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Car purchase auto loan

Hungry4Salsa 20 10 June 16, 2016 at 04:22 AM in Autos
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So I finally saved up enough money to buy a new car with outright cash. I want to pay about 1/3 to a ½ of the car now and using the rest to earn interest. This way I can keep my debt semi-low so it won't affect buying power too much. Right now I can get an auto loan 1.49 for 36 months or 1.99 for 66 months. I'm thinking of taking the latter and paying off the total car in 4 years. I never had a car loan before, is it possible to zero down on the car and pay years' worth of payments in advance and not have to worry about monthly bills for a year? This would be equal to putting down payment 1/3. Or would I still have monthly payment after paying such a large sum and just lower the interest on the car?

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#2
I asked about this with my credit union - no go. Any extra money paid over the monthly payment goes toward the principle just like a mortgage. There was no way to "pre-pay" the monthly payments.
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#3
yes it is, very common actually. when you make extra payments you don't have to worry about missing a month.
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#4
Quote from slickdeal398748 View Post :
yes it is, very common actually. when you make extra payments you don't have to worry about missing a month.
since when?
this is not how the contract is written.
What fortyfour said is what will happen

I would just put the money in an account and do automatic payments.
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bulb save money by checking your insurance every 2 years (and not every 20)
#5
I've never heard that if you make extra payments, you don't have to worry about missing one.
The extra goes towards the principal as stated.

Since your interest rate is so low, you should just take the 1.99% for 66 months and pay extra on top of that to pay it off earlier, like 48-50ish months.
The interest accrued between the 1.49% & 1.99% shouldn't be a lot, so I'd take the longer years to have financial flexibility incase something happens in months. Some months, you may have to pay what's due, but other months you can add extra. Better to be safe. Also, a good way to increase your credit score with a loan.

I'm surprised you got 1.99% for over 60 months. The norm is anything over 60 months, the rate is usually bumped up about +2% over the rate offered for 60 months or less.

Depending on your credit score, you most likely will have to put something down as in cash or trade to get a loan. Rarely do any banks give loans to 0 down.

With that loan rate, I'm assuming it's a new car loan.
I just bought a Certified Pre-Owned car and got a 2.04% for 60 months. That's with a FICO-8 of 845.
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Last edited by KoopaTroopa June 16, 2016 at 06:39 AM
#6
My Credit Union will take "early" payments, basically anything over the payment amount is applied to principal but defers the next payments due date. Interest accrues at agreed rate but only on the principal left so it also reduces total interest paid. I did this on my last car, had insurance money coming from accident that was not my fault, it took months to resolve and receive the payout so I got a loan for the full amount of the new car purchase. As soon as I got the insurance payout I put it directly on the car loan. My next payment due date moved two years out, I continued to pay "early" and paid the car off 2 years before required.
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#7
Quote from KoopaTroopa View Post :
I've never heard that if you make extra payments, you don't have to worry about missing one.
The extra goes towards the principal as stated.

Since your interest rate is so low, you should just take the 1.99% for 66 months and pay extra on top of that to pay it off earlier, like 48-50ish months.
The interest accrued between the 1.49% & 1.99% shouldn't be a lot, so I'd take the longer years to have financial flexibility incase something happens in months. Some months, you may have to pay what's due, but other months you can add extra. Better to be safe. Also, a good way to increase your credit score with a loan.

I'm surprised you got 1.99% for over 60 months. The norm is anything over 60 months, the rate is usually bumped up about +2% over the rate offered for 60 months or less.

Depending on your credit score, you most likely will have to put something down as in cash or trade to get a loan. Rarely do any banks give loans to 0 down.

With that loan rate, I'm assuming it's a new car loan.
I just bought a Certified Pre-Owned car and got a 2.04% for 60 months. That's with a FICO-8 of 845.
Where did you get 2% on a used car? Would like to know. Thanks!
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#8
PNC has 1.99 used if buying from dealer. up to 60 months and draft from pnc account
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#9
You can't "pre-pay" 12 months and forget about it, but why not dump those 12 payments into a dedicated checking account and setup autopay? What's the difference? That way you have access to the money in case something crazy happens.

However, I would still suggest just paying down as much as you can comfortably afford up-front. Even at 2% interest you aren't going to beat that after taxes in a short term risk-free investment. Maybe you could earn 3% on a muni bond or something, but why bother with the extra risk for so little return?
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#10
Quote from Jabbit View Post :
Where did you get 2% on a used car? Would like to know. Thanks!
I'm not sure which bank or credit union approved me laugh out loud yet. I'll let you know because I'm interested as well.

I officially sign the paperwork tomorrow for my car, but I called the dealership about my financing situation yesterday and he stated I was approved at 2.04% for 60 months, that's the lowest he could get.
I'm thinking the dealer added .05% for themselves and I really got approved for 1.99% because 2.04% is a weird APR.

I got a CPO 2015 Volvo V60 T5 AWD Platinum Edition with 13,000 miles on it.

When we were playing with the numbers, he assumed 2.99% but I was like, I'm sure I could get a lot lower with my credit score of 845.

With my previous 2 car loan payments' histories, I'm sure my FICO Auto Enhanced score was almost perfect too, which gave me this low rate.

I was pre-approved from Bank of America with their lowest rate of 2.74% as well, but knew I could do better.

I will say that in my past, I did something very stupid & ruined my credit score to the mid 600s Frown My last used car loan, I had to search hard to get approved and finally got it at 8.9% EEK! So basically instead of maybe paying $800ish for interest if I had the great score like now, I ended up paying close to $6000 for interest charges OMG
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Last edited by KoopaTroopa June 16, 2016 at 08:19 AM
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#11
Quote from fortyfour View Post :
I asked about this with my credit union - no go. Any extra money paid over the monthly payment goes toward the principle just like a mortgage. There was no way to "pre-pay" the monthly payments.
yeah that what I thought about the monthly payment. I just wanted to free up some debt in case I need to make another large purchase like a townhome before paying off the car.

Quote from KoopaTroopa View Post :
I've never heard that if you make extra payments, you don't have to worry about missing one.
The extra goes towards the principal as stated.

Since your interest rate is so low, you should just take the 1.99% for 66 months and pay extra on top of that to pay it off earlier, like 48-50ish months.
The interest accrued between the 1.49% & 1.99% shouldn't be a lot, so I'd take the longer years to have financial flexibility incase something happens in months. Some months, you may have to pay what's due, but other months you can add extra. Better to be safe. Also, a good way to increase your credit score with a loan.

I'm surprised you got 1.99% for over 60 months. The norm is anything over 60 months, the rate is usually bumped up about +2% over the rate offered for 60 months or less.

Depending on your credit score, you most likely will have to put something down as in cash or trade to get a loan. Rarely do any banks give loans to 0 down.

With that loan rate, I'm assuming it's a new car loan.
I just bought a Certified Pre-Owned car and got a 2.04% for 60 months. That's with a FICO-8 of 845.
I didn't receive any stipulations about putting any money down I just asked for an amount and was approved for it. My fico score is around 800
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Last edited by Hungry4Salsa June 16, 2016 at 05:21 PM
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#12
I think if you sent in the coupons in separate envelopes with separate check they would have to apply it to that months payment but set up autopay is better nothing improves credit like paying ontime.

writing a check for 10K is just prepaying not paying a specific months payment.
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#13
Whether or not you can "pre-pay" depends on the lender. We currently have a car loan with PenFed and the next month's bill isn't even generated until a couple weeks before it's due so you cannot pre-pay. However, we previously had a car loan with Capital One and we could pre-pay. I just paid $2K one month and did not have another payment due for several months. Each month they would just subtract from my over-payment and apply it to the amount due for that month.
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As the username says ...
#14
How many months worth of living expenses are in your emergency fund?
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#15
horses are cheaper and have better personalities. i'd buy a saddle first
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