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Taking a loan for the first time, advice needed
Old 03-19-2014, 12:13 PM   #1
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Taking a loan for the first time, advice needed

Hello folks,

Although I am in mid 30s, I never took a financial loan. I am getting a car now so will apply for auto loan. I need some sage advice.

I plan to buy used Subaru Outback/Forester, budget is about $24000. Although I have that in cash, I do not want to buy in cash. My goal is to have $50K liquid cash.

I plan to check with our local credit union and Chase bank (only 2 bankers I bank with). I am looking into Quicken Loan as well, but I don't really know how I should go about.

Any advice for me?

Thanks in advance.
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Old 03-19-2014, 12:23 PM   #2
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Quote:
Originally Posted by noelm View Post
Hello folks,

Although I am in mid 30s, I never took a financial loan. I am getting a car now so will apply for auto loan. I need some sage advice.

I plan to buy used Subaru Outback/Forester, budget is about $24000. Although I have that in cash, I do not want to buy in cash. My goal is to have $50K liquid cash.

I plan to check with our local credit union and Chase bank (only 2 bankers I bank with). I am looking into Quicken Loan as well, but I don't really know how I should go about.

Any advice for me?

Thanks in advance.

Local CU is great. Get a pre-approved check in hand and haggle with the dealership over the price. Interest rates tend to vary considerably between lending institutions especially on used vehicle rates. Good Luck

Mike
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Old 03-19-2014, 01:05 PM   #3
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I'd stick with cash if the interest rate is anything near what they used to be. You'll be able to pay yourself off fairly quickly and avoid adding another expense you don't need.

I'm sure a car dealer would have a loan available if you go that route. Just shop around so you know what a good rate might be.
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Old 03-19-2014, 01:18 PM   #4
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Local CU or PenFed. If you take a loan, PenFed is offering 1.99% and 2.49% used auto loans for 37-48 months and 49-60 month terms, respectively.

That said, unless your job is shaky I would pay cash and then rebuild your cash fund. If you're earning 1% on your cash, that is .7% after tax but you'll be paying 2% or more after-tax on an auto loan because it isn't deductible.

Don't go anywhere near Quicken Loans. Or at least google them before proceeding. I had a bad experience with them on a mortgage a few years ago. Got my money back because of misrepresentations they made that they could not deliver on, but if was a bad experience.
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Old 03-19-2014, 03:40 PM   #5
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If he's never had any credit it might be worth doing if even for only one year. Later on if he wants to buy a house with a mortgage having the credit history will help.

That and get a credit card or two and use them once in a while paying off in full of course.

Generally a CU is going to have a better rate and better service than a bank. There are exceptions of course.
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Old 03-19-2014, 07:44 PM   #6
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Keep the loan term to three years or less and put a minimum twenty percent down for the best rates. If the payment is too high get a cheaper car.
not get any of ghat insurance that they try to sell you in case you lose a job or get disabled. It's not worth it.
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Old 03-20-2014, 07:57 AM   #7
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If you have a local CU, S&L, you might be able to get a passbook loan. Thus, you would use your funds for collateral, rather than the car. The lender holds the funds, and you make payments.
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Old 03-21-2014, 03:22 PM   #8
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At that price, why not buy new?

We did this a couple of years ago for an Outback and total cost was around $28k. We were planning on paying cash, but they offered 10k 0% financing for 2 years.
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