NRR: auto financing question

Local credit union.

As for "not the best credit"... what IS it with you ppl?! Seriously, did no one ever explain how IMPORTANT your credit score is? Or, more basically, how you SHOULDN'T spend money that's not yours or, barring that, that you shouldn't borrow more than you can repay or, barring that, that you should learn to rob Peter to pay Paul in order to preserve your credit score?

Sheesh.

Get a bicycle, kid; you prolly need the exercise anyway.

ok as far as my ppl i have no clue but ive never had a credit card, i had some unpaid speeding tickets when i was like 17 that i eventually paid off. no, no one sat me down and explained the facts to me but id have to say ive done well considering i pay my own tuition w/o the aid of loans. i simply asked about financing because i had no idea what to expect. thanks for your help.

Ha ha! Scatmandu has egg on his face!

Egg Man wrote:

Ha ha! Scatmandu has egg on his face!

I do? Uh...and why would that be, exactly?

I gave him the answer (local credit union), then I railed against his self-described poor credit (and "you people" refers to anyone with poor credit, but most especially young people). With regard to being sat down and having credit explained, it should be self-evident: do not spend what you do not have or cannot repay.

Re-reading the original post: I also counseled against buying the car: 5Gs isn't the kind of debt a self-financed kolledge kid should be entering. Bicycles are cheap, exercise is good.

If you need motorization and public trans is not available, consider a used motor scooter.

mitss wrote:

i was hoping someone could point me in the right direction regarding financing a used car. i'm a junior in college, have a job, not the best credit in the world but not terrible and don't know the first thing about financing. is getting finance for a car 5000 and less easy to come by? again i've never done this and have zero knowledge so any help would be appreciated.

What kind of job do you have? As a junior in college why do you even need a $5,000 car? Go to

and find a car for just a thousand or less even; have a mechanic check it out. If you need a small loan for that, go to your bank. Better yet, pay cash for it (as no one is really impressed with paying back a $1,000 loan). Use that car to tool around town and campus in, and rent a car when you need to drive 2 or more hours away. When you're done with school and you get a job, sell your beater for a song or donate it to charity for a tax deduction. Then just buy a SLIGHTLY better used car.

Don't ever buy a car from one of those lots that says "Everyone's approved!" Yeah you're approved all right -- at 25% interest or so.

If you can't get a car loan for under 5% then you should pay cash.

People aren't buying lots of big ticket items right now (after Christmas, bad economic news). If I were you, I'd go to a reputable dealer who sells new and used cars, find the car you want to buy (spending $2,000 or less), and tell them you will buy it IF they give it to you for 0% interest for 2 years or one year or whatever you think you can handle.

I am DEFINITELY doing that next time I buy a used car. Now, I have a solid credit history, own a home and have a full-time job, so they might be more willing to do it for me. I would still try that if I were in your shoes. Don't let anyone jerk you around. YOU set the rules and if they don't want to play, go to another dealer until you find one that will.

Working off of what FW said: buy a junker and make it go--I am sure there is a '79 T-bird out there somewhere...

Don't be afraid of the 70s; those cars had cheap parts and plenty of knowledgeable mechanics...

Hey Flagpole I have a question for you: I am 47, single and a homeowner. No debt. Plenty socked away for retirement. No dependents.

Used car paid for in cash. Classic sports car for the summer paid cash for long ago. House worth 550,000 or so and mortgage is 100,000. I have a money market account for emergency savings and it has 14,000. Do you think that's sufficient? I feel it's plenty. Curious what you think. Thanks in advance.

secure homeowner wrote:

Hey Flagpole I have a question for you: I am 47, single and a homeowner. No debt. Plenty socked away for retirement. No dependents.

Used car paid for in cash. Classic sports car for the summer paid cash for long ago. House worth 550,000 or so and mortgage is 100,000. I have a money market account for emergency savings and it has 14,000. Do you think that's sufficient? I feel it's plenty. Curious what you think. Thanks in advance.

1) No debt other than the $100,000 left on your mortgage is solid.

2) Your emergency savings account is sufficient since you don't have dependents.

3) You said plenty socked away for retirement. I'm assuming this is in addition to your emergency fund and the $450,000 in equity on your house? Great to have home equity, but unless you sell that house and move to a cheaper area, I'm not too geeked about the equity. Unless it brings you INCOME sometime down the road (NOT in the form of a LOAN) then I wouldn't consider that part of your retirement plan.

So, assuming you have retirement money other than your hme equity, you're probably doing fine.

You should plan to have AT LEAST one million dollars (maybe more if you keep that house that has high taxes and insurance) when you retire. At age 47, if you have $210,000 in retirement money invested in good growth stock mutual funds and you are putting away the max in a 401k (15,500) until age 60, you will have $1.03 million by age 60 (at a 9% annual return). If you have less than $210,000 either you need to increase your investing (IRAs and other mutual funds too) OR you need to work past age 60. You could have $150,000 invested now for retirement, contribute $15,500 to retirement each year and have 1.04 million at age 62.

If you have more than $210,000 invested, then just keep adding to it, make sure you get more conservative (more bonds) when you're within 5 years of retirement, and you'll be fine.

Thank you for the detailed and thoughtful response. I currently have 485,000 in retirement. This is not counting the emergency fund or the equity in the house. I also have a pool of money that is well over the 100,000 mark which is quietly growing.

secure homeowner wrote:

Thank you for the detailed and thoughtful response. I currently have 485,000 in retirement. This is not counting the emergency fund or the equity in the house. I also have a pool of money that is well over the 100,000 mark which is quietly growing.

Dude, you are going to be just fine. If you add NOTHING to your retirment account of $485,000 it will be worth 1.48 million by the time you are 60, 1.76 by 62, 2.28 million by 65. That doesn't count the other $100,000 you have plus the $14,000 emergency fund. Continue to add to it and it will be worth even a little more.

Lets say you retire at age 60 with 1.76 million. That's just 13 years from now. Let's say you'll take 5% from that. That's $88,000. Keep your money in conservative investments and you will likely get at least 6%, so just take less than that and you'll do fine. Of course this doesn't even include the 100,000 that will grow between now and then also (it will be worth $306,000 by age 60 if you have it properly invested gettin 9% return annually). That could provide another 15,300 a year for a total of $103,300. Try to get your house paid off by then. Could you live on $103,300 a year at age 60 with a paid for house? Know that at age 62 you can start taking Social Security too, and that will be AT LEAST another 25,000 by then.

Seems like you're doing fine brother. You will be giving yourself a little increase each year by taking less than you earn in growth, and then your Social Security will go up each year also.

Thanks again.

House is not super expensive to insure and property taxes are reasonable nor is it too large for me such that I would need or want to downsize. Am making little extra payments here and there to get that 100,000 down as you have already suggested.

Mortgage free is a big goal: it's hard not to just pay it off with some of that quiet pool of money but the pool is doing ok and I don't want to empty it out just to pay off mortgage for all the obvious tax reasons as well as getting it out of what is a good investment mix.

I appreciate your input.

Flagpole Willy wrote:

If I were you, I'd go to a reputable dealer who sells new and used cars, find the car you want to buy (spending $2,000 or less), and tell them you will buy it IF they give it to you for 0% interest for 2 years or one year or whatever you think you can handle.

I am DEFINITELY doing that next time I buy a used car. Now, I have a solid credit history, own a home and have a full-time job, so they might be more willing to do it for me. I would still try that if I were in your shoes. Don't let anyone jerk you around. YOU set the rules and if they don't want to play, go to another dealer until you find one that will.

If a dealer tells you THEY will finance the car at 0% for a year or 2 run away as fast as possible. This means they have already made up all of their costs and a reasonable profit on the money (or trade) you have already given them. If you peel out of the lot and never see them or pay them again they have not lost a dime. They money you will pay at this alleged 0% is HUGE profit.

Now DO NOT confuse this from the 0% loans you see advertised on new cars (or manufacturer certified used). These are for well qualified buyers and the manufacturer "buys down" the interest rate to %0 from the market rate. So the Ford (or whoever)factory pays the interest cost to thier finance arm so they can offer that %0. That is just Ford spending $ on rate subvention instead of rebates, more advertising, dealer incentives, etc. Just another marketing tool with associated marketing costs.

If a dealer wants to let you believe that you are "setting the rules" and you walk away happy thats OK. If you truly believe it you are being naive.

To the OP, I suggest you pay cash for beater. If you have more specific questions I would be happy to assist you? FYI, I have worked in auto finance for captive finance companies and independant sub-primes, I do have some knowledge here.

Dude, you still have to do your homework. You don't just accept the price they say. Go to edmunds.com and find out what a fair price for the car is. If they want to sell it to you for 7% interest or whatever, then you offer them the price you want and the terms you want (0% interest). They can take it or leave it.

Ricart Ford here in Columbus sells new and used cars. They want to move cars. You find them at a time when the used cars are high inventory and you could easily (I KNOW I could) get them to sell you a used car for 0%. Now those corner lot used car places make all their money on financing to people with bad credit, so they don't even want to sell a car to a person who can pay with cash, but a reputable dealer who makes most of their money on new cars and service, will sell you a used car if you have good credit for 0%. Just need to ask. That's not them making the rules, that's ME making the rules.