Car loan requirements (Chelsea)

sillysally

Just because a car is newer and has less miles does NOT mean that you will sink less money into it.

Hence why I want a new car.

sillysally

Sorry, I just foresee someone in your situation, even after being employed for a couple of months, getting royally screwed if you set out to buy a car with a loan.

I understand why you'd think that, but I wouldn't get a loan with an uber high interest rate, I wouldn't get a car that would immediately make my loan upside down, I wouldn't get something that would only be worth 70% of what I paid as soon I drove off the lot, etc. Plus I'd no question get  comprehensive insurance, PLUS gap, so if I totaled my car and owed more than it was worth, I'd be okay.

Clearly I have at least a few months to mull this over. I'm not rushing into anything, nor will I take on a payment I can't handle long-term.

But grrr I don't know what to do right now. I really really hate not having a car. I feel so stuck, and like a total mooch if I ask anyone for a ride...

chelsea_b

I wouldn't get a loan with an uber high interest rate, I wouldn't get a car that would immediately make my loan upside down, I wouldn't get something that would only be worth 70% of what I paid as soon I drove off the lot, etc.

Then you won't be getting a new car unless you're making a large down payment. Because that WILL happen no matter what the car, maybe not down to 70%, but you can count on being upside down for at least a couple of years on a new car if for no other reason than your first years worth of payments will be virtually all interest and no principal. 

Plus I'd no question get  comprehensive insurance

You won't have a choice. Banks require it if there is a lien on the car.

Chelsea - as a stop gap measure, maybe consider biking? I know the thought kind of boggles the mind, but I had a couple of friends in high school who got around surprisingly well with bicycles before they were able to get/borrow cars on a regular basis. Down to the beach, to stores, etc... it wouldn't make the car unnecessary, but it might help bridge the gap from "stuck" to "mobile." Once you get in biking shape a couple of miles isn't bad at all, and with the So Cal weather being what it is...

For insurance - your mom putting you on her plan can be good, but bear in mind if anyone else on her plan has an accident it can also affect you, and vice versa of course. And it will make it more expensive when you finally do branch out on your very own plan (unless you're 25 by then). I'm not saying don't do it (I probably would), just something to keep in mind.

As for the "that's why CA people love their cars so much" - yep, it's totally true! You guys ever see the movie Crash? That bit with the guy complaining about buses, saying they have big windows "so people can look in and feel superior to the people on the bus" or something like that? Yeah, that movie is about the LA area... there's a reason pretty much anyone who can afford it at all doesn't take the bus. There are a few routes that aren't bad (usually involving colleges/universities), but in general... :-\ and yeah, Chelsea, I wouldn't want to walk around there by myself after dark, either.

 **content removed, personally directed**

You say that retail and food service is not beneath you.  Well, if it isn't beneath you, why aren't you working?  Why are you still, after all this time, unemployed?  Everyone who wants to work is working.  There are jobs out there.  **content removed, personally directed**

You say you won't be immediately upside down in a car loan.  The only way to avoid that is with a significant down payment.  **content removed, personally directed** 

Let me be clear.  You wonder, if after working for two or three months, someone is going to loan you money for a car, with no or very little down,  at an attractive interest rate.  Forget it.  It isn't going to happen.

So here's where you're at.  You can get a job and, after two or three months of saving, buy yourself a beater and take a chance on it breaking down and leaving you without transportation.  Or, you can continue doing what you have been doing and be certain of having no transportation. 

Ultimately, what it comes down to is nothing in your life is going to change until you get a job.  This is America.  Most of us have to work for what we want.  The sooner you accept that and act on it the sooner things will start getting better for you.  **content removed, rude**  This is America.  You have a choice.

 Billy, I just wanted to say that what you wrote was almost word for word (with the exception of including the car) the speech my grandfather gave me when I was 13 or 14.  I was, in fact, working for him at the time and slacking off quite a bit.  I will spare you the part of the speech where he threatened to shove something up something else if I didn't change my attitude. 

chelsea_b

the APR on a loan for a used car is going to be a heck of a lot higher than on a new car.

Not necessarily.  Your best bet, after you work out your job situation, would be to join a credit union and get your financing set before you step foot on a car lot.  Credit unions have the best interest rates.  Research and decide on the type of car you want before you go to the credit union.

chelsea_b

IMO. I've had my license 3 years, and haven't had an accident, so I'm not too high a risk to insurance companies, and if I have a reliable car, I'm even less of a risk.

Yes, the type of car is a factor in deciding insurance premiums, but so is age.  People under 25 are considered a higher risk than those older than 25, so you will still have a slightly higher rate even though you have a clean driving record.

Seriously, start researching Hyundais.  They got a bad rep when they first came to America, but they are now considered some of the most reliable cars on the road, and they are some of the most affordable cars, too.  They're not bad looking, either.  I've never owned or driven one, but if I were looking for an affordable car, I'd start there.  You could also consider leasing a car.  Sometimes you can get a better deal on the monthly payments.

aerial1313

Yes, the type of car is a factor in deciding insurance premiums, but so is age.  People under 25 are considered a higher risk than those older than 25

This is true - but girls under 25 are considered a  much lower risk than boys under 25.

Joyce

I heard a rumor the the vehicle licensing fee might be going back up again, and that might be another good reason not to buy a new car. The state budget is in very bad shape and it's one way they can raise money without raising taxes.

aerial1313

You could also consider leasing a car.  Sometimes you can get a better deal on the monthly payments.

You have to be VERY careful with leases.  There is a lot of difference between leases.  Most allow you to drive the car less than most people want to drive it.  There is a substantial penalty for going over on mileage.  I have known people who are leasing a car and it sat in their garage for the last year of the lease because they were already over on the mileage.  However, to your point, a lease will allow one to drive a nicer car than they can afford to buy. 

Leases usually require outstanding credit.

I guess leases must work out for some people, but I'm just not sure how/why. DH leased a brand new Explorer for 4 years. We took great care of it and it had low miles, so when the lease was up, we bought it outrright and continued with a couple more years of payments for a total of 6

probe1957

Why are you still, after all this time, unemployed? 

Heh, you misunderstood the situation. I was employed full-time until the end of December, when I had a 3-month "hiatus". 3 days before I was due to start full-time again, I was told that my job would be unnecessary in two weeks (or, rather, would drop down to 1 day per week). I was looking for a job in that 3 months, for that 3 months. But at some point I decided not to get a job during that time period, because I had enough money saved to last me until I started work again. When it was clear I would need a new job after all, I started looking, and I've been looking ever since. I've literally put in probably 20 job applications in that time, and while I could've done more, I thought that'd be enough. None of those turned into anything. I'm doing another big round of applications right now, but then my access to a car disappeared, so it's been a little harder to get around to put in job applications, and since I clearly have no car in my immediate future, it's majorly limiting where I can apply. Next week I'll be walking or biking to everywhere practical and applying. I'm hoping to Dog that one of those places will give me a job. The end.

I was also rent sharing with roommates, so I had some financial history there.

This all goes to show the lenders, when you apply for a loan, that you have the ability to pay and be a "good payer." They need to see that you have a history of bills, debt, credit and paying them (especially on time). Sometimes you might get a better loan through your own bank because of the relationship that has been built (so establish a checking or savings account, if you haven't already). Other times, auto dealers will run financing specials - sometimes they are for a very limited loan period though, like 2 years. Sometimes, dealers also will give low percentage rates on short period leases.

If you don't have the history, you might get a terrible percentage rate.

In regard to the 2008 Subaru I just bought: on the loan application they needed to see what our monthly mortgage payment is, what the balance on our mortgage is, place of employment now and over the last two years (with contact info), income/salary, living address for the past two years, and I think that's about it. The rate is 4.49% for 60 mo, $4000 trade-in value, plus $3500 off of sticker, no cash down (aside from trade), and my payments are $430 per month. Not looking forward to the monthly payment because I've been without one for at least 5 years now!

My advice for you, at this point, is to start establishing a good credit history. Working and paying, working and paying, working and paying and round and round we go, LOL!

fuzzy_dogs_mom

This is true - but girls under 25 are considered a  much lower risk than boys under 25.

Do they still do that Joyce?  I know they did when I was young but I thought that was now considered discrimination???