Im still in line for my 2009 smart passion, and I know that I will need to take out a load for my car and hopefully by March, which is when my DDE says the earliest my car will be here, that I can have $7,000 as a down payment. That leaves me with about $10,000 to finance. I will be 18 in January and will cosign on everything. One problem.... my mom's credit is not great... or good. Is there any of you who did finance and what were your rates. I know this is kind of a personal question, so any answers are greatly appreciated!!
rates are determined by a number of factors besides just credit rating. each financial institution with has their own guidelines and set of criteria which governs the rates they quote.
if you have 'no credit' history and your mom's credit needs some work, the two of you might start now by asking her to get a copy of HER credit report. by law, you are allowed ONE FREE REPORT PER YEAR.
depending on her situation, YOU might be better off going it alone rather than have her as a co-signer since you'll have a hefty down payment. simply call around and ask your bank, a 'name' financial group, such as Wells Fargo (it's been posted on here that they have pretty good rates for financing smart cars) and see what they have to offer. when you get your 30 day notice, then go to work by contacting the lender you have chosen and get 'pre-approved' so that all you have to do when your car comes in is to call them and say "it's here, write me a check for $xxx number of dollars" and away you go.
just my opinion. whatever you do, just don't wait until the last minute. should you have a 'glitch' in your financing, you may see your smart go 'bye-bye' real fast.
I put down $1,250, and I got financing for 60 months at 4.40%.
I'm hopefully going to be house shopping in a year or so - so I am banking for a down payment for that right now as well.
I've never carried an auto loan full term, so this works out well for me... I have a low base payment in case something were to happen and I were not able to put a large payment down, but most months I stack the payments.
Im still in line for my 2009 smart passion, and I know that I will need to take out a load for my car and hopefully by March, which is when my DDE says the earliest my car will be here, that I can have $7,000 as a down payment. That leaves me with about $10,000 to finance. I will be 18 in January and will cosign on everything. One problem.... my mom's credit is not great... or good. Is there any of you who did finance and what were your rates. I know this is kind of a personal question, so any answers are greatly appreciated!!
you can start getting pre-approval for the loan now. with a sizable downpayment like that i'd see if you can get pre-approved without her cosigning. a big downpayment like that is great because you'll never be upside down on the loan, which makes for much less risk for the bank.
i'd also suggest looking at credit unions as a financing source - in my experience their rates tend to be lower and they are more personable to deal with. often you can get better rates or obtain approval by agreeing to automated payment or automatic withdrawl from your checking or savings account... then the payment is always on time automatically (provided you have the money going into the bank account)...
bottom line - there's no reason to wait until the car arrives to figure out the financing. go ahead and get that rolling now, shop around, etc.
i ended up getting preapproved up to a certain amount, the credit union sent me a blank check - i put about $8000 in cash down and then wrote the check for the difference. very easy transaction and i didn't need to listen to the dealership's finance guy try to sell me anything.
another thing... depending on where you live, keep in mind that you'll probably need more than just the MSRP quoted - in my case it was a few thousand dollars additional by the time i paid sales tax, registration fees, dealer fees and insurance downpayment... so keep that in mind too. the more you can put down, definately the better off you are, the lower the payment you'll have and the shorter the financing term.
if you can afford it - try to finance for no more than 2 or 3 years (24-36months) that way, by the time the warranty is up you've got money available to handle any repairs without having to come up with a monthly car payment too. i would not recommend a 5 or 6 year loan for a smart car, or any car for that matter...
I've never carried an auto loan full term, so this works out well for me... I have a low base payment in case something were to happen and I were not able to put a large payment down, but most months I stack the payments.
EXCELLENT ADVICE! i too do the same thing, even with our house. i'll take the '60 month' loan for the smart BUT plan on paying it off in 36 months.
From what I have found, get your credits reports 30 days before you start looking and show them that instead of having everyone and their dog pull yours. Within a 14 day period, they all look like one hit, but If you pull your credit and show your lenders that, they wont pull it. And you pulling it wont hurt your credit. With a huge down, you probably wont need your mom to co-sign, and if she does it wont help YOU out that much. But, if you are just looking for the best rate, pull them both and ask lenders what would be the better deal.
First off, Thank you guys soooo much for all the useful information. I know a couple of you are saying to do it with out my mommy but because when my car comes in I will have just turned 18 and wont have ANY credit. Do any of you know if I can even get a loan without credit? I know as soon as I start making payments, I will begin to build credit so that will be good.
I also went to my dealership to make my reservation ( its only a 20 min drive right off the highway!!) and in CT there is no sales tax and only a $299 dealer fee.
But from what I'm reading, you are all pretty much suggesting NOT to finance with the dealership?
Thank you guys so much for responding and I'm looking forward to my 2009 metallic blue/black smartie!!
I remember back when I was in your shoes - I had to get my parents to co-sign for my first late model car (one year old) to get my feet wet but they had excellent credit and could of bought the car outright for me but didn't. After that loan I went & joined the military then moved away - about 8,000 miles away. As luck would have it, the head loan officer happened to know my parents and actually had lived just the next street over from me as I was growing up. That was a heavy player in actually getting the loan for my first NEW car, she gave me the loan just because she knew my parents. How do I know that? Three of us went to the same bank over 3 days. Three identical loans - all of us made the same amount of money per year. The only reason I got that loan was because of the loan officer. I was 18 at the time as were the other 2 guys.
What I think is great is you're researching interest rates. I wish all 18 year olds thought that way. All the 18 year olds that work for me don't have a clue about interest. Even the 20-somethings don't have a clue until I start grilling them about it when they come visit my office for one reason or another.
$7k is going to be a big player for you when the time comes. Next question will be how long have you've had your job. Chances are they'll also call the references you put on your loan application, so plan it like they will. Hopefully you'll get a loan period and hopefully you can get one for a stellar rate.
I just got a PAL last week from my credit union for 4.25% in anticipation for picking up my car this week. As luck would have it, my credit union changed their rates starting Sep 1, they are now lowered to 3.9%. I might put maybe a grand or so as a down payment. I also make it a habit to double up payments.
Either way, Dave Ramsey would tell you that you don't need a new car unless you can pay for it cash. A few years back his advice has helped me get out of slump though I haven't made it a habit to follow his rules 100% I still was able to work out of a rut. I made my own kid that's a little older than you listen to some of his stuff and make my kids that work for me listen to it to. I know it has helped my kid, she's learned to be extremely frugal.
p.s.- Do loans usually charge you for doing early payments??
Not usually... good ones, that is.
The important thing to make sure is that your additional payments go towards the principle of the loan, and not to the interest. Most loans these days stick it towards the principle - but a few still go the other way.
Going through the dealer, you might not get as good of an interest rate. Shop around... banks are competitive. I spent an entire day last week, went to 3 banks and my credit union, and spent the other half of the day shopping around for insurance.
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I might put maybe a grand or so as a down payment. I also make it a habit to double up payments.
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