Have you ever applied for an auto loan before?

[chestynuts]

Hi there. Have you ever applied for an auto loan before, either with a bank or a CU? What's the lowest auto loan rate you got approved for? Hoping to get some answers based on first hand experience before my sister takes the plunge! Thanks

[snafu]

Suggest sister begin the process checking one of the four free credit reports to verify there are no negatives. She can follow up learning her FICO score as the higher the score, the stronger the position to ask for a better rate [every point counts]. A bit of time researching rates on line lets her know if the rate offered is reasonable. Depending on vehicle of choice, there may be promotional rates offered by dealerships, electronic [non brick 'n mortar] banks.

Off topic, but suggest sister check with insurer before settling on a specific make and model. Some cars are rated as trucks and other tiny details that accelerate premiums

[disneysteve]

What any of us has gotten really has no beating on what she will get. It depends on her credit. I'm sure plenty of people here have gotten 0% loans but that doesn't mean she can.

Definitely shop around for rates first. Don't just take the offer that the dealer gives her. That said, the dealer will negotiate. Last time we bought a car, the dealer wanted to charge 4+%. I said we got 2.9% the last time, less than a year earlier. He checked and came back and said he could do that. So just by asking, I got the rate dropped by more than 1%.

[Jluke]

If your sister is buying a new car then the financing and rebates (if any) are available on the manufacturer's webpage.

If buying used, I would not trust the dealer for financing. I would most likely go to my CU and get a loan from them. If the dealer can beat that rate then consider that loan instead.

5 year loan term max. Pay off in 4 years if possible.

[disneysteve]

Suggest sister begin the process checking one of the four free credit reports

I believe that should say three credit reports, not four, unless there's a new one I'm not aware of.

5 year loan term max.

I'll respectfully disagree here. Three-year loan max with a payment not exceeding 10% of monthly income is the usual rule of thumb. I think stretching out to 5 years (or more) just allows people to buy cars they can't really afford comfortably.

[Jluke]

I'll respectfully disagree here. Three-year loan max with a payment not exceeding 10% of monthly income is the usual rule of thumb. I think stretching out to 5 years (or more) just allows people to buy cars they can't really afford comfortably.

I agree with you. Not knowing full details in this case I wanted to emphasize not going beyond 5-year term and point out the early payoff.

Seems dealers like to push 7-year terms now and the OP asking this basic type of question makes me wonder how experienced they are with financing terms. I could see them being talked into a longer term to buy more car than they can afford.

I know the 7-year term worked for you because you handle debt very well. But it would probably trap most other people to a long payoff.

Key is know what you can afford and don't rely on bank or car dealer to tell you what you can afford.

[chestynuts]

Uber thanks for all your reply, they really help.

Here FICO score has no negatives and she mentioned that her FICO scores for the past 3-4 years have not gotten anywhere below 620.

Is it better to shop around and talk to a dealer to see if she can get the car price lowered and proceed with talking to a CU for an auto loan? She's planning to get a Honda Civic for her first car. She wants to go for the 3 year term to avoid getting tied up with the loan.

She's also a member of a CU in SF and they're offering her these auto loan rates which are lower than what her bank has made available. She hasn't applied for it yet, just doing a bit of research with her on this. After all, it's her first car.

[Jluke]

I've bought 2 Honda's (2011, 2014).

I go to the dealer's website.
Search their inventory.
Find the Model you like.
Email them for a price on a specific vehicle (include the Inventory/Stock #).
Honda's are very basic models when it comes to how they include options so that price should apply across the board for that trim level.

If you have 2 Honda dealers nearby, contact them both.

Sometimes the internet business will get you a good deal and it is easy. Unless you are good at negotiating in person, it's stress-free.

I didn't see any special financing offers from Honda on the civic, but check specifically for your area and you can also ask them for financing options they offer. In my case, they offered a "better price" when I financed through them.

I did see $500 for recent college grad, if that applies.

[shawdenise777]

I bought an Isuzu car for 5-year term, cost me around $8000 interest!

[Sagalamora]

Never, had always bought it cash, except the first one generously offered by my dear parents.

[FLA]

I've always had 0-1.9%. The 1.9% ticked me off, lol. I agree with Disneysteve, 3 yr loan that is less than 10% of her income.