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I'm a first time new car buyer. In the past, I've always paid my cars off on the day of purchase. I am now trying to build a credit history, so I decided to buy a new car on finance. My credit score is 740 or so, but credit history is short and haven't filed a tax return yet as I just recently started working after graduation. The dealership approved me for 4.99% APR. Is this a respectable rate for a new buyer? Thanks in advance!
I'm a first time new car buyer. In the past, I've always paid my cars off on the day of purchase. I am now trying to build a credit history, so I decided to buy a new car on finance. My credit score is 740 or so, but credit history is short and haven't filed a tax return yet as I just recently started working after graduation. The dealership approved me for 4.99% APR. Is this a respectable rate for a new buyer? Thanks in advance!
My first new car loan in the 80's was 17% as an 18 year old with no credit
Keep in mind the rate is only a few dollars a month so the price of the car/down payment is the big picture!
15K for 60 months @ 4.99% is $283 a month
same loan at 7% is $297
So figure $7 a month per point (%) up or down on 15K/60 months. So even at 2% difference you only spend $840 over the course of the loan. Clearly getting a better price on the car or not paying a dealer fee could net you just as much savings as 2% off the financing.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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Dealers will not offer the best rate available, because like the price, it's negotiable. If you go to the credit union ahead of time and get pre-approved you can get a better rate. That 4.99% is not bad but you should be able to get below 3% and the difference over the term of the load will save you some money.
OP, some CU's also chase business by re-financing a loan even if it's new. So if you already have the new ride, you can still check around if you feel a better deal may be out there down the road.
4.99% is low enough, unless you are dropping down to 2% it won't make much of a difference. Depends on how you set up your payments as well. Is this with a cosigner or by yourself? If with a cosigner, they could be hurting your APR a little.
It's by myself. The car is 38k, looking to put down 15k. I just figure if I went through the dealership, maybe it would look good on my credit history for future purchases?
It's by myself. The car is 38k, looking to put down 15k. I just figure if I went through the dealership, maybe it would look good on my credit history for future purchases?
You are correct, the second best way to build your credit is to buy a car, this is right behind a home purchase. 38k is up there, and with 15k down I would seriously try to talk them down, use the fact you are putting down some good cash and you'd like to lower it to around 3%.
It's by myself. The car is 38k, looking to put down 15k. I just figure if I went through the dealership, maybe it would look good on my credit history for future purchases?
Most dealerships are not lenders but simply qualify you with lenders they have business relationships with. Your credit history is not dependent on a dealership.
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