Car Financing question...

I'm a member of the Hanscom Federal Credit Union and I got both my truck loans through them, but I bought my tucks from other dealerships. There's no harm in trying to haggle the price especially in this economy they're going to be looking hard to make a sale. The worst they can say is no, but usually salesmen will try to make some sort of deal. If they say no, oh well, get the loan from them, and look else where for a better deal.

I joined our local credit union when I bought my first car and have ended up financing every other one through them as well.  Of course they want you to buy from their dealership, but there is no reason not to look around and see what you can find.  I have always used www.cars.com for every used car I have purchased.  I could find what I want, in the right price range, year and all the specs I required without driving all over the place.  Maybe the rules have changed b/c of the economy, but I have never had to put money down.  As long as I was approved for as much as the car cost, I was golden.  So maybe try to get approved for the most you are willing to spend, and then find something in that range.  You might ask them about why they are requiring a 20% down payment and if there are ways around this, like going for a less expensive car etc etc. 

Also, on my last car I bought, I ended up financing it over 6 years b/c I knew we were starting a family and wanted my required payment to be a certain amount.  I pay at least what I would need to in order to pay it off in 5 years, but I know that if finances became tight, that is one place I could back off a little.  Just something else to consider.  Not sure if this would hurt or help your case with the bank. 

Also, I thought I would add, I think most people finance cars.  I personally will never buy a NEW car unless I can pay down quite a bit b/c it does depreciate so much just driving it off the lot, but most people out there don't have the money to just BUY outright a car.  I don't think financing a car is such a horrible thing when it is a necessity.  Ideally it would be great not to be financing it, but sometime you have to do what you have to do...and I am a very financially minded person who saves enough money that we feel really broke all the time b/c everything extra gets saved.  You are obviously financially responsible...you may have to pay the bank interest to finance it where you may not have had to when you borrowed from your grandparent's but building your credit is also a good thing.  Your credit is sacred!   

Definitely haggle over the price of the vehicle.  There is no reason to ever pay full price for a car.  Period.  IMO, the dealer knows that their asking price is just a starting point, & they expect to sell the car for less than the asking price. 

When I bought our jeep, I ended up going to three dealerships.  I wanted to see just how low I could get the price.  I made an extremely low offer at the first dealership, & they were not even willing to try to haggle after my offer.  I increased my offer at the second dealership, & we did discuss things, but I didn't feel like they were going as low as they could.  The third dealership was willing to really work with me to make the deal happen.  After a lot of work, & some stress, I ended up paying about $7K less than the sticker price.

If you're credit score is good, then you can always ask for a lower interest rate.  Just point out that your credit score is XXX & ask if they can do better on the interest rate.  Tell them the rate that you are looking for, & see if they can make it work.

Car dealerships, finance companies, & credit unions are all in the business of making money.  They aren't going to help you get the best deal possible unless you ask for it.

 I have a car loan on my car (it was previously a leased vehicle as well).  Though I needed a cosigner (not from bad credit but lack of credit), my SO and I were not required to put any type of percentage down - we just put the trade in value of what they would give me for my hunk of metal that I had at the time.  The SO's credit union actually gave us the worst loan rate, so we ended up having the car sales people find out from a few different banks who was offering the best rate and went with them.  We did a 5 year loan, which I did with my last vehicle and he did with his vehicle.  I like 5 years, generally the monthly payment is reasonable and if I can pay it off sooner, all the better.  Considering I was in school full time and we were for all intents and purposes living off his income, a reasonable monthly rate was incrediably important to us. 

By all means, research who will give you the best deal in terms of financing, you do not need to settle on the first rate someone gives you!  I am not sure how the rates are working in todays economy, but it never hurts to look around and inquire.

If you do shop around on rates, don't let each of them pull your credit b/c too many hits in a short period of time can actually hurt you.  Just shop the rates to get a general idea of who is offering what.  I always knew what I could get at my credit union with a best case scenario and would often let the dealership hit all the places at once and get me the best rate...if it was better than what I had secured I would go with that instead.  For me at least, even when I did it that way, I always ended up at my credit union whether it be me or the dealership who did the looking.

boneyjean

I joined our local credit union when I bought my first car and have ended up financing every other one through them as well.  Of course they want you to buy from their dealership, but there is no reason not to look around and see what you can find.  I have always used www.cars.com for every used car I have purchased.  I could find what I want, in the right price range, year and all the specs I required without driving all over the place.  Maybe the rules have changed b/c of the economy, but I have never had to put money down.  As long as I was approved for as much as the car cost, I was golden.  So maybe try to get approved for the most you are willing to spend, and then find something in that range.  You might ask them about why they are requiring a 20% down payment and if there are ways around this, like going for a less expensive car etc etc. 

Also, on my last car I bought, I ended up financing it over 6 years b/c I knew we were starting a family and wanted my required payment to be a certain amount.  I pay at least what I would need to in order to pay it off in 5 years, but I know that if finances became tight, that is one place I could back off a little.  Just something else to consider.  Not sure if this would hurt or help your case with the bank. 

Good to know (the last bit).  I've been doing the loan calculators online and trying for 3-5 years since the vehicle will be about 5 years old already, but I guess we could stretch it out and overpay each month.

The ones we like I actually found on cars.com, then realized they are owned by the credit union that we've been talking about applying to for a long time, so I figured why not.

They wanted 20% down on $6500.  We set our limit at $10,000 and one of the ones I really like is $10,500 (but this dealership is already offering $500 off and we haven't haggled yet), so they are re-running the numbers at $10,000 and running DH's credit.  I have my credit report as of two months ago but not my score.  I have no idea where I stand since so far in life, I've just had student loans, my checking account, and my savings account.  Maybe the student loan amounts make them nervous.  I've always paid on time and my interest rates have gone down as a "reward".

It's easier to haggle a deal with a new car than it is on a used per owned however, there is always room to negotiate somewhat.  On my last car I offered them $5K over sticker and got it.   Mind you I am 51 years old and now have kick ass credit and had a good amount to put down - that all is important in the negotiations.

For my daughter who was buying a used pre owned we got them down 1,500 dollars on her Chevy trail blazer and free oil changes for the life of the car (which is big when finances are tuff) and a good warrenty.  As for Credit Unions they are not really looking for profit (non-profit organization) however they do have margins to fill so they can offer those rates to their member.  Buying a car through their repo program probably is not going to be the best bet knowing you can't come up with the 20% down. 

Try going to a dealer and looking at their pre owned vehicles, you will get a service package and their finance companies are more lenient with the reqirements on $$ down.  You MAY pay a little higher rate but if you don't have $$ to put down it may be your only choice and a trade off you may need to make.  You can also go out 5 years (which I wouldn't recommend) but it will keep your payments down while you build your credit history.  Good luck and I hope you get a car you love.

I wonder if they wanted the 20% b/c I wasn't a member?  I applied for the auto loan first, and then today I talked to someone about other stuff and am starting an account that makes me a member (basically the min. balance is like buying your shares).  I've wanted to use this bank for a long time, but previously you had to be a teacher or in the family of a teacher, now almost anyone can join as long as you buy in.  I'm not totally opposed to putting money down, I'm more worried about the interest rate but I guess I'll know tomorrow when they call back....

We're calling the Ford Lincoln Mercury dealer tomorrow to see if they will buy our current car (Mercury).  They are only a few blocks away, so from a safety perspective (lol) that would be the best place, and then the price is not tainted by attempting to trade-in where we'd be buying (I've heard they will hear you are trading in and then ask for a higher price on the new one).

Car salesmen like to play this stupid little game with you ... the old "well I can't make that decision ... I have to go check with my boss ... blah, blah blah. Then they run back and forth leaving you in that little room where I'm sure they're watching you through two-way pictures on the wall and listening to whatever you're discussing. If you act like you're through playing and ready to walk out and go someplace else, they'll fall all over themselves to get you the deal you want - especially in this economy where I'm sure car dealerships are hurting.

Joyce

As far as your trade in goes, it won't hurt to go around and see who will give you the best trade in.  You might get a tad more where you buy just b/c they want to make the sale, especially if you have a number a little higher from somewhere else.  I have no idea how it is where you live, but in Texas, where we have no state income tax, but we do have sales tax, you have to pay the sales tax on the total purchase less the trade in.  At 8.25% here locally, sometimes it is worth it to just trade it in at the same place.  But that may not even apply where you live depending on if you pay sales tax and what the rules are...and I am not sure that the sales tax on cars is the same as it is on regular purchases...just using that % as an example.

It sounds to me like you had them approve you for less than the car you are looking to buy and that is why they want a down payment.  I could be reading it wrong though. 

Liesje

I've wanted to use this bank for a long time

As for interest rates, they are determined based on your credit history - not your score persay.  Your credit history has to reflect long term credit in good standing, meaning credit cards that you have had for a long time and never defaulted, long term jobs, not defaults etc. etc. The better your credit history, the better the rate.   So if you are young, your credit history may be lacking.  With my daughter from 18-24 her score was satisfactory because she had a car loan for sometime however, her credit history was minimal.  Now at 27 with 3 loans behind her, a credit card with good payment history and a student loan paid in full - her score and credit history are finally giving her buying power.  So depending on your case, you may end up with a higher rate for now until you build your credit history - if your young enough to have not had that opportunity yet.

boneyjean

It sounds to me like you had them approve you for less than the car you are looking to buy and that is why they want a down payment.  I could be reading it wrong though. 

They approved me for a car we were dead set on, then we went to see it, brought the dog kennels along, and it's too small/weirdly shaped and won't work.  It's depressing because it was perfect but there's no sense in buying something I can't use for dog shows and we'd outgrow quite quickly once we start having kids. 

The other vehicles we're looking at are all a tad more expensive, so I had them increase the amount.

I'm betting that just like with mortgages, the banks and credit unions have really tightened up. Figure if you don't put 20% down and then hand them the keys and walk away, they're instantly upside down on the car. I've belonged to a credit union for years and financed my car thru them. I remember that the less you put down, the higher the % rate.

If you decide to buy thru a dealership, don't even mention a trade-in. Haggle until you've got the price you want on the car you're buying and then discuss your trade-in. That way you'll be dealing with separate issues. They'll still probably say that they've given you such a great deal on what you're buying that they can't give you what you want for your trade-in. At that point, tell them that unless you can get x amount for the trade-in, you can't afford to buy the car - period! You couldn't be in the market at a better time than now, so don't let them make you feel like they're doing you a favor. Don't be afraid to walk away either. You'll be surprised at how eager they are to work with you when they think you'll go somewhere else.