they will implement in order to stack the odds in their favor.

First off is the good old trade in. You will never get a fair price for your trade in from a dealership from what you can get selling it yourself. This is a huge point for the dealership, as their turn around sale of that car will make them big money. You on the other hand will not get anything out of the trade in.

Second is the questions the salesman will ask you. "Whats your price range?" they may ask. Followed by an immediate "Up to..." If you answer $30k, and they ask up to, your mind will immediately start thinking about how you can extend your budget. Its subconscious, but it works in favor of the dealership. If your budget is $30k, but you can go up to $33k, thats an immediate $3k advantage that the salesman as over you now. If they ask you what your price range is, IMO the best response is "I don't know, show me what you have." Even if you do know.

Third is financing. Always goto a bank first and get pre-approved for a car loan at a particular value when you are looking for a car. When you goto a dealership and financing comes onto the table you have something that they will have to beat in order to get you to take the loan from them. You have to make them compete for you money. Often a dealership can not compete, and the bank loan will be the better offer.

Last is do your research first, know what you want to get before you walk onto the lot. Just because a sticker says a particular price doesn't mean thats what the dealership has to sell it for. You have the advantage here because you can walk off their lot anytime you want. You have an army of dealerships you can deal with, but for your sale they only have you. You can give them your phone number, tell them if they can meet your price for a particular car its sold. Then just leave. 90% of the time, they will call you back with a better price.

The last car I bought was a 2009 RAV 4. I did all the research set myself a price, and walked onto the lot. The sticker price was $32k, probably $35k after all the extra fees. I offered them $30k, out the door, all fees included in my offering price, including the sales tax. I gave the guy my phone number and told him to call me if he can meet that price. 4 hours later I got a phone call back, they asked me if I could go with $30,150. Right there I had a small savings off the sticker price, and a major savings off all the extras. I ended up driving off the lot with it for $30,050.

Some people are even more aggressive when it comes to buying a car. In my case I drove away satisfied with my purchase and never looked back.

I'm writing all this because its the salesman/dealerships job to get the best price they can for the car. They are not working for you. Its your job to stack the odds in your favor.

Some caveats - Yes, you will get a better price doing a private party sale vs. a dealership, but in many states (NY for sure) - the price on the trade in is taken off of the price of the purchased vehicle for sales tax computation. So - for me locally, I need to get 8.75% more in a private party sale than my trade in would have gotten me at the dealer to break even. Add in the time and hassle of dealing with a private party sale and as long as you are firm in your negotiations, you can get pretty close between private party vs. trade in. My last trade in - I was able to get them within ~5-10% of what I knew I could get private party.

As far as securing bank financing prior to going to the dealer - necessary when buying used and can be useful for buying new - unless you are qualified for any manufacturer's incentive financing. Build your credit, wait for a 0% or near 0% financing offer, and then financing isn't even really part of the deal. As I said earlier - IMO, if you can't qualify for a manufacturer's incentive financing of 1.5% or less - you shouldn't be buying new. Those low or zero percent interest rates offset some of the depreciation hit you take on a new car. You shouldn't be taking that depreciation hit and paying high interest.
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Old 03-12-2014, 01:03 PM   #37
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One thing you can also do is after you have paid your installments on time for a couple payments to the lending bank, call them up and see if you can renegotiate your rate. Most banks are understanding and if you prove that you are not a deadbeat and pay what you owe or more on time (or even early) they can often give you a break.

Credit card companies do this all the time. If you miss payments your APR skyrockets, if you call them up they drop them if you are in good standing.

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