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Option 1: used truck $5,000-10,000 with $2,000 down
Option 2: 60's-70's muscle car same $$
I'm 38 never had a car loan. Basic credit or about 800
I live in Phoenix and let's pretend there is an option on these vehicles of buying at a dealer or private loan.
Can someone give me the ins and outs here?
Sometimes it depends on the type of dealership. I purchased a car from one of the small, aggressive auto lots and after getting the price down to where I wanted to be, they offered a big incentive for me to take a high rate loan from their lender. At the time I bought the car, I could get a loan from an online bank at under 2% APR, but I took a 7% rate at the dealership and got quite a large discount. Then, three or four weeks later, I went to the same online bank and refinanced the entire loan at 1.99%.
On net, I saved an extra ~$500 in exchange for another 30-45 minutes of paperwork.
But if you like to keep things easy, consider the online lending arm of SunTrust - their auto loans are actually unsecured loans but their rates are much lower than a local bank (and lower than many credit unions). The unsecured element is nice because it makes the car easier to sell when you're done with it since there won't be a lien against the title.
Agree with MrRational. My rule is never have both a car payment and a car repair bill. So I wouldn't do a loan on a car more than maybe 2 years old.
This is just personal preference. In my experience, car loans are some of the cheapest money you can access. I can pay cash but choose to finance as much as possible- my investments are earning WAY more than 2%, so I take as much 2% money as I can get my hands on, for as long as I can have it. I would take a 10 year note at 2% if I could (60 months is the longest I could find at that rate, though).
The same holds true at 3%, but at or above 4% I begin to think about paying cash. On paper, my investments still do better than this but when the value gap closes I start to think more about things like the administrative convenience of not having to deal with another lender in my life.
Here are their rates as of today (about 0.5% higher than when I got my car three years ago):
[EDIT: the formatting didn't copy over and the table became useless]
You can get 2.19% for 36 months or shorter, and 2.59% for up to 60 months. If you go with more than 60 months, the rates jump into the 3's and 4's. These are all unsecured.
I won't post a link to their site because I don't want to look like I'm trying to advertise for them.
Never buy from a "buy here pay here" dealer; they offer the absolute worst financing terms and they are the quickest to repo if you get behind on payments. They can make thousands on a $1,000 clunker just by reselling the same car umpteen times.
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