Here’s the deal. I have a 1999 Saturn that I leased for three years and recently bought off lease (well, will be making the payments for the next four years or so).
The Saturn was the first new car I ever bought (I was 29 at the time). I had the considerable help of my dad, who cosigned on the lease.
I’m kicking around the idea of a new car (meaning I’d get rid of this one), but I don’t want to ask dear old dad for advice. You see, if I do get a new one, I want it to be a surprise. Since I bought this one, I’ve moved out of the state. I thought it would be a great surprise to drive it back home.
So here are some questions. I know they may seem rather naive, but please bear with me:
I am making payments to a bank for my current car. Does this mean I’m locked into making these payments for the next 4 years? Or would I be able to sell the car back to Saturn (in which case they’d assume the payments), then take the cash and use it as a down payment on a new car?
If I could sell it back to Saturn, how do they figure the price? Do they take the Kelley Blue Book value and then subtract what I’ve already paid?
The car I have in mind is a brand-new Thunderbird. I’m not even sure I can buy the damn thing, but I wanted to look into it.
You bought this car at the end of the lease term, on a 4-year payment plan. This car is therefore yours, and whatever bank has your loan has a lein on the title, making the car also theirs, in a sense. Saturn doesn’t want your car You have to sell it, or trade it in against your new T-Bird using whatever equity you might have in it after your car loan is paid off. If any. Banks only “take over payments”, so to speak, if they have to repossess your car. In that case, your credit is shot so no new T-Bird.
Find the Kelley Blue Book value, subtract how much you still owe on your car loan, not counting interest. That’s the approximate value of your car - if you trade it in, the dealership has to figure in paying off your loan. Sometimes this works out - but other times you could be “upside-down” on your car, meaning you owe more on it than it’s actually worth. Those can be hard to trade in, but occasionally the helpful (sarcasm) dealership can add the extra onto the loan or lease you’re taking out when you buy your new car.
When you go to the showroom to hunt the T-Bird, remember that the sales folk will go to lengths to “make it work” for you - be careful, and even if everything seems OK, I advise taking all the numbers home overnight and working it out with the help of the Web and/or some friends.
Keep in mind that Kelley is usually very high for used car values. A better one is usually NADA ( http://www.nadaguides.com ). Take their trade in value, and expect a little less than that.
Avoid being upside-down at all costs. It makes your new car more expensive than it already is, and may affect the rate you get on your loan, if you’re going the normal “auto loan” route. If you are using cash, then disregard this.
Also, I don’t mean to question your financial acumen or decision-making, but moving from a used Saturn to a new T-Bird is a monumental step up. It’s like going from a used Corolla to a new Mercedes. Unless you’ve made a large lifestyle change (read: graduated from law school) since you leased(!) your last car, with a cosigner, a newT-Bird might not make the best financial sense.
Actually, I’ve made quite a few big changes since the car was originally leased, including a pretty nice job (as opposed to the hourly crap I was getting). Plus, I’ve been establishing credit by paying my credit-card bills on time, as well as my rent (and the loan for the car, and the insurance, and…).
A new Thunderbird?!? Is that the only car you are thinking about buying, I mean do you have your heart set on it?
'Cause it really isn’t all that. Like the new Beetle it is another triumph of style over very little substance.
How do I know this?
My best friends brother owns a Ford dealership up in Tavers city Michigan, and so my friend his cars from there. Well, my friend, Lasco, got a new Thunderbird and kept it exactly 10 days. He would have had it 3 days but he couldn’t get time off from work to drive the damn thing back to Michigan.
For one thing, the proportions are all wrong the car just doesn’t look right, too long in back, not long enough in front. This is because the car is built on a Lincoln platform.
Plus, you are very likely to pay way too much over sticker price right now.
I would recommend looking at the Chrysler Sebring convertible.
I would reccommend against it. I rented one last summer. For being a convertible, the visibility is astoundingly bad. A built up rear deck make and the massive windscreen frame combine to block out large parts of the horizon. A strangely shaped hood makes it impossible to tell where the nose is.
However, the people I visited thought it was cool.
Oh please! A Saturn’s not a new car, even when it’s new. It’s like the Ford Escort used to be.
I’m just curious. I don’t have my heart set on the thing, but I drive past it every day. There’s an off-blue one and a cherry red one, and they both look fine to me. I also checked out the specs online, and it comes with a whole buncha stuff.
The Saturn is a low-cost car. College kids get them. Since I began leasing it, I’ve more than doubled my salary.
I don’t have much experience in this, obviously. And don’t worry, I’d never buy it on a lark. I’m more interested in doing a lot of research on it. I first went to Ford’s site to make sure that the car was one I might like, at least on paper. That’s the first step. I’d also want to check on insurance - what it might be in relation to what I have now, for example.
I contacted a few dealers in my area regarding the specific car, and explained my situation. I said I did have a car to trade in, and that it has relatively low mileage. I said I would like to get a monthly payment in the $250 range (but of course, I didn’t add that I could go higher than that, as I probably will).
A dealer replied to me that they’d need to see the car and offered to come look at it. Then he verified some numbers with me.
It all comes down to the trade-in value of the Saturn. If they give me, say, $4000 for the car, then I’ll know how much to get in a loan for a down payment. My thinking - and please correct me if this is wrong - is that the higher my down payment is, the lower the monthly payments could be. I figure once I know the approximate amount I’ll put down for the down payment, I’ll go to Lending Tree and see if I can secure a loan that way.
By the way, here’s a pic of the car, in the color I want:
This is very important when looking at new cars: As monthly payments go, you can safely figure $20/month per thousand dollars of sticker price at best - and assuming the best possible APR on the financing. Therefore, a $40,000 T-bird (plus tax, title and license) will run around $800 per month. And that’s if you manage to get below 2.9% financing (do you have spotless credit - and I mean absolutely pristine?) and put down a good down payment.
As far as you trade-in, go to www.bluebook.com and click on “trade in value”. When it asks the condition of your car, remember that “Excellent” means “never been driven, even to leave the car lot when you purchased it”. “Good” means “Pampered like a baby, no scrateches or dings anywhere, and nobody ever ate food within 20 feet of it”. Most well-cared for used cars are “Fair” or (maybe) “Good”. The Blue Book website will give you a pretty good idea of what the trade-in on your car will be, as long as you are very critical of the car’s condition and take every possible imperfection into account. Mileage will hurt you - on a '99, if you’ve got more than 40,000 miles on it, it’s gonna eat away at the trade value.
If your trade-in value is less than what you still owe on the car, that amount gets “rolled in” to the cost of the new car. If a car dealer promises to “pay off your trade”, they’re feeding you a line of bullshit.
You are right - the more you put down, the less you pay per month. It takes a lot of down payment to make a small difference in montly payment, however - it can be depressing.
How do I know all this? I made the mistake of working at a car dealership…but I’ve recovered now.
I’ve been to both Kelley and NADA, but I’ll have to see what they say regarding the actual value…
The thing is, that $800/month figure you came up with is only relevant for a certain length of plan - some dealers will give you a 7- or 8-year plan. I’ve asked for one. It doesn’t hurt to ask.
I’ve also seen different valuations of the TBird - as high as $40,000 and as low as $33,000.
I think that because of the timing (they ostensibly need to get the '02s off the lot to make room for the '03s), they might be more flexible. Also, I have a very solid job that’s not going anywhere anytime soon (it’s a not-for-profit and has been largely unaffected by the economy problems). So we’ll see.
Do not go for any car loan over 4 years! Specifying the amount of money you want to spend per month is NOT the way to buy a car. Any car dealer worth his salt can come up with a plan to get you into any car with that criteria. But you are destined to end up owing more on the car than it is worth, ie, being upside-down.
Even with a higher paying job, you might not be able to afford this T-Bird.
I second what Telemark says. Nothing over four years. If you cannot afford the payments to pay off the car in forty-eight months, you don’t need that car right now.
A seven or eight year plan?!?!?! For a Ford?!?!?! Good lord!
Thunderbirds are limited-production vehicles - the most any dealership is likely to have on hand is two or (maybe) three. The “get the '02s off the lot” motivation works to bring the price down on high-production lines like Mustangs and Focuses at this time of year, but you’re going to find that there aren’t many '02 Thunderbirds left. Many dealerships are unwilling to negotiate below sticker price on T-Birds because they know the demand is high enough that they don’t have to put effort into selling them, no matter what time of year it is.
The $800/month figure is based on a 60 month plan, which is the longest that most car dealerships will go for, especially on a high-demand model like the T-Bird. You’re shopping with your heart, not your brain…and you’re making it easier for the dealership to screw you.
Car loans that last 7 or 8 years will screw you hard (and will have higher APR’s), and even at 7 years you’re looking at about twice what you stated you were wanting to pay. You’re going to be hard pressed to get any new car for $250/month unless you’re planning to put 8 to 10 thousand down, and even then a $35k T-Bird (which is less than average according to the price range you came up with) will run you over $400/month.
Maybe you should wait a year or two, when people are unloading their two year old T-Birds for something newer.
You’re the guy car salespersons think about while their flagellating themselves.
Seriously, though - Don’t set foot on a dealership’s lot until you’re sure you know what you want to do. You’ll be driving away 4 hours later in a new T-Bird and smoke coming from your wallet. Right now, it sounds like you’re looking at $1000 / mo. minimum for transportation. Remember when the PT Cruisers came out? Big bucks. Now? El cheapo. If you’ve got your heart set on this car, Dan, IMHO you should wait at least a year and pick one up used when the “value” is a bit more in line with what they’re actually worth.
You have to sell it, or trade it in against your new T-Bird using whatever equity you might have in it after your car loan is paid off. If any. Banks only “take over payments”, so to speak, if they have to repossess your car. In that case, your credit is shot so no new T-Bird.