augigi

I am in the US, and keen to buy a car. I'm looking to get one around $10-15K and would like to pay around $5k down and finance the rest if possible (to build credit).

Is it best to just ask the dealers about their finance, or to get it from my bank or AAA or what? Or does it not matter as they'll all have a shocker of an interest rate?

I have a credit card with a $5K limit, but I don't yet have my SSN. Is it a waste of time trying to build credit until I have the SSN in hand?

Thanks for any info!

Bob

Find finance first, either bank or credit union, though AAA have pretty good rates...though chances are, car place would probably go through AAA, but take a slice of the pie, so why give them extra?

Dan B

Personally, I think financing a car is one of the worst decisions you can make in life. I learned the hard way on this one and I'm glad I did it at an early age. Car financing is tantamount to burning money, but I can appreciate that some people really "need" a car that they can't afford right away (e.g., new parents and a mini van).

Do not, for the love of God, put it on your credit card.

My advice would be to find a POS $500 run around, say an early honda CRX, and then save save save. On an "average" US salary, and "typical" outgoings, in NYS at least, you should be able to easily put away $5-8K in 12 months.

BE VERY wary of "credit" in the US. Remember, that the credit companies are literally trying to strip you dry of all your spare cash. USCs love to use credit cards, and I don't get it. I think it is because they always want everything right away. It is actually a leading reason as to why the economy has gone to shit over here.

Nevertheless, I will give you an answer to your question: Yes, get the loan from a bank. You may see some really "good" finance deals at car dealers, but again, they are fooling you. You will be lucky to get an interest rate less than 8%, especially as you'll have no credit history. With a bank loan you will get a competitive interest rate, and (HERE IS THE GOOD BIT) you will essentially walk into the showroom with CASH. There is nothing like cash in full to make a salesman drop his pants and take a huge reduction on the selling price; he will have to do little paperwork and there is no risk for the dealer.

When you've got the money, come back for some more advice on getting the most out of a dealer

Longy

I have heard differently on this - it was my understanding that because they make a lot of money from the financing if you are paying cash they won't want to cut the price.

I remember reading somewhere that you should go in as if you are going to finance, negotiate and once you are happy with the price, say you want to pay cash.

Dan B

Yeah, I agree. Don't tell them about the cash. Get the best deal first and then go "So, how much more will you take off for cash?" If they say "nothing" walk away.

Bob

yup...and getting a car loan is a good way of building up credit if you can afford to put a large down on it and pay it off in six months so that it has time to go on your credit history...

ugacrew

Never ever agree to work a 4 Square Worksheet or get payments down within a certain range. You want to bargain the total cost of the car down NOT the monthly payment. I'm going to point you to several Consumerist.com articles that will advise of you off all the pitfalls shopping for a car.

However I'm in total agreement with Dan B. Get a car you can knock about it. Something that just has the basics and has all it's wheels. If you need to do long distance driving rent a car. This way you'll have a car that's paid off and you'll have a low insurance premium and money will be in your pocket at the end of it all and not going to the dealership.

Consumerist

chicagojlo

Look at getting a 2000 Taurus, you can pick one up for around $5k and they are very cheap to insure for someone with no local driving history or credit score! Plus if you keep the mileage reasonable they hold their value fairly well.
If you have a credit union try them because they will often give you a better rate, particularly if it's through work.

augigi

Hmm.. sounds like it may be easiest to just pay cash. I don't want a $500 car - I can't imagine that would be very reliable! I do have the cash, I just thought a loan was advisable which I'd pay back within 6 months to build credit.

Thanks all

Big D

getting a loan is a good way to build your history even if only a small amount - this will in turn get you better insurance premiums etc etc. That said it wont be easy for you to get a loan - see the sticky about ways to build credit score.

Car loans in the US are even more of a minefield than in the UK - so be careful. As a previous poster said it is better to use cash, but not everyone is able to do so, or want to drive an older shed. Sounds like he had some bad experiences but if you are careful then there is no reason not to finance a car - the vast majority of people do both here and UK. Good luck!

Bob

just make sure there isn't a clause to pay x amount if you pay the loan off early...

BritGuyTN

www.patelco.org

is excellent

so is

http://www.jfcu.org/

4.99% for a car loan?

very cheap money

Folinskyinla

Hi:

You will need that SSN and a driver's license to deal with banks.

Once in hand, join a credit union if you have the appropriate affiliation. They work quick and have relatively cheap money.

Do NOT use dealer financing if you can avoid it.

You don't say what you want in a car. You may want a new car. The Honda Fit has gotten good reviews -- I've driven them and the worst I can say is that they are somewhat buzzy at sustained highway speeds. Also, look at

Longy

Carmax were willing to give me a loan if I put I think it was 30 or 40% down and that was within a few weeks of me arriving.

So to the OP if you have the cash, put down the minimum depost they are willing to take at somewhere like Carmax, then pay off most of the rest in the first bill - leaving youself with enough of a loan to make it last for at least six months.

chicagojlo

On any loan here the rate you will get is dependent on your credit score so if you don't have one (or have a very low one) then the more you borrow, the more you will have to pay. I don't believe having a loan for $15k will improve your credit score significantly quicker than one for $5k will in 6 months. At least if you buy a car that will retain it's value, or has less to lose in the first place then you can get more at trade in down the line when your credit is good enough to get the car you want at the price you want.