I’m looking at getting an auto loan for maybe around 5 grand. I have a 500 dollar down payment and incredibly poor credit, but a very good credited co-signer.
What sort of interest rates would I expect to pay? The loan calculators I see put a set rate at either 6 or 10 percent, and that seems to be a pretty big difference.
Go to a credit union and get pre approved for a loan. You will receive a pre approval letter.
When you go to buy your car, do not show your pre approval letter to the dealer. Do not let them know how much car you can afford.
You do not want to say "I have 5 grand, help me find a car".
You will not get a discount on that car. Essentially with pre approval you are considered a cash buyer. A cash buyer can get more than 30% off the sticker price of the car.
Be ready to walk away even if you love the car, and got a nice discount. They will call you and offer you a better discount. I have bought many many cars, they always call you and make you a better offer.
If you go to the dealership, they will offer you 0% interest, but of course you will pay much, much more for the car.
Since you only have 10% down, you might have to pay the higher interest rate. Could you get up to 20% down?
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Go to a credit union and get pre approved for a loan. You will receive a pre approval letter.
When you go to buy your car, do not show your pre approval letter to the dealer. Do not let them know how much car you can afford.
You do not want to say "I have 5 grand, help me find a car".
You will not get a discount on that car. Essentially with pre approval you are considered a cash buyer. A cash buyer can get more than 30% off the sticker price of the car.
Be ready to walk away even if you love the car, and got a nice discount. They will call you and offer you a better discount. I have bought many many cars, they always call you and make you a better offer.
If you go to the dealership, they will offer you 0% interest, but of course you will pay much, much more for the car.
Since you only have 10% down, you might have to pay the higher interest rate. Could you get up to 20% down?
/
References :
In general, based on your age and credit, regardless of your co-signers credit, you will get a very high interest rate. It might be better to have your co-signer be the primary on the account and you be the "co-signer" in this way you will get the benefit of their credit score and thus, a lower interest rate, while still getting the reporting to your credit reports to help increase your credit score. However, this will require a lot of trust on your co-signers part. So hopefully they are a family member or something.
References :
Been around the credit block enough to know this stuff…