car financing, used vs new (advice wanted)

[West]

My old car is headed to the graveyard, and this time I am going to take on a car payment, which I have actually never had before. I'm under pressure to get things done sooner rather than later (presume I am renting a car while I am carless), and yet the time I have to look is somewhat limited by work at the moment.

I'm currently reading carbuyingtips.com for advice. I've got my credit report, which is decent (FICO 685).

The only option I've really looked at so far is a 2001 Honda Accord LX 2dr coupe with V6, 80000 miles, price $11,500, possibly a bit less. Drove this morning, like it, not sure what financing I could get yet, I didn't have time this morning to get into that with them yet, though I asked them about it. They are a small dealer who doesn't directly handle the financing, but they apparently have banking partners who can handle financing. I went to my bank close by to ask about a car loan, without my credit report info yet, and was quoted 12.6%, which I told them I was sure I could do much better. They pretty much acknowledged as much without debate.

Carbuyingtips.com recommends applying for a loan online, either from E-LOAN or Capital One. Haven't applied yet, but presumably if your credit score is >680 I think, can get 6.something for a used car loan to buy from a dealer, and less than 6% for a new car. Been told by a friend that the problem with the online Capital One loan is that they may send me a "voucher" to buy the car with, and some dealers don't like that because it means they have to get the money from Capital One.

The guy at my bank also suggested that if my credit rating is good, getting 0% financing on a new car might not be that hard. So that got me to thinking that I might be better off spending a bit more than I would on say the Accord I was looking at if I could get some great deal on financing (as it would work out to costing me something similar in the end). Called a Honda dealer though and they said that there is currently no 0% financing deals from Honda, though there was 2 months ago. Did read some testimonials on some website, and it seemed like Honda buyers often got very low financing rates recently through Honda.

So ultimately I'm trying to figure out with a minimum of hassle what is likely to be my best bet, say, buying that Accord I was looking at (or something similar), or trying to get say a new Civic. Am I likely to be able to get a much better rate on a new Civic as compared to the used Accord, thus making the actual cost comparable? How difficult is it normally to get reasonable financing for a used car purchase?

My other debate is if overall cost turned out to be similar (due to differences in financing I could get), which would I rather buy, the Accord with 80,000 miles, or a new Civic VP, for example. Are there other non Honda options that I might be interested in (keeping in mind that reliability is very important to me - I don't want something that I can count on being in and out of a shop).

[FouTight]

I have awful, AWFUL AWFUL credit and get a loan through capital one (indirectly through lendingtree.com) with a rate of under 10%, you should be able to do better then this.

However, there were stipulations, such as, the car had to be under so many years old, and under so many miles, and had to be through a manufacturer dealership, lots of rules.

All in all, the interest rate is alright, but a few things I didn't like is that I wanted an older (cheaper) car, but couldn't get it because it didn't have enough value, and thye have no online bill paying righ tnow, sucks.

[BoogerFace]

If it were me, I wouldn't buy used. You are still going to have the occasional repair bill to contend with and on top of payments it will drive you batty. Every make of car is going to be relatively problem free during the warrenty period, you might want to consider buying american and dumping it after a few years.

Credit unions will have the best rates.

The voucher thing isn't such a big deal at least at my credit union. Most dealers that sell new cars are famillar with them. Anything that is 'certified' pre-owned probably would qualify. The lender should be able to get you a list of dealers that can handle the vouchers.

The zero percent financing is usually impossible to find with the Japanese imports.

If you really want the least hassle in terms of getting a car, look at leasing for a couple of years.

[cadillac1234]

Look at new car financing via the dealer and compare it to used car financing payment-wise. I've found the dealer financing via manufacture to usually be the best but there are so many options out there it pays to look around. Be careful of dealer's brokering out third party financing as they will more than likely screw you on the interest rate.

A lot of times your only talking $40-$50/month new versus used plus you'll be getting a warranty versus possibly buying someone else's problem. If your lucky you may be able to find a couple month old certified used which mayactually come with better financing/warranty options.

Make sure you look at kbb.com for invoice pricing and blue book values. Getting internet pricing and dealing with fleet managers helps if you know exactly what kind of car you want and options. The managers are more interested in reducing inventories this time of year than trying to jam you for an extra 2% although they'll still try....

[LaggyLou]

E-loan gave me 4.94 two week ago, which was better than the 6.25% available at the (lexus) dealer. It was quick and easy, too.

[BettyBoopAA]

I think you are better off getting a new civic as the payments will be similiar to the used Accord. Both cars are extremely reliable. I had an Accord and it was completely worry free and retained value (great if you are looking to trade it, not great if you are buying a used car).

The whole idea of "interest rates" for car shoppers is a scam. Your goal should be to minimize how much actual cash you pay out on a regular basis, not to try to minimize some theoretical interest rate. Go to the Honda dealer and tell them that you're not falling for the interest rate/sales price mumbo jumbo they usually throw out new car buyers - you're only interested in what kind of monthly payment they can work out.

Once they realize that you're financially astute, they'll cut all the bullshit and give you a good deal - probably a 60-84 month loan with pretty low monthly payments.

[ddollevoet]

[ QUOTE ]
I think you are better off getting a new civic as the payments will be similiar to the used Accord. Both cars are extremely reliable. I had an Accord and it was completely worry free and retained value (great if you are looking to trade it, not great if you are buying a used car).

[/ QUOTE ]

I agree with most of this. Buy new if you want reliablity, without the hassle of repair costs from time to time.

The big unknown is the service history of the used car. The Accord is generally reliable, unless the previous owner only changed the oil every 25,000 miles. Sure, it sounds ridiculous, but how do you know for sure?

I'd buy new and sleep well at night.

[West]

you forgot to tell me to make sure I get the undercoating

[West]

The site I'm looking at recommends applying for an online loan to compete with whatever financing may be offered through a dealer. Here's my question - while completing the E-LOAN application, it appears that if I am approved, they will send me their "PowerCheck"...what if I wind up not using them? Not sure if I will need to do something or just tear up the check...I'm a little nervous because it is not made clear how things will proceed if I get approved...

[Al P]

Last month capital one gave me 7.29% with a similar fico score. The Toyota Financing gave me 5.35% - they pulled my credit the next day and it was 709 for them (I think they used TransUnion).

This was a 13K loan for a 22K car at 5 years.

[FatalError]

i have a 737 and got 7% on a 48,000$ loan with only 5000 down... you can do much better

some hints:
see if adjusting your down payment changes things
see if you can get points off for automatic withdrawal

[West]

I was about to apply for the E-Loan, but at the end there is a part where instead of just checking a check box to opt out of being hassled by offers of some kind, they actually want to make you enter a whole bunch of contact info to go on a list to not be bothered....I decided f-that, so I didn't apply.

Filled out the Capital One online application and they're sending me their "blank check" at 6.65%. Hopefully, I will be able to do better through the dealer, but at least that gives me an option.

Thanks for the responses.

[Patrick del Poker Grande]

[ QUOTE ]
The whole idea of "interest rates" for car shoppers is a scam. Your goal should be to minimize how much actual cash you pay out on a regular basis, not to try to minimize some theoretical interest rate. Go to the Honda dealer and tell them that you're not falling for the interest rate/sales price mumbo jumbo they usually throw out new car buyers - you're only interested in what kind of monthly payment they can work out.

Once they realize that you're financially astute, they'll cut all the bullshit and give you a good deal - probably a 60-84 month loan with pretty low monthly payments.

[/ QUOTE ]
Nice.

[OtisTheMarsupial]

I heard some really good advice about buying a car and recently tried it out on another big ticket item and it works:

1. Do your research and pick a car (yes, used. new cars are a silly purchase)
2. send out faxes or emails stating your desired terms
(duh, get financing elsewhere beforehand)
3. haggle the best two offers, playing them off each other to get 'em both down to your liking
4. choose best one