How can I make my car financing situation work?

[FerraraZ]

So I'll try to be brief with this. I got referred to a dealer who has seemingly been helpful in setting me up with my first new car post college.

2012 Fiat 500 Sport w/ interior lighting and spare tire option for 16,400 (300 for interior lighting plus tax and tags) Total = 17,300

Its a pretty good deal and I knew I would get a good deal from the guy because of whom I'm being referred by.

The problem now is that I wanted to get 0% financing with 1k down and use the rest of my money to pay off a credit card bill and student loans in July.

The problem is I make more than enough money in my new job but I've only worked there a month and lived in my current situation for a month (very fortunate to live with a friend who's house is paid so all I do is pay utilities). The dealer is telling me the best APR I can get is 13% on a credit score of 607. I just havent built enough credit and this is all I can get which I dont really want to do.

I understand this is a weird question but I know anandtech has some excellent users and was wondering what I should do? The dealer suggested I do it and build credit and refinance in 6 months once I've built up better credit.

I love Volkswagen also which their college graduate program guarentee's 1.3 APR but I dont know if I should believe that and go with a base Jetta instead of this Fiat. I know I'm getting a great deal on the Fiat Sport and I really do like that car but at 13% APR....I'm not sure I'd like having my money go to interest.

 

[waggy]

yeah sounds right.

First car so i assume you have NO credit (607? you are NOT gettign 0%).

13% sounds high but no credit adn such so might be.

 

[ponyo]

13% interest. #@#*! Are you crazy?

You're freaking out of your mind even considering it. It's generally bad move purchasing new car straight out of college. Financing at 13% says you're a moran.

 

[Imdmn04]

With a credit score of 607, most promotion programs with low or 0 APR will reject you. See if you can get a better loan term at a local credit union.

Also, if you just graduated and started the new job for a month, it is probably not wise to buy a new car. Work for a year, feel the place out, pay off your student debt. Personally I would save up at least $10-20k cash after paying off all debts before I would even think about a new car.

 

[FerraraZ]

13% interest. #@#*! Are you crazy?

You're freaking out of your mind even considering it. It's generally bad move purchasing new car straight out of college. Financing at 13% says you're a moran.

Ok thanks for the trolling but you think I'll get a better rate on a used car? Be constructive I ask because I dont know and your experiences can help.

 

[Safeway]

Contact a local credit union. Credit unions are now required to allow non-members to utilize their financial services if the individual lives within a certain geographical radius of the credit union's location.

Credit unions often offer the best rates, especially for new cars from a dealer.

Do. Not. Finance. At. 13%.

 

[Safeway]

Ok thanks for the trolling but you think I'll get a better rate on a used car? Be constructive I ask because I dont know and your experiences can help.

He called you a "moran." 'Nuff said.

 

[Safeway]

Additionally, how the hell do you have a 607 credit score? I got my first credit card my freshman year of undergrad. Within two years, I had a 780 credit score. Even with loads of student loan debt, I continued to build credit and improve my credit score. Are you sure you haven't been delinquent on utility bills, rent, credit card payments, student loan payments, etc?

 

[satyajitmenon]

First job and new car - I wouldn't do it.

Now that I've got that out of the way, go to a credit union. I've yet to find a bank that gives a better rate than a credit union (unless it's 0% financing from the manufacturer and that's only with a really good long credit history).

 

[ponyo]

Ok thanks for the trolling but you think I'll get a better rate on a used car? Be constructive I ask because I dont know and your experiences can help.

No, you freaking walk, bike, or ride the bus if you have to. You do not finance at 13%.

You don't have a car right now? Whatever happened to buy a beater in cash or cheap used car you can payoff in 3-6 months? Is that unfashionable now?

Buy a cheap car in cash and work on your credit. Once your credit is decent and you have some savings and work history, knock yourself out and buy a new car. You can sell your old car for what you paid or close to it. Experience the joy of depreciation on your new car.

 

[Jumpem]

Just do it if you can afford the payment. It will raise your credit score and allow you to get much better rates (on other things also like a house) in the future.

My first new car, I bought during college, was 12.5%.

 

[Bignate603]

Just do it if you can afford the payment. It will raise your credit score and allow you to get much better rates (on other things also like a house) in the future.

My first new car, I bought during college, was 12.5%.

You can build your credit without taking on a large debt at really high interest.

Do NOT buy a car at that high of interest. If you do a 4 year loan with that kind of interest you'll be paying about $5k in interest.

 

[master7045]

Buy a used car and shop around for interest rates. Go to your bank as they may have a special for existing customers, or on the opposite end, be prepared to switch banks if one is offering a new customer incentive on auto loans. As mentioned earlier, shop credit unions as well. I'm in the process of shopping for refinance options and so far, credit unions are offering the best rates.

 

[Jumpem]

You can build your credit without taking on a large debt at really high interest.

Do NOT buy a car at that high of interest. If you do a 4 year loan with that kind of interest you'll be paying about $5k in interest.

I traded it in after fifteen months and got another car. Much better interest rate on all of them since then.

Though, my suggestion for anyone else would be to try to keep a vehicle three years or so. I wish I wouldn't have switched several vehicles at an average of thirteen months of ownership out of college.

 

[MDE]

Go to your bank or a credit union and see what they can do. Last I checked, my bank was offering 2.99%.

 

[alkemyst]

don't trust the 'refinance' thing in 6 months. For one it's hard to refinance any car unless you have great credit (and you won't in only 6 months).

The impossible thing is your car will be upside down at that 6 month mark making the only way to refinance would be to come out of pocket a few grand to do it. The interest savings would not be worth it.

Get a co-signer.

To others...having a perfect credit score with no big tradelines is not worth much.

Take my wife for example. She has had a few credit cards in the last ten years, a $7,000 personal loan, and a credit score close to 800. For a new car she could not qualify for the 0-2.99% rates.

For me, my credit score is about 100 points below her's. When my mortgage was sold my account somehow got screwed. On paper I haven't made a mortgage payment in over 2 years. I was still able to qualify for less than 4% interest on a used car and not be required to put anything down. I still regularly am approved for free credit and credit line increases. I have had several cars, home, large installment loans in my past all paying off as agreed and usually much earlier than the original terms.

Once my wife pays off this car or gets about 1-2 years into the payments she should qualify for the top tier rates.

There is a lot that goes into credit worthiness other than purely the score.

 

[kornphlake]

If I was going to be financing anything at 13% interest I'd be looking to spend as little as possible. Look at it this way, assuming a 5 year loan, you can finance $17k at 0% for a monthly payment of $283. If you finance at 13% you can finance only $12,500 for the same monthly payment. If that's the payment you're comfortable with you should probably be looking at a Hyundai Accent or Chevy Aveo.

At the end of the day it's your money and you can spend it on drugs and hookers or you can spend it on interest and it's nobody's business but your own. The recommendations to spend less are coming from people who made the mistake of spending more. Experience trumps enthusiasm in this case.

 

[Kelvrick]

13% is a ripoff. I thought my 8% was bad. Don't get a new car out of college, go for a used one. Check local credit unions for their rates.

 

[Bignate603]

The problem is I make more than enough money in my new job but I've only worked there a month and lived in my current situation for a month (very fortunate to live with a friend who's house is paid so all I do is pay utilities). The dealer is telling me the best APR I can get is 13% on a credit score of 607. I just havent built enough credit and this is all I can get which I dont really want to do.

1. If you can afford this car because you don't have to pay rent right now you can't really afford this car. Don't buy a car if you need free rent to be able to make the payments. In the next few years its likely that your living situation will change and you'll need to pay rent.
2. If you've only worked someplace for less than a month you are a bad financial risk. It's safer to loan to people that can prove they have a long term stable job.
3. If this is all you can get on this car go get something else. Check other dealers and other types of cars. Specifically, do yourself a favor and check out used cars. Drive a cheap car for a few years, build your credit (paying down your student loans helps, as does responsibly using a credit card), and then get a better car on a better loan with more of a down payment.

The problem now is that I wanted to get 0% financing with 1k down and use the rest of my money to pay off a credit card bill and student loans in July.

You want to put very little down and get awesome financing when you're just out of school with no credit history? No way that's happening. At this point you look like a terrible credit risk. Without any sort of history they aren't going to have a clue if you can actually pay them back.

 

[GoatMonkey]

I don't know about the financing. You're getting good advice on that already. I just can't imagine spending all of my money to buy a Fiat. Think along the lines of a good used car. Maybe something like a Civic with 75k miles for around $8k or so. Or a Hyundai for even less.

 

[rcpratt]

I would never finance anything at 13%.

 

[nickbits]

Only get a new car if you can afford it. Sounds like you can't. Get used.

The 3% I had on my last car made me want to puke as it was. I can't imagine paying 13%.

 

[Elganja]

have someone who can cosign? parent? siblings? other family?

 

[Mermaidman]

. . . The dealer is telling me the best APR I can get is 13% on a credit score of 607. I just havent built enough credit and this is all I can get which I dont really want to do. . . The dealer suggested I do it and build credit and refinance in 6 months once I've built up better credit.

So wait 6 months and then buy a new car at that time. It's in the dealer's interest (no pun) to sell NOW, so he will say anything to make you buy now. I agree with Alkemyst refinancing a car seldom ever makes sense.

The 500 has been a major sales disappointment for Fiat:
Goal: Sell 50,000. Reality: Sold 20,000.

 

[homercles337]

The problem is I make more than enough money in my new job

New job? One month out and you want to buy a new car? Why not save up for a half-dozen months?