of course 100% down payment would be nice, but the purpose of my question is to draw a connectioin between purchase price & down payment. If you give less of a down payment are you apt to get a better deal, than if you plunk down 50%? The logic being that the more you finance, the happier they'll be.

 

In the end it comes out the same. If you give a small down payment they'll give you a lower interest on the rest. If you put down more up front they'll give you a higher interest but on a smaller amount. That doesn't sound good at all though. They should give you a price up front and then you should tell them what you'll put down.

 

Thanks.
So I guess the smart thing to do would be to give a small down payment and pay off the loan like a mo'fo.

 

Again, this goes back to the big post about misinformation.

Anyway, I have never heard that the more you put down, the higher the interest rate. The relationship is that the longer your term, the higher your rate. That's true whether you have a home equity line of credit, loan, balloon, 15-yr fixed, 30 yr-fixed, etc. That's common sense.

In an ideal world, like you say, we don't borrow at all for a car, because our finances are limited, so we put the pedal to the metal on the house, and pay cash for the car. Problem is we're no longer satisfied with a Toyota Camry or equivalent, myself included, we want that car that is above average.

That being said, you are better off having financing taken care of, and then sitting down to negotiate with the dealer. I strongly recommend a down payment of no less than 25%. It's just dumb to do that zero down and pay GAP insurance, which, by the way is the case in 33% of all car transactions. IMHO you absolutely have to remove financing and trade-in to get rid of all the smoke and mirrors when buying a new car.

Check out a bankrate.com etc. for a rate. Often you can borrow through your own credit union at work and score 1/4% off because of payroll deduction. Don't borrow too much, because there comes a point where a normal person hates paying for something they no longer like or want. You trade-in at that point and you really do a double-whammy on your finances. I estimate that point to be around 30 months or so.

 

look around for the best interest rate, be it the dealer or your bank...it also depends how much you can actually afford to put down without hurting your overall income...obviously don't put all the extra cash you have lying around down...also..it doesn't matter how much you put down for your interest rate...it's based off your credit...when I bought my max...I didn't even put a down payment down and I have a 5% interest rate...hope this helps

 

This decision should be based on your financial situation, income and lifestyle. If you put too little, then your pmts going to be very high, and you will tie up your cashflow, $ you could have been spent on other bills, clothing, vacation, etc. The depreciation will outpace amt you owe, so if you happen to total your car before payoff, you may still have to come out of pocket. Also, if you get laid off on the job, you may loose the car. My personal rule of a thumb is to have the car paid for by the time it has 100K mi on it. If you have money, put 10K-15K down to have very comfortable pmts of like 200/mo

 

[QUOTE=Frank Fontaine]It's just dumb to do that zero down and pay GAP insurance, which, by the way is the case in 33% of all car transactions. /QUOTE]

Im not sure if your sayin GAP insurance is a bad idea but I think its crucial to get and they usually dont tell you about it. Its usually only a few bucks a month or a flat fee around maybe $100.
-My friend bought a brand new car for 18K. Didnt get gap, totalled car after 1month. They only pay what its worth if you dont have gap, instead of how much you owe. Well it was only worth 15K, guess who had to put out the 3K........

 

Thanks for the correct advice Frank...the previous scenario seemed improbable. That +25% can be a hefty chunk of change on a $20k car, but it's the smartest way to do it. The truth is I want a car that's a cut above average, and a 2k1 SE will do just fine. Of course I'd like to go to grad school too....I guess we cant have it all. Mommy, daddy?

 

That sounds like a nice deal, but your payments must be pretty high. Did you buy the car new?
I've got nice chunk of change sitting around, but I'd rather use most of it for something other than a car (house, education).

 

I'm pretty cheap as far as lifestyle goes, and I'd rather be making more money (who wouldn't?)
$200/mo payment is nice, but $10-$15k down is such a large investment in something that drops its value like a rock, IMHO.

hell, I may just end up leasing some cheap car.

 

Well, you mentioned two things that make total sense--house, and education. The first house is very tough, you have to come up with the downpay, and then all of a sudden all these hidden closing costs come out of the woodwork. BUT, imho if there is any "American Dream" left, it's home ownership. The cost of homes has appreciated so much in the last 4-5 years that smart homeowners are being stupid--they're pulling that equity out of the homes by taking out a loan and then once again living high off the hog with the cars, boats, unwise home improvements, etc.

Put your money away like a squirrel and save up for your first house, don't worry about how long it takes or if it seems so far away, just do it! Get yourself educated! Just don't waste money on a car unnecessarily. Again, if you or anyone else is rich, that changes the picture--then you can live it up and waste a little, or a lot. But if you're avg., put your licks in when you're young and take it easier as you get older. my .02

Truthfully? There's nothing wrong with a 94-99 Maxima provided it's not a money pit and in decent shape. And they are cheap enough that even if you have to borrow money, the most we're probably talking about is 5 grand. Good luck.

 

I put 4G's down on my car that cost 15K......

 

Well, to me the payments aren't too high at $285 a month for 5 years is what I went on the loan, I got the car for $13,900 + TTL and it's half paid off since I bought it used in July 2001...but it would be a good idea like you said to use most of your cash on education and/or a house...cars are the biggest money pit and worst investment...depending on the car of course

 

I'd probably have to give education the nod over the house. I'm 24 and single, no rush here...but I'm sure that day will come sooner than I expect.

Actaully, that's what I have been doing: packing my lunch, free parking, lite beer (yuck!), avoiding big purchases.
I ain't rich, and even though my parents pull good money they won't hand me ****. They'd prefer I take my licks when young rather than when I'm older.

95-99 Maxima is surely reliable, but when you start pushing 75k miles, age, maintenance, start becoming issues.
It's hard to beat a new car, although the 2k1 SE I have my eye on has 24k miles and is $16900.
Hell, I may have to go the Civic route and quit the .org.

 

That sounds reasonable...if I could get this 2k1 SE for $15k I could probably swing the same deal.

 

doesnt matter what you put down because the smart way to work a deal is to work out purchase price like you are paying cash, and then you work on downpayment after you figure out your credit rating...

if you get Tier 1 credit, doesnt matter what you put down because interest will be low anyway

 

I have tier 1, but the more you finance, the more you pay in the end, regardless of the rate ('cept 0%).

 

the more you put down, the less you pay in interest as well as payments but thats also the more you lose in the beginning.....


If you can afford to buy the car full out cash, do it...if not put down as little as possible to get an affordable loan and then when you get your payment book lump down cash payments so that u can recoupe some of that interest in the end

 

Usually 20-25% is a good amount for down payment.

When my dad bought the Max (it was going to be his car at first), he charged it to a credit card that had no interest for a year, so it was basically 0% financing for a year for a used car. He did that again 3 months after when he bought his used Accord You can't beat 0% financing on a used car

Get some interest rates before you buy the car since you can most likely get a cheaper rate than what the dealer is offering.

 

Hmmm, good logic....I guess that makes more sense.

I'd rather have $15k readily available or tied up in something else other than a car. I guess financing is the best way to have that comfort.

 

I've heard about people doing that...but if something bad happened within the year, and i had that on my credit card.

 

best way to buy car is take a line of credit out on your house(if you own one) and then pay the loan back and write off the interest.....

 

Again, I don't know 100% that you're wrong, or maybe your dad didn't tell you the whole story, or what. But I have heard that you CANNOT purchase a car with a credit card. Yes, you can put a downpayment, but you cannot complete the whole transaction with a CC. That's why they require a certified check, or cashier's check. If you are able to buy the car with CC, you can dispute the charges which then becomes a hassle for the dealership, not to mention the 1-3% cut that the CC company takes.

What I have heard of people doing is paying off their car loans with CC checks. Sometimes they have 0% for so long, sometimes a 3.9% for life, sometimes a rate and they even pay a 3% transaction fee capped at $50. So in essence, they move the amount they owe to the CC, at a lower rate than the car loan.

Any way you slice it, understand that borrowing is like having a monkey on your back. You don't have the appropriate job, it doesn't matter how much you can borrow. But these days, and with this economy being such, anyone can lease a BMW or Audi for $299-$349/mo. So why doesn't everyone run out and get it? Why do some people put up with 6 yr. old Maximas with airbag lamps flashing, front-ends shaking, mufflers costing $200 rotting away, auto climate controls changing on their own, rattles, so on and so forth? Because like I said, debt is a monkey on our back. I make an exception with the house because for one, girls like a nice home, AND if done right one can recover the improvement costs upon selling (kitchen, bathroom). Again, if a person is rich, all this talk is irrelevant, then it becomes you can't take it with you, might as well get a 2k4 M3 while you're in high school (there are such cases in the town that I reside).

 

I wasn't there when he bought the Max, but I was there when he got the Accord. The guy told us that he'll take 50% as a check and 50% on the CC. My dad asked him if he'll take it all on the CC and he said no because he didn't want to pay the CC charges. My dad told him that he'll pay the charges and the dealer said ok It was a small dealership so they probably wanted the sale or something