How can I make my car financing situation work?

[xSkyDrAx]

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.

I don't mean to derail the thread but I have a question.

I am looking to buy a new car in a few months (3-4) and was also planning on looking for a new job at the same time. Preferably I would like to find the new job first before car shopping but would that screw with my loan terms? Do they take into account your previous job or only the length you are at with your current one?

 

[ajskydiver]

I don't mean to derail the thread but I have a question.

I am looking to buy a new car in a few months (3-4) and was also planning on looking for a new job at the same time. Preferably I would like to find the new job first before car shopping but would that screw with my loan terms? Do they take into account your previous job or only the length you are at with your current one?

They may also consider how long you've been working in your industry. If you've been a programmer for 10 years and just got a new job as a programmer - that's not so bad.

However, limited/new employment history + new job = high financial risk.

 

[NutBucket]

Pay your loans/bill first. That may actually help your credit a bit. Then when you buy that car, even with a ridiculous APR, you can pay it off faster and save some dough. How long was the loan they offered you @ 13%?

I aim to pay off car loans in a 2 years.

 

[MrChad]

Do you have an existing car or no other means of transportation? If you are truly living rent free you should be able to take that $1000 and make it $5000 in a relatively short amount of time. That should be more than enough to buy a decent used car in cash, and then you can continue saving for a nicer car a few years down the road while you pay down your existing debt (CC bills and student loans).

 

[upsdriver]

I don't mean to derail the thread but I have a question.

I am looking to buy a new car in a few months (3-4) and was also planning on looking for a new job at the same time. Preferably I would like to find the new job first before car shopping but would that screw with my loan terms? Do they take into account your previous job or only the length you are at with your current one?

I bought a car about 2 weeks ago and I was unemployed at the time. I did have an accepted offer letter with a company that will start me in about another week. In the end, I spent about $22k on a new car. Put 10k down and financed the rest at 0.9% (36 months) through the dealership. I'm 3 years out of college and this is my first car, but I do have good credit (~730).

 

[xSkyDrAx]

I bought a car about 2 weeks ago and I was unemployed at the time. I did have an accepted offer letter with a company that will start me in about another week. In the end, I spent about $22k on a new car. Put 10k down and financed the rest at 0.9% (36 months) through the dealership. I'm 3 years out of college and this is my first car, but I do have good credit (~730).

Did you try check with your bank as well to see if you could get a better deal? Did they ask you about your employment situation?

 

[upsdriver]

Did you try check with your bank as well to see if you could get a better deal? Did they ask you about your employment situation?

I didn't check with my bank because I didn't think they could do much better. They did ask about my employment situation. I had to print them out a copy of my offer letter and they called my future employer to confirm.

 

[SpatiallyAware]

Would you loan someone with no credit, just out of college 1 month into a job, who lives with someone else rent-free $17,000??? I'm surprised you even got 13% to be honest.



Buy a $5k beater. Work for a few years and buy something nicer.

 

[the DRIZZLE]

OP if you currently own a car I would try to hold onto it for another year. Otherwise get something cheaper. If you want to post your full financial situation including your income and balance sheet we can advise further.

 

[Doppel]

The dealer is telling me the best APR I can get is 13% on a credit score of 607

He's probably not far off the mark and this is why it's very unwise to buy a new car at this point. I have read no other posts in this thread yet but guarantee, absolutely assured, that others have also advised against it.

EDIT: Yep, just in first 10 or so posts already three people saying the same thing.
I assume that you will ignore this advice, though, as people typically do.

My first car out of college cost under $4k. Next one when I made twice as much money I paid even less for. Now I'm a big balla with a massive credit score, but I took my time building it and you can, too. 13% is crazy crazy rate.

 

[Bignate603]

I bought a car about 2 weeks ago and I was unemployed at the time. I did have an accepted offer letter with a company that will start me in about another week. In the end, I spent about $22k on a new car. Put 10k down and financed the rest at 0.9% (36 months) through the dealership. I'm 3 years out of college and this is my first car, but I do have good credit (~730).

If you had some work or credit history at all that could go a long way. The OP is straight out of college, is just getting a job (likely his first real job), and it sounds like he either has no credit history or a very poor one.

 

[NutBucket]

I bought a car about 2 weeks ago and I was unemployed at the time. I did have an accepted offer letter with a company that will start me in about another week. In the end, I spent about $22k on a new car. Put 10k down and financed the rest at 0.9% (36 months) through the dealership. I'm 3 years out of college and this is my first car, but I do have good credit (~730).

Putting down $10k doesn't hurt either

 

[FerraraZ]

Thank you for everyone I am waiting 6 months and risking my current car possibly brekaing down but in the mean time I'm knocking out some debt hard core! I know its stupid however my car has 206k miles on it and I dont want to be without a vehicle to work.

 

[Zap]

Thank you for everyone I am waiting 6 months and risking my current car possibly brekaing down but in the mean time I'm knocking out some debt hard core! I know its stupid however my car has 206k miles on it and I dont want to be without a vehicle to work.

Being new doesn't guarantee it won't break.

 

[FerraraZ]

Being new doesn't guarantee it won't break.

But it does mean I'll have a warranty which is super important to me especially for first car.

 

[foghorn67]

But it does mean I'll have a warranty which is super important to me especially for first car.

I may have missed it, but how will you get around if it needs 5-7 business days of repair?
Will they have a loaner, can you get around without the car?
If you have to rent a car, even a shitty one, it could cost a few hundred bucks.

 

[the DRIZZLE]

Thank you for everyone I am waiting 6 months and risking my current car possibly brekaing down but in the mean time I'm knocking out some debt hard core! I know its stupid however my car has 206k miles on it and I dont want to be without a vehicle to work.

Your car breaking down and you having to make alternate arrangements to get to work is one risk. Another risk is that you'll lose your job in 3 months and be stuck with a car that's worth less than the loan. Still another risk is that'll you'll hate the job and want to leave in a year to go back to school or to do something else but you'll have too much debt to give up the steady income.

I don't believe the "debt is slavery" crap but debt certainly can limit your options and magnify risks. I understand that you are starting your first real job and want to buy yourself something nice but this is not the way to do it. At a minimum you should pay off all your credit card debt before you borrow more money for a car if you already have a working one.

Also don't worry about letting this one go. There's really no such thing as a great deal from a car dealer on a new car. Unless there's a shortage you can always get them down to a few hundred over invoice.

 

[PhoKingGuy]

I may have missed it, but how will you get around if it needs 5-7 business days of repair?
Will they have a loaner, can you get around without the car?
If you have to rent a car, even a shitty one, it could cost a few hundred bucks.

If any new car broke within the warranty requiring 5-7 days of repair and they didn't give me a comped loaner I would be bashing some stupid service writers face in.

 

[halik]

If you have credit card debt, you should not be buying a new car.

 

[foghorn67]

If any new car broke within the warranty requiring 5-7 days of repair and they didn't give me a comped loaner I would be bashing some stupid service writers face in.

Looks, at your post, looks at the word, FIAT.

Not sure what will happen.

 

[Doppel]

Thank you for everyone I am waiting 6 months and risking my current car possibly brekaing down but in the mean time I'm knocking out some debt hard core! I know its stupid however my car has 206k miles on it and I dont want to be without a vehicle to work.

:thumbsup:

 

[Jeff7]

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.

While the post was a bit terse, it also helps to drive home the point that it's not a good idea to buy a new car fresh out of college and at a high interest rate and while you also have student loans.
Right out of the gate you're in debt, and with a credit score that could definitely do with some boosting. (I think that making loan

One of my teachers at college emphasized that too: Don't buy a new car right away! (Unless your parents paid for your college stay and are offering to pay for a new car.)

Thank you for everyone I am waiting 6 months and risking my current car possibly brekaing down but in the mean time I'm knocking out some debt hard core! I know its stupid however my car has 206k miles on it and I dont want to be without a vehicle to work.

Good.
Worst-case is that your car breaks down and you have to buy a used car from some dealer or individual nearby. Even if you only spend a few thousand, you should at least have something that runs for several more years, and it isn't as expensive as something new.


The route I took:
- Graduate in 2009 with a job offer in-hand.
- Keep living on a college budget. (With a few deviations from that here and there, like a nice tablet PC with a 1.33GHz dual-core i5 processor.)
- Paid off my student loan debt 7 years early, saving $4k on interest in the process.
- I'm buying a new car now. I am going to take out a loan on it, however, I expect to be able to pay it off within a year. I could probably do it even faster, but I prefer to keep a decent buffer of money available for emergencies, or just to pay for living expenses for 1+ year in the event of a layoff or something like that. It would have been preferable to be able to pay for it in its entirety right away, but...well...I don't have a proper answer for that part.:$ The interest rates are much lower than they were on my student loans, and I'm getting a short loan term.

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?

Apparently paying my utility bills and student loan payments on time, and paying off the loans very early, only got my score to 714. (Utility bills in my name started in 2007, and the loan payments started in 2009.) That's all I've got on my credit history.
It's a wacky system.

 

[Ferzerp]

Apparently paying my utility bills and student loan payments on time, and paying off the loans very early, only got my score to 714. (Utility bills in my name started in 2007, and the loan payments started in 2009.) That's all I've got on my credit history.
It's a wacky system.

Utility bills have nothing to do with a FICO score unless you don't pay and get sent to collections. All you have is your student loans. Utility bills are not a loan, and only loans (and defaulted debt, i.e. collections) are reported to credit bureaus.

They can be used to establish residence, but have nothing to do with credit.

 

[Jeff7]

Utility bills have nothing to do with a FICO score unless you don't pay and get sent to collections. All you have is your student loans. Utility bills are not a loan, and only loans (and defaulted debt, i.e. collections) are reported to credit bureaus.

They can be used to establish residence, but have nothing to do with credit.

Hm; well, all I know is that the utility companies appeared on my credit report. Guess they don't affect the score though.

 

[Ferzerp]

Hm; well, all I know is that the utility companies appeared on my credit report. Guess they don't affect the score though.

They would have appeared as an inquiry to make sure they didn't need to get a hefty deposit from you.