Car Loans, where do you go?

[GNews]

So,

I'm just looking to see if you guys have any tips. Been living off the grid and in the world for about 7 years now. My credit exists only because I started building 1 year ago, after a LONG period of doing NOTHING on it. I didnt' even realize (being young) it's not good to just close accounts and use no cards. I felt I could live off cash, why not?

Anyhow, now Im in phase 2 of my goals to build it up. I got credit cards (3), just closed the secured line and going to get a car loan / buy a nice Wrangler or one those Ford Edges maybe... I think the Wrangler though.

Any tips on getting my loan? how to approach and be sure I get it. I'm going to pay off all my credit cards, leave the credit on $0 balance for a month or two.. then buy.

 

[Steve Brownlie]

These may be of interest to you (from news.ycombinator.com):

http://timharford.com/2017/06/trapsfordinosaurs/
and discussion:
https://news.ycombinator.com/item?id=14476381

We became a 'one car family' a long time ago now (I do all my business travel First Class on the train and have never come close to spending what I'd spend even with my cheaper car ownership strategy on buying, maintaining and fuelling cars - yes I'm lucky to be in the UK for that).

But beforehand I'd tend to buy a car for £1,500-2,500 (old Audi's and Ford's mostly) and run them into the ground (3-5 years).

The problem is even with a cheap lease, and terrible growth rates for the alternative savings you end up way more out of pocket:

There's a good chance your online business (or the real market) has a much higher performance over the next 25 years than a 5% return so you could be way more out of pocket than that through taking on leases and debt.

Disclaimer: While I previously worked in Banking/Finance and was authorised to give certain types of advice I'm not currently regulated to give any advice and this is just my personal opinion etc etc. Seek financial advice and so on...

 

[dsoul]

lease a car, never buy a depreciating asset. even if it costs slightly more per month than the loan would.

 

[Sutra]

lease a car, never buy a depreciating asset. even if it costs slightly more per month than the loan would.

Can you clarify why that is? Not trying to be a smart ass, hah. I really want to know.

 

[dsoul]

Because a car simply loses thousands in value every year (if it's new, less so if older). Buy a property, it goes up in value. Not a car.

Lease a car, put it down as an expense of living, just like food, electricity etc.

I've leased cars through my biz for over a decade, here are the benefits as I see them.

1. I get a brand new car (of my choice) delivered to my door every two years, and the old one taken away.

2. No dealing with part-exchange, no dealing with private sales.

3. Fully taxed for 2 years (part of lease) and no MOT on new cars for 3 years (in UK). Full roadside breakdown assistance as part of lease.

4. The payment for car comes out of bank before I pay taxes on that income. Corporation tax, and I can reclaim a portion of VAT.

5. I don't own a piece of metal that is guaranteed to lose several thousands in value during the two years it's mine.

 

[contract]

I have ties to the automotive industry dating back to well over 100 years...

Credit score really doesn't matter AT ALL. A LARGE downpayment is what really matters. If you want to buy a $20K car and you plop down $8K, you will get approved. Period! Even if you have a job of only 6 months and your credit is complete dog shit.

Credit scores only matter when you want to buy or lease a car and you don't have a whole lot of money to put down... OR you want 0% APR for x months, or a super low rate. If you ignore credit completely, you'll get a shit rate at 13%. BUT if you can pay off your loan fast enough, it doesn't matter.

You can go with a buy here pay here dealership and they will finance it 100% without a bank loan. You will just pay a higher interest rate. ANYONE can get a car. It's how people in the ghetto get financed. 99% of the time the downpayments are laughable, like $100 down and $99/month car payments.

They run TV ads all the time. JOB + DOWNPAYMENT = CAR! They aren't lying... (Most dealers are shady, but buy here pay here dealers get the fucking job done)

People get approved all the time, beacuse a car can be repo'd. If you don't pay the bank can just come and take it.

In the end, your credit score will determine how much $$$ you put down.

It's best to get your credit utilization rate down to 0 BEFORE applying. They will run your scores and even being at like 20% UTL can knock 100 points off your score...

My personal favorite is Ally bank. They are fucking amazing and their payment apps are beautiful. They also financed me when no one else would.. Even my own bank of 10 years told me no fucking way... lol.

FYI:

If you're not prepared to live in a castle and drive a rolls: Then NEVER buy a new car. The moment you drive it off the lot, you throw thousands of dollars away. Don't lease. Just buy a USED, PRE-OWNED car that you are OKAY with driving for AT LEAST 7 years. Most people buy a new car within or around every 10 years.

The best tip I can give you:

Figure out what make/model you want.

SEARCH WITHIN 200 MILES. NOT locally!

Drive 200 miles to get the lowest price. That's like 2 hours in the car.

Dealers around me wanted $10K over NADA prices for my last used car. I drove 2 hours and bought it for $2K under NADA. Most major dealers in large cities will rape you on price. Dealers in the middle of nowhere can get VERY agressive on having the lowest price. They don't have enough showroom traffic not to!

 

[ryandiscord]

I have ties to the automotive industry dating back to well over 100 years...

Credit score really doesn't matter AT ALL. A LARGE downpayment is what really matters. If you want to buy a $20K car and you plop down $8K, you will get approved. Period! Even if you have a job of only 6 months and your credit is complete dog shit.

Credit scores only matter when you want to buy or lease a car and you don't have a whole lot of money to put down... OR you want 0% APR for x months, or a super low rate. If you ignore credit completely, you'll get a shit rate at 13%. BUT if you can pay off your loan fast enough, it doesn't matter.

You can go with a buy here pay here dealership and they will finance it 100% without a bank loan. You will just pay a higher interest rate. ANYONE can get a car. It's how people in the ghetto get financed. 99% of the time the downpayments are laughable, like $100 down and $99/month car payments.

They run TV ads all the time. JOB + DOWNPAYMENT = CAR! They aren't lying... (Most dealers are shady, but buy here pay here dealers get the fucking job done)

People get approved all the time, beacuse a car can be repo'd. If you don't pay the bank can just come and take it.

In the end, your credit score will determine how much $$$ you put down.

It's best to get your credit utilization rate down to 0 BEFORE applying. They will run your scores and even being at like 20% UTL can knock 100 points off your score...

My personal favorite is Ally bank. They are fucking amazing and their payment apps are beautiful. They also financed me when no one else would.. Even my own bank of 10 years told me no fucking way... lol.

FYI:

If you're not prepared to live in a castle and drive a rolls: Then NEVER buy a new car. The moment you drive it off the lot, you throw thousands of dollars away. Don't lease. Just buy a USED, PRE-OWNED car that you are OKAY with driving for AT LEAST 7 years. Most people buy a new car within or around every 10 years.

The best tip I can give you:

Figure out what make/model you want.

SEARCH WITHIN 200 MILES. NOT locally!

Drive 200 miles to get the lowest price. That's like 2 hours in the car.

Dealers around me wanted $10K over NADA prices for my last used car. I drove 2 hours and bought it for $2K under NADA. Most major dealers in large cities will rape you on price. Dealers in the middle of nowhere can get VERY agressive on having the lowest price. They don't have enough showroom traffic not to!

Buying used is the way to go! Even if you have the money for a new, you can find something nicer used. Try to find a low mileage used. Under 20,000 miles and it's practically a new car. I bought my car used with 1,500 miles on it and saved a ton, it wasn't even fully broken in yet. Owning your vehicle means you can do whatever you want to it, say down the line you wanted to modify it.

 

[psocko]

Lease a car, put it down as an expense of living, just like food, electricity etc.

I've leased cars through my biz for over a decade, here are the benefits as I see them.

This is the value of owning an asset. This is why we are here, to license online properties. Running your home and every other expense you can get away with through your asset as a write off, Depending on the tax law in your neck of the woods, is good.

 

[Darth]

Don't you need to pay Fringe Benefit Tax if buying through a business?

 

[GNews]

Great information here.

What are the negatives of a lease? We gave the positives.

Beyond not being able to modify the vehicle. What's the negative?

 

[ryandiscord]

Great information here.

What are the negatives of a lease? We gave the positives.

Beyond not being able to modify the vehicle. What's the negative?

You're always making payments. Instead if you own, once you pay it off you can go a few years without having to make another car payment.

 

[dsoul]

You're always making payments. Instead if you own, once you pay it off you can go a few years without having to make another car payment.

That is the pro.. but then you come to the part where you own an old piece of metal that's depreciating in value. You will need to spend XXX per year just to keep it roadworthy, and waste time (and stress) back and forth from mechanics. And from my experience, suffer the occasional breakdown.

Then if you want to upgrade to "a few years old" again, you need to fork out a lump of money, after you manage to sell your old car, to get back where you were.

With leasing, I get a brand new (lovely smelling) car with circa 30 miles on the clock, every two years.

To me transport is a living expense, so it's in my thoughts as a payment that needs paid each month, so why not have a new unused one?

The only negative from my experience, having leased about 7 cars, is you need to look after it as if it were your own.

The leasing co. won't allow bumps or scratches over certain sizes, and will charge you for anything which is beyond fair. I've only been charged once at the end of the lease, £180, for some scratches to alloy wheels that were beyond what is allowed.

 

[GNews]

That is the pro.. but then you come to the part where you own an old piece of metal that's depreciating in value. You will need to spend XXX per year just to keep it roadworthy, and waste time (and stress) back and forth from mechanics. And from my experience, suffer the occasional breakdown.

Then if you want to upgrade to "a few years old" again, you need to fork out a lump of money, after you manage to sell your old car, to get back where you were.

With leasing, I get a brand new (lovely smelling) car with circa 30 miles on the clock, every two years.

To me transport is a living expense, so it's in my thoughts as a payment that needs paid each month, so why not have a new unused one?

The only negative from my experience, having leased about 7 cars, is you need to look after it as if it were your own.

The leasing co. won't allow bumps or scratches over certain sizes, and will charge you for anything which is beyond fair. I've only been charged once at the end of the lease, £180, for some scratches to alloy wheels that were beyond what is allowed.

So if you wreck.. How does that work out?

Same as normal? Insurance covers it... and all good? Back to leasing?

 

[dsoul]

Yes, you insure your car, as per normal.

 

[eliquid]

5. I don't own a piece of metal that is guaranteed to lose several thousands in value during the two years it's mine.

You might not own it, but you paid for that part of it still.

Car companies and financing departments are not idiots. They wont lose money in the deal.

Therefor, if the value lost in the 2 years on a car ( regardless of how it's paid for ) is $20k, your paying $20k ( or more ) if you lease OR if you own it.

But in your lease example, you now have to baby it and restrict ( possibly ) how and when you drive it so you don't get he dings and mileage hits. You also have to carry full insurance. When you own something you don't have to worry about those things which can be ease of mind for others.

When is a new car ( from any brand ) going to break down or need major repairs? Maybe at the 200k mile mark. The tires you need to throw on at 80,000 or brakes at 100,000 will be nothing in reality and your business can pay for those too.

Sure your business might be paying for all of that pre-tax, but the same could be done if you own it as well.

You might not "own" a deprecating hunk of metal, but you still paid for it like you owned one.

Oh and lets not forget that if you buy an older car good on gas and in good shape, you can opt ( here in the US ) to just write off the miles. I know people that buy older ( but really really nice ) diesel Mercedes for like $7k once, and then write off $7k worth of miles per year for the next 5 years.

I have a 2007 Dodge caliber that I use in the same way and its pretty much the only reason I own the car now. It pretty much sits in the driveway while I drive other cars during the week. However, when I need to drive to another city or state to conduct business, I use the Dodge.

It's more than paid for itself 5x over in the tax write-offs I get for mileage.

Money is always made when you buy something, not sell it. This is why you feel a car is a deprecating hunk of metal.

It might not be your cup of tea and I respect that, but I can buy a car at auction for $1200. Drive it for a year and write off the miles and get a larger tax write than what I paid for it, put no money whatsoever into fixing it or repairs, and then sell it at month 13 of ownership for $4500.

But it just depends on what your cup of tea is.

I try to make money in every part of my business, not just the core functionality of it.

My personal favorite is Ally bank. They are fucking amazing and their payment apps are beautiful. They also financed me when no one else would.. Even my own bank of 10 years told me no fucking way.

I love Ally Bank, although prob not for the same reason as you.

I stick all my mid-term money in Ally Bank. Much better interest draw with the liquidity I need the most.

Longer term money I hold in a different account, but that's only for money I don't need to be easily liquid.

 

[dsoul]

When is a new car ( from any brand ) going to break down or need major repairs? Maybe at the 200k mile mark. The tires you need to throw on at 80,000 or brakes at 100,000 will be nothing in reality and your business can pay for those too.

I was referring to the guys above my post who were saying to buy older used cars, rather than new, it's one of the reasons I switched to leasing.

Regards some of the rest you said, yeah I know I pay a bit more, and I know the leasing co. is good on the deal. But I also know I don't have the bother of owning a car, which from years of experience before leasing, was a pain in the ass, and a drain on finances back then when I wasn't in the position I'm now in.

I think of it as 1 payment per month, like rent/mortgage/electric, and it's done. New car delivered to my door every 2 year.

But not knocking other opinions.. each to their own. (You can probably tell I'm not a car fanatic lol).

 

[Andrey]

If you work from home and barely drive, having a used car might be a better idea. Leasing is okay, but 2 year leases are really expensive per month. With leasing you must have full coverage insurance, where as with an older 10 year old vehicle that is worth 5k, you wouldn't even want to have full coverage, liability is enough.

Psychologically I hate being in debt and having never ending monthly payments, right now paying $630 per month on a truck. Gotta pay that shit off and be done with it.. I am contemplating going away to tropics for half of the year each year and having car just stand and still paying hundreds per month for it kind of sucks. I already drive like 7k miles per year only.

Just hate how cars deteriate so quickly, we need vehicles that can last 20-30 years and not become a rust-bucket.

 

[Sutra]

If you work from home and barely drive, having a used car might be a better idea. Leasing is okay, but 2 year leases are really expensive per month. With leasing you must have full coverage insurance, where as with an older 10 year old vehicle that is worth 5k, you wouldn't even want to have full coverage, liability is enough.

Psychologically I hate being in debt and having never ending monthly payments, right now paying $630 per month on a truck. Gotta pay that shit off and be done with it.. I am contemplating going away to tropics for half of the year each year and having car just stand and still paying hundreds per month for it kind of sucks. I already drive like 7k miles per year only.

Just hate how cars deteriate so quickly, we need vehicles that can last 20-30 years and not become a rust-bucket.

Well, on that note...my car is 17 years old and still running relatively well. 250k miles on it. 2000 Mazda Protege. Not 20 - 30 years like you said, but it's almost there. Giving her to my brother in a couple months when I move. I'll miss her.

 

[Asad]

I have ties to the automotive industry dating back to well over 100 years...

Credit score really doesn't matter AT ALL. A LARGE downpayment is what really matters. If you want to buy a $20K car and you plop down $8K, you will get approved. Period! Even if you have a job of only 6 months and your credit is complete dog shit.

Credit scores only matter when you want to buy or lease a car and you don't have a whole lot of money to put down... OR you want 0% APR for x months, or a super low rate. If you ignore credit completely, you'll get a shit rate at 13%. BUT if you can pay off your loan fast enough, it doesn't matter.

You can go with a buy here pay here dealership and they will finance it 100% without a bank loan. You will just pay a higher interest rate. ANYONE can get a car. It's how people in the ghetto get financed. 99% of the time the downpayments are laughable, like $100 down and $99/month car payments.

They run TV ads all the time. JOB + DOWNPAYMENT = CAR! They aren't lying... (Most dealers are shady, but buy here pay here dealers get the fucking job done)

People get approved all the time, beacuse a car can be repo'd. If you don't pay the bank can just come and take it.

In the end, your credit score will determine how much $$$ you put down.

It's best to get your credit utilization rate down to 0 BEFORE applying. They will run your scores and even being at like 20% UTL can knock 100 points off your score...

My personal favorite is Ally bank. They are fucking amazing and their payment apps are beautiful. They also financed me when no one else would.. Even my own bank of 10 years told me no fucking way... lol.

FYI:

If you're not prepared to live in a castle and drive a rolls: Then NEVER buy a new car. The moment you drive it off the lot, you throw thousands of dollars away. Don't lease. Just buy a USED, PRE-OWNED car that you are OKAY with driving for AT LEAST 7 years. Most people buy a new car within or around every 10 years.

The best tip I can give you:

Figure out what make/model you want.

SEARCH WITHIN 200 MILES. NOT locally!

Drive 200 miles to get the lowest price. That's like 2 hours in the car.

Dealers around me wanted $10K over NADA prices for my last used car. I drove 2 hours and bought it for $2K under NADA. Most major dealers in large cities will rape you on price. Dealers in the middle of nowhere can get VERY agressive on having the lowest price. They don't have enough showroom traffic not to!

But for those of us who are 100% freelancers and dont have the corporate docs or tax records going back 7 years how do we land financing?

 

[eliquid]

Most banks only require 2 years of tax records, so I wouldn't worry about 7 years.

If you're a freelancer, you should have tax records. I mean, you did pay your taxes... right?

 

[turbin3]

Great information here.

What are the negatives of a lease? We gave the positives.

Beyond not being able to modify the vehicle. What's the negative?

The downside is, you never actually "invest" in or own anything. That's fine, if that's what a person likes. Me, personally, I like owning what I have and enjoying it to the fullest. As an automotive enthusiast, however, I do understand that not everyone sees it the same way and/or doesn't get the same level of enjoyment out of owning and driving the "hunks of metal".

Cars are not an investment, of course, and almost always a depreciating asset. They can be a rather enjoyable one though.

 

[GNews]

If i have 12k in credit cards........... and balance of 0.. should i able able to get a car loan easy?

And if i Cancelled 1 card , leaving me only 7k in credit.. would it be a big difference?

 

[contract]

But for those of us who are 100% freelancers and dont have the corporate docs or tax records going back 7 years how do we land financing?

Buy here pay here.

Bank statements with deposits will work just fine.

If i have 12k in credit cards........... and balance of 0.. should i able able to get a car loan easy?

And if i Cancelled 1 card , leaving me only 7k in credit.. would it be a big difference?

Amount of credit doesn't matter. Credit score is what matters.

DON'T cancel your card. You end up losing history/account age and it will ding your credit. Depending on how old the card is and your average credit age, it could drop your score significantly.

 

[turbin3]

Agreed. Don't cancel the card. Aged accounts help.

Also, I disagree on one statement. Amount of credit does matter. Take $5k vs. $50k in credit cards and other accounts. Say you owe zero, but have lines of credit totaling either of those levels. The greater level demonstrates a greater degree of "qualification", and will likely make many types of applications and purchases much easier. It denotes trust and stability (probably). AKA one looks like a baller, and the other not so much.

Lenders don't just hand out high credit lines or approve applications for significant purchases (think tens or hundreds of thousands, though auto loans are a different ballgame) to the average joe. At least not since the sub-prime mortgage days a decade ago... LOL