elee

Hello everyone, just registered here

I'm considering purchasing my first car some time towards the end of this year, and my top choice would be some sort of used roadster. I've seen older S2000s (2000s, 2001s mostly) with around 60-80k miles going for around $15,000 USD, and as low as $13,000. That's sort of what I'd like to buy.

In any case, here's my situation:

My credit (which I last checked about a month ago) is pretty good and above the national average. What I'm most concerned about is my employment/income.

I'm a fairly recent college grad, 24 years old. My main job is at a small "startup" type IT company, where I've been working for almost a year now. My salary is -low-. I also work part-time at the family business, for around 2 years now, which boosts my income ever-so-slightly.

My company also got a new client, with whom we'll be working with starting around August, and this means I'll be getting a substantial raise at that time too But regardless, my yearly income is still best described as low.

However, my expenses are virtually nonexistant. I pay for things like cell phone, ISP, about half my meals, a World of Warcraft account, and that's about it. I live with my parents, so no rent/mortgage. No, I'm not proud of it, but my workplace is within a 5 minute walking distance so I don't see any point in moving out anytime soon.

In other words, I could probably easily devote something like 90% of my monthly income towards car payments.

With that in mind, here are my questions/concerns:

Let's say I'm out to buy a $15,000 used S2000. I want to finance at least some of it if for no other reason than to help continue building my credit. Considering my credit/employment situation, how much should down pay? How much should I expect the dealer to ask me to down pay?

(for what it's worth, I'm fully expecting to get clobbered by the interest rate I'll get)

I've heard that it isn't recommended that your car payments exceed 20-40% of your income. Well, its probable that it would exceed 50%, but like I said above, I have virtually no other expenses. Would this affect how much I would be able to finance?

I guess the best way to answer a lot of my questions would be to visit a financial institution or dealer in person and see for myself. If they run a check for a potential loan, and I get rejected, would that negatively affect my credit?

Thanks in advance

Jumpy Guy

I would wait till August to see if the "substantial" raise comes in. I wouldn't recommend you becoming car poor, because you never know when your situation is going to change positive or negative. Besides if you devote all your money towards a payment, how will you afford the gas.
My suggestion wait till October, November when they are making good deals on these cars. Good luck!

Chazmo

Try visiting a credit union and see what they can do for you on a used car loan. Some are not so terrible.

IMO, you shouldn't exceed 20% of your income on car payments. The good news, on a used S2000, is that much of the depreciation is done. If you keep the car well, you won't lose a ton on your "investment." A new car will be a bad idea (even if the loan has better interest terms).

ryanvnw

Also yes, if they run your credit and you get denied it affects your credit in the negative. The statement "it doesnt hurt to try" does NOT apply here. Just keep that in mind.

What kinda of down payment are you looking at? If you indeed do have above national avg credit score and went in with say 50% down payment I wouldnt imagine you having any problems. Course finance rate might still be high.

Personal advice. Do not buy one if its going to consume majority of your income. Just because you can make the payments doesnt mean you can afford it. What happens when you need a new cluctch? How about insurance? Got any quotes yet. I'm not trying to come down on you here I'm just speaking from experience. I would atleast wait for that raise to come in and see where you sit then. Plus its more time to save towards the down payment.

Good Luck to you.

elee

Yeah, I'm not looking to buy immediately, but later in the year, definitely after August. I also turn 25 in July, which means lower auto insurance in my state. Just wanting to plan early

The whole "I can spend this much" estimate was including insurance + gas (though I don't expect gas to be a big issue since I doubt I'll be driving around too much).

At the moment I'm planning around $5000-$7500 down payment, which, assuming the car costs $15,000ish would be roughly 1/3 - 1/2 the total. I'm wondering if the dealer (or whatever other lender I may use) will set a minimum neccessary down payment?

I would also prefer to keep the length of the loan as short as possible. 1 year would be ideal, and definitely no longer than 3.

How exactly do credit unions work? Doing some quick research, I know I'm eligible for at least one - my university's alumni CU, but I'll have to wait till tommorrow to call them for any details.

Ks320

[QUOTE=elee,May 3 2006, 10:07 PM] Yeah, I'm not looking to buy immediately, but later in the year, definitely after August. I also turn 25 in July, which means lower auto insurance in my state. Just wanting to plan early

The whole "I can spend this much" estimate was including insurance + gas (though I don't expect gas to be a big issue since I doubt I'll be driving around too much).

At the moment I'm planning around $5000-$7500 down payment, which, assuming the car costs $15,000ish would be roughly 1/3 - 1/2 the total. I'm wondering if the dealer (or

elee

Hmm, do you think it would be worthwhile to visit a dealer(s) for more information

Not actually getting them to run a loan application/credit check, but just to ask around for estimates, and what they think?

mephrules

if your living at home and not paying rent... and your going to be doin that for a while im sure you can afford that much if not even more...
i live at home with my parents (im about to graduate college) and i bought my s2k for 18500 and i can afford it easily since theres no rent...

you should spend grand or 2 extra and get one with like 30-50k miles not 60-80k

Ks320

elee: I just sent you the spreadsheet. Hope that helps. I played around with the sheet before deciding on my budget.

In any case, just do a preliminary search on google.com for auto loans, those numbers should give you an estimate of what interest rate to expect to pay. You will find that most places will offer between 7 to 8% for used-car loans on decent credit. The lowest I found was from HSBC, and can go as high as over 10% from Citibank. Credit unions might be able to give you a 0.50% lower rate in some cases, based on what I heard. You just have to keep in mind that the interest rates have gone up so much in the past 12 months.

The best thing to do is to take out a second-lien loan, or home-equity loan. These loans are essentially a "loan on a loan.' If you can ask your family to slap that on top of their mortgage, you can get much better rates (talking about 5.8%-ish) -- then you just pay your family back every month.

So yes ... try walking around the sites (just google/yahoo search for "Car Auto loan" or something) and ask your family about home equity loan (I couldn't do that because my parents don't live in this country ...).

elee

The easiest route I could probably take is to get my dad to co-sign it. But I'd rather wait on the car than go that route ;p

Anyways, brief update for anyone interested:

I visited some local dealers. For kicks I visited a Mazda and Nissan dealer that were part of the whole "automall" complex as well and inquired about the 350Z and RX-8 - new, as well as used. I figured if I could get an estimate on what my chances with a new car would be, I could get a better idea of my chances with a cheaper, older one.

I'm not sure how much was pure fact, and how much was the dealer trying to bait/encourage me. But pretty much everyone seemed to say that I would have absolutely no problems getting a loan - even for a new $30,000ish 350Z assuming I did lay down the $5000+ down payment - and with a APR that's "only a percentage or two more than the national average of 6-7%" - quoting the Nissan dealer.

Now, I've taken all this with a grain of salt, but it certainly does make things interesting.