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Discussion Starter · #1 ·
I don't have much credit so I have been saving up a rather large down payment over the last year. If the car costs me $23,000 then I am going to put down $15,000 and make financed payments on $8,000 over 60 months so I can slowly build up some credit, while not having a huge monthly bill. Is this a good idea? Are there downsides to a large down payment? Will I get stuck with a worse APR?

And what kind of down-payment did you place? If you feel comfortable answering. I'm anon, so I don't care.
 

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Most dealers get a kickback from the bank they use if they finance a car. so the more you put down the less they get. if you finance say 15K over 60 months the bank is making pretty good money on interest. now 8k over 60 months is not near the amount of interest. so they may try to jack the APR to make more $$ of interest.

my suggestion is to say you "might" finance and if they ask how big the down payment is ask them "well how much do you think i should do?" they will prob say 2-5K. let them think it's as low as they want. find out what APR they give

then say something like well i might be able to put a better down payment because (something about family willing to pitch in or something) and say what kind of payment/APR could i get with say 10K 12K 15K down-payment.

go with whatever gets you the best APR. you can always only give 5K of what you have and then write a separate check to add what you did not give for principal(clearly labeled so they don't use it as an advance on your payments) on the first payment.
i would also suggest getting someone with good credit to co-sign if at all possible and to maybe save 1K in case something happens and you don't have the $$$ to make the payment one month. hate to get your car repo-d because you get laid off or something.

i know when my dad bought his last two cars cash he said he "might" be financing and they gave him a bigger discount off the car and were a little peeved when he said he was paying cash.

if you have any other questions/ my rant makes no sense let me know.
 

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Discussion Starter · #4 ·
Hey dcubed,

You make very good sense. I don't really know anyone who A) has good credit or B) would co-sign for me, haha. I think it's stupid how they want to make more money even if you're giving them money up front. I mean, jesus... way to screw the consumer. This country is all about credit, credit, credit. Instead of rewarding someone for saving, they hammer you with an increase in APR as a way of making more money because you saved up enough to not need a long term finance plan on big payment. It really pisses me off, especially considering how banks royally f**ked us Americans over the last few years.

Theres the end of my rant, hahah.
 

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Having more recently been there done that going a longer term like 60mos is probably a good idea just because length of credit history is a big deal when you are trying to build credit. As for down payment...that depends on your overall financial situation. I wouldn't recommend putting every cent of your savings down on a car if you would then no longer have any money saved for emergencies, lost job, etc...

As for what I did...I didn't put any cash down at all. However I had quite a bit of equity in my trade-in so it was basically a down payment.
 

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One other thing get a credit card ASAP. Once the car is payed off it will remove one of your "old" accounts. I know I dropped 30 points when I got my civic and lost my oldest account.

Btw just use the credit card for gas once a month and pay it off 15 days after u make the purchase.
 

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One other thing get a credit card ASAP. Once the car is payed off it will remove one of your "old" accounts. I know I dropped 30 points when I got my civic and lost my oldest account.

Btw just use the credit card for gas once a month and pay it off 15 days after u make the purchase.
Can't agree with you more on that. My CC is by far my oldest account and it makes a huge difference. Just keep your balance low to none and pay on time...paying late is not an optjon it will destroy your credit.

Might find a good local bank or credit union too...when I financed my first car a couple years ago (was exactly the same age as you) noone would finance me except those shady 25% interest loan companies. So I went to my credit union and got a reasonable rate...they didn't even mention the tiny credit history I had. when I bought the CR-Z now that I have a better history they gave me a ridiculously low rate this time around.
 

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I traded my moderately modded (3" lift, 33" mud tires, front tube winch bumper (took the winch out), Rear tube bumper with winch hookups, Rear upper and lower control arms, MPAC rear door rack (same stuff the military uses to mount equipment in HMMV), rock rails, dual battery setup and a big dent from a tree) FJ Cruiser for 18k and my bank gave me an interest rate of .09% over 60 months. It's a simple loan, meaning there's no early pay off fee.
 

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I traded my moderately modded (3" lift, 33" mud tires, front tube winch bumper (took the winch out), Rear tube bumper with winch hookups, Rear upper and lower control arms, MPAC rear door rack (same stuff the military uses to mount equipment in HMMV), rock rails, dual battery setup and a big dent from a tree) FJ Cruiser for 18k and my bank gave me an interest rate of .09% over 60 months. It's a simple loan, meaning there's no early pay off fee.
.09%??? Wow...

Considering that the average new car rate right now is in the 6%-6.5% range I was thrilled to come in below that with 5.2%. I've never heard of a rate like .09% outside of the special rates the car companies offer. Like for example now on 2010 models Honda is offering 0.9%/1.9%. But even that is 10x higher than .09%
 

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APR can vary quite a bit based on location. In CA I considered myself lucky to get under 6% from my credit union. This is tier 1 with excellent credit (over 750). Many banks in the bay area were 6.5% and above.
 

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.09%??? Wow...

Considering that the average new car rate right now is in the 6%-6.5% range I was thrilled to come in below that with 5.2%. I've never heard of a rate like .09% outside of the special rates the car companies offer. Like for example now on 2010 models Honda is offering 0.9%/1.9%. But even that is 10x higher than .09%
The advantage of private banking.
 

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Check out the link below and be glad you don't live in the bay when it comes to financing.

Who Pays the Highest APR? - KickingTires
If they call those low APR in the bay area that's crazy...from dealers I've talked to recently and in the past Honda has very little history of giving out uber-low APRs with the exception of their yearly clearance of last years models.
 

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I don't have much credit so I have been saving up a rather large down payment over the last year. If the car costs me $23,000 then I am going to put down $15,000 and make financed payments on $8,000 over 60 months so I can slowly build up some credit, while not having a huge monthly bill. Is this a good idea? Are there downsides to a large down payment? Will I get stuck with a worse APR?

And what kind of down-payment did you place? If you feel comfortable answering. I'm anon, so I don't care.
If you are a member of a credit union you can ask them what your best options are.Also,wait till the end of the year and work with the invoice price.As far as the 0.9% APR is concerned,if the dealership advertises that,you have to qualify for it(we're talking HIGH CREDIT SCORE).Plus you also have to put down a certain amount.
 

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Check out the link below and be glad you don't live in the bay when it comes to financing.

Who Pays the Highest APR? - KickingTires
I don't take this for fact. :thumbdown:

I lived in Southern California and guess what the dealer rate was; and I walked away using my credit union? It sure not the 9.55% average the article is stating. Not even closed. Honda dealer quoted me 3.84%. I got a better rate with my credit union 2.99%. :sleep:

Not much difference but I was taught a penny saved is a penny earned. :yeahthat:
 

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My point is there are low rates out there. Look for them. It is advertised not a secret. Depends on who is willing to lend the money to you and who do you wants to get your hard earned money.

It is a double edged sword but credit history will determines your rate. If you don't like it, like some members from another post I read awhile back and lucky enough...pay cash. For most of us, we have to demonstrate we can and willing to obliged to pay back our loans (we borrowed).
 

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I guess they have to give you a reason to take a loan at all then... That's really more of a perk of banking with them at all, no bank would make a dime off such a low interest loan. At least now I still feel like I got a good interest rate for a normal person :hi5:
You get the idea.

It's called almost perfect credit/never missing a car or credit card payment and banking with a private sector of a public bank. There are huge incentives to be in private banking and having a banker play with your money to make even more.
 
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