Auto Loan Help

[The Critic]

A friend of mine is about the same age as I am, has no credit history, and is trying to purchase her first used car. She has a small part-time job.

With her mom as a secondary, and her as the primary, Hertz and its affiliated bank gave her a rate of 8-9%.

Is this in the ballpark of what she should be expecting, or could she do any better?

Thanks

 

[JHZR2]

As a first timer with no real credit, that is likely as good as shell get.

If she was truly responsible and had a good level of trust between her and her parents, she'd be better off with her parents as the primary, IMO.

She can always get a high-rate credit card, pay it off monthly and build credit that way. 9% interest, where her parents may be able to get 5% is just throwing $$$ away for a necessary appliance.

Navy Federal Cerdit Union offers 4.25 and 5.5% on used auto loans, depending upon length:

http://www.nfcu.org/rates/lease-frameset.html

JMH

 

[deepsquat]

8-9% sounds good to me she is lucky not to be paying 13% ..that was my rate 20 years ago in the same situation

 

[Quattro Pete]

Good rate, IMO.

 

[javacontour]

That's probably a good starter rate.

I'd try to ensure there is no penalty for early payoff. That way, after a year or two, of establishing good credit, she could shop the loan around to see if she could finish off the last few years of the loan with a new loan of a more favorable rate.

One thing to consider is used car rates are higher than new car rates, so 8-9% is actually pretty darn good for a first time buyer.

 

[The Critic]

Thanks guys, I'll pass the info along to her.

I got her a decent, but not great deal on the car. It's an 2006 Corolla LE Auto with 26,000 miles on it. Price is $11,695 + TTL, which is below KBB (fwiw). Nice part about this car is that it is still under the original 3-yr/36k warranty, so she can still pick-up a Toyota Extra Care Platinum contract (7-yr/100k, $0 deductible) for $795. She's only planning to keep the car for another five years, so this will ensure that it is under warranty the entire time.

I'll probably go and pick up with her later this week, so I'll review the maintenance records, etc.

 

[The Critic]

Originally Posted By: javacontour
One thing to consider is used car rates are higher than new car rates, so 8-9% is actually pretty darn good for a first time buyer.

Most of the major banks have rates in the 6-6.5% range for people with "excellent" credit, so I guess she isn't doing too bad.

 

[Colt]

That's a very good rate considering it's a used car.

 

[Quattro Pete]

Originally Posted By: The Critic
so she can still pick-up a Toyota Extra Care Platinum contract (7-yr/100k, $0 deductible) for $795.

People still buy extended warranties for Toyotas - the epitome of reliability? I thought people buy Toyotas in order not to need them.

I know it's just insurance, a piece of mind. I'm just being a prick.

 

[lovcom]

I would not buy a car from a rental car company....people trash those cars when they rent them...as to her car loan, the rate sounds about right.

 

[lovcom]

Originally Posted By: Quattro Pete
Originally Posted By: The Critic
so she can still pick-up a Toyota Extra Care Platinum contract (7-yr/100k, $0 deductible) for $795.

People still buy extended warranties for Toyotas - the epitome of reliability? I thought people buy Toyotas in order not to need them.

I know it's just insurance, a piece of mind. I'm just being a prick.


True, it would be exceedingly foolish to buy an extended warranty on a Toyota, with perhaps the exception of the Tundra.

Same for Honda....however if you buy a domestic car, it would be equally foolish to NOT get an extended warranty.

 

[The Critic]

Toyota is not very generous with their customers as far as goodwill work goes once the vehicle is out of warranty, whereas Honda is. That's something to keep in mind when deciding whether or not to purchase an extended warranty.

Besides, the newer Toyotas aren't as well built as the older ones. One of my other friends has an 03 Corolla with 80k that just needed a $700 dealer radiator job last week despite 30k coolant changes at the dealer. Luckily Toyota Extra Care picked up the cost.

 

[JHZR2]

toyota radiators are the pits... were on the 89 corolla, are on the 94 previa... My father had an extended warranty on the 89, and it paid for itself because of the radiator job.

No other man ufacturer has such lousy radiaotr quality, IMO... I still have the original in my 22 and 24yo MB and my 17yo BMW!

JMH

 

[Quattro Pete]

Originally Posted By: JHZR2
No other man ufacturer has such lousy radiaotr quality, IMO... I still have the original in my 22 and 24yo MB and my 17yo BMW!

Well, the plastic radiators on the newer BMWs (e39, e46) are quite unreliable as well.

 

[javacontour]

Originally Posted By: JHZR2
toyota radiators are the pits... were on the 89 corolla, are on the 94 previa... My father had an extended warranty on the 89, and it paid for itself because of the radiator job.

No other man ufacturer has such lousy radiaotr quality, IMO... I still have the original in my 22 and 24yo MB and my 17yo BMW!

JMH


Hmm, the radiator on my 2002 Toyota Sienna was made by a typical GM supplier, Delphi, if I recall correctly.

Hope it's a good one!

Actually, after poking around on that vehicle, many of the parts I've seen are US sourced. Many say Denso, USA and of course there is the Delphi radiator.

Even the Toyota Oil Filters for the 1MZ I got from the dealer are stamped Made in USA.

Somewhat off topic, but this thread reminded me of those details.

 

[Steve S]

Also not to buy over her head.

 

[Al]

Hmmmm...not to change the subject..if this is your new g/f I would advise getting one that owns her own car free and clear and has a good job. Hey If I could do it you can too.

 

[rjundi]

Originally Posted By: JHZR2
toyota radiators are the pits... were on the 89 corolla, are on the 94 previa..


Did you know a lot has changed from 14+ years ago. Gaging any car company from a period that long ago is not very meaningful.

 

[rjundi]

I would shop around a bit if financing through the seller. I found a nasty little thing dealer financing can do is add up to 3% to an auto loan's real rate and split 50/50 that with the bank.

I had a 10% rate on similar size loan on my first car at age 21. Found out loan was really for 8% on $11.5k loan from a person(friend) who worked at the financing company.

Knowing what I know now I would never take an auto loan ever again. Buying what you can afford and repairing it is significantly cheaper.

My stupid car loan prevented me from getting about another $35k on getting a better first home at age 23. That was very significant considering my purchase price was $100k which sold a this past year for $250k.

 

[refaller]

Definitely shop around. Also let the finance manager know that you are shopping. If you find a lower rate, I bet he matches it. It is amazing what they will do, but they do get to add to rates and make money on it- that is back-end profit on the sale. Many times the back end profit (off waxes, extended warranties, rates etc) exceed the front end profit (what the dealership paid- what you paid).

ref