Car loan questions

[NateDN10]

We found a 2012 Mazda5 on Craigslist nearby and are very close to pulling the trigger. I test-drove it, got the CarFax, etc. and it all looks good.

We are going to take out a loan (which we will pay off as soon as we sell our Outback) to buy it. But I have some questions.
-Do all car loans have origination or some other similar fees? It is very hard to find information on fees on bank websites.
-Rates seem to vary quite a bit. Bank of America is showing ~2.5% APR, while First Niagara (local) is showing ~7%. What's a good rate nowadays?

Also, if this is the wrong forum, let me know!

 

[Donald]

Used car loans will be higher than new car loans. Credit unions will be the cheapest.

The actual interest rate may vary from advertised when they look at credit score.

 

[apwillard1986]

I’m not sure on an individual level but on the dealer level banks seem to rarely charge fees for auto loans. A good rate here is around 2%. However, it is entirely dependant on credit and or your state’s laws. Also, the rate is often higher for pre-owned vehicles and can jump significantly if the amount financed is rather low.

Also, while credit unions are generally cheaper some will request you to have the vehicle inspected by a third party such as autoexam if you are requesting a loan for an individual purchase. It is a good question to ask while shopping rates.

 

[SatinSilver]

The interest rate is used to calculate your payments. The apr uses the interest rate and includes any fees in the loan to express the "true" cost of the loan. Mortage loans are similiar. Car loans have little to no fees. Read the paperwork but ask the bank reps about it also. Including any prepayment penalties.

 

[99Saturn]

As already mentioned, credit unions or local banks should be the cheapest. 7% sounds way too high to me. I'm seeing ~2% to 2.5% for excellent credit and meeting some down payment criteria depending on the institution.

When we financed new (back in January), there was no fee, and there wasn't a fee with any of the institutions I spoke with.

Check on prepayment penalties, ours has a stipulation of a clawback of the "sign up" bonus we got if the loan is paid in fill in 18 months.

Whenever you ask for a rate I'd ask what the conditions of getting that rate are.

 

[solorexpy]

Credit unions are the best if you plan on making the payments over several years. I've never been charged an origination fee. Just make sure there's no early payoff fee.

 

[dparm]

Agree that credit unions are best. I was able to get 1.49% for 60 months on both of my recent vehicle purchases.

There shouldn't be any origination fees.

 

[thr_wedge]

Used with excellent credit should be ~2-2.5%
New with excellent credit should be under 2%

7% just run away!

No loan fees anytime I have bought a car.

 

[bepperb]

Capital One did one of our loans with a good rate and were pretty easy to apply for online.

If it's just a short term loan to buy one while you wait on the other it might be cheaper to take a loan against your 401k, for example I pay 75 dollar origination fee and pretty cheap interest (which I'm paying to myself) so for a couple month loan that's the cheapest option for me.

A lot of loans will not allow you to buy a car used off craigslist, only a manufacturer franchised dealership, so double check that. Obviously the 401k loan is cashiers check you can do what you want with.

 

[eljefino]

+2 on a used car loan wanting a dealer. Otherwise joe schmoe could sell a burned out wreck worth $300 to jane schmoe then stick the bank with the worthless title and no bond to go after.

Ask about/ consider putting something else on the line eg a loan against your life insurance, 401k, or even a "personal loan" if the bank is being crabby about the private party thing.

 

[NateDN10]

Thanks, all.

We used Bank of America for the same sort of thing (private party, paid off in a couple months) when we bought our Outback. Their rates are good, but at least last time they charged us a $200 fee.

 

[dparm]

Originally Posted By: NateDN10
Thanks, all.

We used Bank of America for the same sort of thing (private party, paid off in a couple months) when we bought our Outback. Their rates are good, but at least last time they charged us a $200 fee.


That's ridiculous...$200 fee? Sounds like a good way for them to sell a very low APR but still collect the same amount of money as a higher APR.

 

[99Saturn]

Originally Posted By: NateDN10
Thanks, all.

We used Bank of America for the same sort of thing (private party, paid off in a couple months) when we bought our Outback. Their rates are good, but at least last time they charged us a $200 fee.


FWIW, when I shopped rates, BofA was on the higher end of the rates and they seem to have held in my area (so I think you could find something slightly less than 2.5%) - I know it may vary regionally.

IDK the pricing of the Mazda 5 you're looking at, but I believe that $200 fee is probably in the ballpark of an additional .25% added to the interest rate over the life of the loan (depending on how much you finance), and you get no benefit in that case for paying it off early.

Edit: Likely even higher than additional .25% but it depends on the upfront cost.

 

[JTK]

Nate, I got 2.5% through BOA for our new Dodge. Of course the dealer rates were more than double that. I told them what I found and they got it through BOA for me. Search for credit unions in your area as well. Some of them are 2% or less. Obviously the low rates will depend on your credit score.

If you could swing a drive to Buffalo, search Riverside Federal Credit unit. Their rates are really good.

 

[SteveSRT8]

Our local credit union has loans under 2% for high credit scores.

 

[NateDN10]

Originally Posted By: JTK
Nate, I got 2.5% through BOA for our new Dodge. Of course the dealer rates were more than double that. I told them what I found and they got it through BOA for me. Search for credit unions in your area as well. Some of them are 2% or less. Obviously the low rates will depend on your credit score.

If you could swing a drive to Buffalo, search Riverside Federal Credit unit. Their rates are really good.

Do you have to be employed at a member company? That is the case with a lot of credit unions.

 

[JTK]

All you have to do with Riverside is join. No employer association needed. I know a few people who have gotten loans or re-fi'd their car loans through Riverside.

 

[NateDN10]

Originally Posted By: JTK
All you have to do with Riverside is join. No employer association needed. I know a few people who have gotten loans or re-fi'd their car loans through Riverside.

Thanks, I'll look into that. They're advertising 1.99% right now and no fees.

 

[hattaresguy]

If you only need it for a few months why not just pull money from a 401K or a HELOC or something like that? A car loan seems like expensive short term credit.

 

[NateDN10]

Originally Posted By: hattaresguy
If you only need it for a few months why not just pull money from a 401K or a HELOC or something like that? A car loan seems like expensive short term credit.

Expensive how? If there are no fees and we pay it off quickly, it seems very inexpensive to me.