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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.
^^^This is correct. Your finance rate will depend on your past credit history, payment history, job history etal. The credit rating for your new car won't really be considered until you've made a least 6 months payments on time to establish a pattern, and possibly 12. The large amount you put down may or may not make any difference, depends on the lender.
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%.
How do I go about negotiating my APR with the dealership? Also, should I shop around elsewhere? According to Credit Karma, they did 3 hard inquiries on my report. I'm scared if I decide to shop around it will take a big hit from all the inquiries. And secondly, where do I shop for auto loans? Any advice appreciated, sorry for the newb questions, and thanks in advance!
I also vote credit union. I've been car shopping for awhile and the credit union gave me a 2% rate for a new car. I never consider getting financing from a dealership since I don't like them shopping my credit and playing with the rate. It takes the financing aspect out of the negotiation and process.
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 bought my first car by myself (without a co-signer) this past summer. Granted, it wasn't new but rather it was a 2011 model, so a couple of years old. I had a similar credit score and got a loan offer from an online site that was like 4.25%, if I recall correctly. I took that number to the dealer and they contacted a bank that they do a lot of business with, who in turn offered me a 3.79% rate. Again, the car I bought wasn't new, it was about 2 years old, but still.
Shop around. Interest rates are still pretty low.
I agree with everyone else that a credit union is the best way to go, but for what it's worth the loan I ended up going with was with one of the major nationwide banks. I should've contacted my credit union, not sure why I didn't. Guess I was in too much of a rush to get rid of my old clunker.
I usually get a preapproval for a certain amount through my CU, right now they're offering 1.99. I've never paid more than 2.49% though. Friend of mine is buying her first car, banks are floating between 4.5 and 5.29 for her.
That said - get your preapproval, then go to the dealer. Every time I've bought a vehicle, the dealer always beats whatever rate I came in with (and yes, they just shop you around to different banks. I've had Capital One and BB&T for cars, Sheffield Financial for my motorcycle). When I bought my current Jeep, my CU gave me a check with 1.49%. Dealer got me 1.29%. When I bought my bike, it was 0%.
Yep, jaypee is right. The dealer's name won't show on your credit report and, even if it did it wouldn't carry any more weight than any other credit lender. SO...Go to a credit union, get the best rate you can get and you'll save some money while also building your credit history. The CU will report your account to the credit agencies and you record will show your payment history, etc. Your current 740 is better than average so you're not having to start from a low score. Just don't miss any payments!!
How do I go about negotiating my APR with the dealership? Also, should I shop around elsewhere? According to Credit Karma, they did 3 hard inquiries on my report. I'm scared if I decide to shop around it will take a big hit from all the inquiries. And secondly, where do I shop for auto loans? Any advice appreciated, sorry for the newb questions, and thanks in advance!
Get pre-approval for a car loan elsewhere with a lower APR than what they're offering then see if any of the lenders the dealership works with can beat that rate. Check first with your bank. Then with other banks and CU's.
Get pre-approval for a car loan elsewhere with a lower APR than what they're offering then see if any of the lenders the dealership works with can beat that rate. Check first with your bank. Then with other banks and CU's.
Good advice, my wife and I did the same for her first car purchase back in November. Our bank (USAA) was going to give her 1.99%, presented that to the dealership and they gave us 1.74% plus some other price breaks to go with their lender.
Note that we both have excellent credit and are paying off a house loan so I'd imagine that would help keep the car loan rate pretty low.
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