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Message
Auto Loan Help
Posted on 7/28/14 at 4:57 pm
Posted on 7/28/14 at 4:57 pm
So, I just graduated from LSU and have been working for the past 6 months. I am getting ready to purchase a new truck and it's looking like I will need a loan for around 24-25k depending on the deal I get and how much my trade-in ends up being. I have access to Telco through my company and they are offering loans at 2.99%. When I calculate my loan out it comes out to be around $375 over 6 years and around $450 over 5 years. Would I save or lose money if I finance over 6 years but pay $400 a month? Or should I just go with 5 years and pay the $450? Also, I will have to have my loan co-signed as this will be my first loan. So, any advice would be appreciated. Also, should I look at some other credit unions that my give a better rate.
Also, what car insurance do y'all use? I have shopped some rates and received the lowest rate from Geico. Thoughts?
Also, what car insurance do y'all use? I have shopped some rates and received the lowest rate from Geico. Thoughts?
This post was edited on 7/28/14 at 4:58 pm
13
Posted on 7/28/14 at 5:04 pm to GeauxTime9
Go read Dave Ramsay. You should ride a tricycle until you are 80, then enjoy your money when you are too old to know the difference between a wet fart and an orgasm
Posted on 7/28/14 at 5:10 pm to lsupride87
quote:
lsupride87
Thanks for the help.
Posted on 7/28/14 at 5:11 pm to GeauxTime9
have you been approved for a loan?
whats your credit score like?
penfed usually has the best auto rates, but I'm not sure how it works with lackluster credit and/or using a cosigner
your typical rate on a 6 year loan will be higher than the 5 year, so you'll save money in the long run with the lower interest rate on the 5 year, but it may not be a ton of money
don't forget to account for TT&L when you determine how much you can afford/finance
I use state farm because I have my home/auto/life all bundled but I've used geico before with no problems
whats your credit score like?
penfed usually has the best auto rates, but I'm not sure how it works with lackluster credit and/or using a cosigner
your typical rate on a 6 year loan will be higher than the 5 year, so you'll save money in the long run with the lower interest rate on the 5 year, but it may not be a ton of money
don't forget to account for TT&L when you determine how much you can afford/finance
I use state farm because I have my home/auto/life all bundled but I've used geico before with no problems
Posted on 7/28/14 at 5:12 pm to GeauxTime9
Sounds like you need to read up and research a bit more on finance and loans.
It all depends on interest rate. If it changes/goes up for a longer period, it gets more complex (at least for this brief post). However, at the exact same rate, longer is "better" IMO. This may not be shared by all here, especially on a vehicle purchase, but the idea is simple. You can pay the larger note of the shorter term, even though you financed for longer, and come out the same as if financing on the shorter term. This just does not lock you in on the larger note, and allows your money to work for you longer. This is especially true if you have a low interest rate and can make more on the money "invested" than the loan interest costs.
ETA: As for insurance, I use State Farm as well. I have multiple policies with them, so that multi-line discount helps.
It all depends on interest rate. If it changes/goes up for a longer period, it gets more complex (at least for this brief post). However, at the exact same rate, longer is "better" IMO. This may not be shared by all here, especially on a vehicle purchase, but the idea is simple. You can pay the larger note of the shorter term, even though you financed for longer, and come out the same as if financing on the shorter term. This just does not lock you in on the larger note, and allows your money to work for you longer. This is especially true if you have a low interest rate and can make more on the money "invested" than the loan interest costs.
ETA: As for insurance, I use State Farm as well. I have multiple policies with them, so that multi-line discount helps.
This post was edited on 7/28/14 at 5:14 pm
Posted on 7/28/14 at 5:13 pm to lsupride87
quote:
Go read Dave Ramsay.
He absolutely should.
quote:
Thoughts?
If you are sincerely looking for thoughts, then my thought is don't do it. Seriously. Especially at your age, you can get a great truck for 15K, and put 10K in any number of things including 401k, Roth, emergency fund.
These are investing years that a good chunk of posters on this board would kill to get back.
If you are already doing the above, then go get the new truck. If not, I would think long and hard about spending that kind of money when these other opportunities are available.
Posted on 7/28/14 at 5:21 pm to Sigma
I agree with saving my money and investing. My mother is a financial advisor so I had this preached to me growing up. I need to earn some credit though, and I believe this is my best option. I make around $1500 a week and don't have many expenses.
Posted on 7/28/14 at 5:39 pm to GeauxTime9
quote:
I need to earn some credit though, and I believe this is my best option. I make around $1500 a week and don't have many expenses.
You can still build your credit with a less expensive option. Just something to think about.
Posted on 7/28/14 at 5:49 pm to Sigma
quote:
If you are sincerely looking for thoughts, then my thought is don't do it. Seriously. Especially at your age, you can get a great truck for 15K, and put 10K in any number of things including 401k, Roth, emergency fund.
I see recommendations like this a lot of the money board. Y'all always ignore a pretty obvious flaw with your advice. Y'all make it seem like the OP has $25k liquid to use. So saying put 10k in an investment vehicle is pretty useless advice.
Posted on 7/28/14 at 5:52 pm to GeauxTime9
quote:
My mother is a financial advisor
Take some free advice from me and get some free advice from her.
Posted on 7/28/14 at 6:10 pm to GeauxTime9
quote:
it's looking like I will need a loan for around 24-25k
No hate because I am a serious car fan, but is there a cheaper option? I was able to avoid paying a large monthly car note in my early 20's and it helped tremendously down the road. 
Posted on 7/28/14 at 6:13 pm to GeauxTime9
quote:
I agree with saving my money and investing. My mother is a financial advisor so I had this preached to me growing up. I need to earn some credit though, and I believe this is my best option. I make around $1500 a week and don't have many expenses.
I would look at alternatives to building credit. An easy one is having a credit card and paying it off monthly. If you still want to build credit through an auto loan, just save up and then take out a small loan (5k or so) for the rest. No need to take on large amounts of debt at such a young age.
Posted on 7/28/14 at 6:19 pm to LNCHBOX
quote:
I see recommendations like this a lot of the money board. Y'all always ignore a pretty obvious flaw with your advice. Y'all make it seem like the OP has $25k liquid to use. So saying put 10k in an investment vehicle is pretty useless advice.
Doesn't have to be liquid at all. It's 10K he was otherwise going to spend. So he could get a 15k loan, build his credit while doing so, and invest the difference. Monthly.
This post was edited on 7/28/14 at 6:23 pm
Posted on 7/28/14 at 6:32 pm to GeauxTime9
quote:
have been working for the past 6 months
So using your later post of making $1500/wk, then you should have put away around 12-15k if you don't have any other major bills, correct?
Dude, if you can afford to put away 20-25% of your income into retirement accounts, fund an emergency account, pay all other bills, then do it... Lifes too fricking short to put away put away put away and never enjoy it.
You just need to have the foresight if your situation changes to unload the burden of that note.
YOLO Bitches
Posted on 7/28/14 at 7:13 pm to Lsut81
I want a job that pays me $6k/mo net...with no experience 
This post was edited on 7/28/14 at 7:16 pm
Posted on 7/28/14 at 8:06 pm to Golfer
quote:
I want a job that pays me $6k/mo net...with no experience
shite, I'll take a job that pays me that with experience.
Posted on 7/28/14 at 8:28 pm to Lsut81
just dont do anything because of what others think. I wish I would had paid 10k cash for something in early 20s instead of having a monthly note.
even though it was 360 for 5 years on a TOYOTA financed 20k
even though it was 360 for 5 years on a TOYOTA financed 20k
Posted on 7/29/14 at 12:02 am to GeauxTime9
Can you get laid without driving a $25k depreciating asset?
Advice: if you truly want to build credit, buy smaller. the insurance will be cheaper, too.
Personally, I like your take on the longer note with a discretionary overpayment.
As far as insurance, lots of companies have sweet spots. Both Geico and State Farm do well with single car policies (but that aggressive pricing pushes up their rates with multi-car policies). You should be fine with either of them. Since you are co-signing on the note, maybe go with your co-signor's insurance. That should get you a multi-car discount which could save another 40% plus give you advantages of homeowner (is he/she a homeowner).
Good luck even if you go with the $25k note. But I promise you that most people have regrets about chunking a large sum of money into a vehicle long after they no longer have the vehicle.
Advice: if you truly want to build credit, buy smaller. the insurance will be cheaper, too.
Personally, I like your take on the longer note with a discretionary overpayment.
As far as insurance, lots of companies have sweet spots. Both Geico and State Farm do well with single car policies (but that aggressive pricing pushes up their rates with multi-car policies). You should be fine with either of them. Since you are co-signing on the note, maybe go with your co-signor's insurance. That should get you a multi-car discount which could save another 40% plus give you advantages of homeowner (is he/she a homeowner).
Good luck even if you go with the $25k note. But I promise you that most people have regrets about chunking a large sum of money into a vehicle long after they no longer have the vehicle.
Posted on 7/29/14 at 1:23 am to lsupride87
Posted on 7/29/14 at 7:11 am to GeauxTime9
I'm agreeing with most on here...If you DO borrow that kind of money, pay it off more quickly to save in interest.
But think long and hard before you borrow 25k at your age. In about 5 years when you're focused on saving and investing (I hope) you'll probably realize how unnecessary of a purchase it was. All the while you could have been throwing that $_____/month into the market.
Wait, and save a good chunk for a downpayment on something a bit cheaper. Invest the difference.
Those are just my thoughts. Just some advice from someone who wishes he was just 4-5 years younger again.
But think long and hard before you borrow 25k at your age. In about 5 years when you're focused on saving and investing (I hope) you'll probably realize how unnecessary of a purchase it was. All the while you could have been throwing that $_____/month into the market.
Wait, and save a good chunk for a downpayment on something a bit cheaper. Invest the difference.
Those are just my thoughts. Just some advice from someone who wishes he was just 4-5 years younger again.
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