So I'm buying a used car...

[AC/DC]

So I drive a 1996 Jetta, and it's a bucket with a sound system.

I test-drove a 2002 Jetta 1.8T (turbo) and it's really comfortable, soft seats, awesome sound system, dumb quick, looks nice, has alarm, power everything, stick shift, just the way I want it.

Private sellers sell it for about 11,000, dealers sell it for about 13-14,000.

My car is worth about $2000, and I will have an additional $3000 cash to spend on it.

So my question is this:
I'm 18, just got my credit card, not sure how to build credit yet. Should I buy it off a dealer, use the dealer's loan with the lower interest rate? Or should I loan frmo my bank, pay less overall for the car, but have higher monthly payments with higher interest? Is there some other option?

I don't know anything about financing or credit or buying used cars; I just turned 18 and I was never taught much.. I kinda learn everything myself.

Help me out!

 

[Create Reality]

Do what costs less in the end.

Security of payments VS Risk of saving. Your choice.

 

[check_mate_kid_uk]

do you have a good/stable job because at your age it is dangerous to take out such large loans because you may not be able to repay it.

 

[AC/DC]

I'm currently trying to switch jobs to something where I make about $280 a week, and that will be about the cost of the montly payments for the dealer. I assume it would be higher for the bank loan than for the dealer loan.

 

[JH6]

get a bank loan, and shop around on autotrader.com and get the exact ride you want and go pay for it in cash at the used dealership.

You get hammered if you just walk to a local dealership and buy a used car.

I've gotten my last two cars from that site, and paid way way under book and gotten decent rides.

I'm ready to sell my truck now and get something else.

 

[PRMoon]

Originally posted by JH6
get a bank loan, and shop around on autotrader.com and get the exact ride you want and go pay for it in cash at the used dealership.

You get hammered if you just walk to a local dealership

#1 way to buy a car for sure. If you don't have that much credit and the bank won't give you an extention, try to get someone (your parents, sibling, older friend) to co sign for you. Just make sure you make the payments, as they probably won't want to see an noticies coming to their house.

 

[AC/DC]

So I should take the bank loan instead of the dealer loan and go with a private buyer? There's no warranty this way, and the monthly payment/interest is higher. My banker said it would be more cost-effective if I took the dealership route...

 

[PRMoon]

Originally posted by AC/DC
So I should take the bank loan instead of the dealer loan and go with a private buyer? There's no warranty this way, and the monthly payment/interest is higher. My banker said it would be more cost-effective if I took the dealership route...

I don't see how your intrest could be that much higher with your bank, but i guess since you have little credit history your banker would assume it to be higher. If you go to a used car dealership however, they can move your loan from one bank to another and you COULD get pinned with a higher interest rate.

This isn't the practice for too many auto dealerships. If you're dealing with a reputable dealership then they won't do that, but if it's a really sleazy place that has those free hot dogs and what not you may want to re concider.

You also might want to concider having one of your parents or someone with good credit history co sign for you or maybe even have them as the primary on the loan. You can still have the payments come to you the liscencing for the vehicle may be some what messy if you go that route in terms of the liability.

You could also apply for a loan at another bank, not your institution, tell them what you're trying to do and about how much you'll need and see what their interest rate is. Sometimes it's lower sometimes its not but it's worth a shot. At this point I don't think it makes too much differance if you have your credit run a few times becaue you have no history so you could probably do that a few times but don't go crazy (the credit bureau are a bunch of nervous guys who have way too much coffee in their diet. If you run your credit too many times they assume you're planning on spending way out of your range and lower your score).

There are other things you could try but I'd look into doing one of these first because it's reltatively safe and you won't get too jacked. But if you do like a consumer report on the dealership and everything checks out legit and you don't see that many complaints you may just want to put it in their hands.

 

[bay]

The best route is to save up your money and pay cash.

 

[al77]

Originally posted by bay
The best route is to save up your money and pay cash.

Word!

Think about it: 2002 Jetta. it will prolly cost a lot to fix since it is an European car.
Much better to save some cash and buy something cheaper.
If you get a loan and buy froma dealer not only you will have to pay extra 1-2k to dealer (he won't tell you about that of course), but you also have to pay for a full insurance, which is a lot.

Save cash, buy a used honda civic or acura, it's significantly cheaper and last forever plus you can save on insurance a lot!
Buy minimum one, here is a company I buy my insurance from... check their rates, they were unbelievably low for me.
horacemann.com

 

[PRMoon]

Originally posted by al77
Save cash, buy a used honda civic or acura, it's significantly cheaper and last forever it's significantly cheaper and last forever plus you can save on insurance a lot!

This may be harder to acheive then you think. With gas prices at the levels they are, used japanese cares are in high demand. I'm actually looking at getting a used honda or toyota (the tC is just not doing it for me) and the 02-04 models I'm looking at run from 10-19K depending on the model. A comparable car to the one hes looking at (like an accord or a vigor) in decent condition will run just as much as that 02 jetta.

Also I wouldn't expect the insurance for an 18 year old to be too much cheaper on any type of mid sized four door sedan. Maybe if he droped down a size (like to a civic or an integra) it we be a few hundred cheaper per year at best. But then again if he got say a golf as a opposed to a jetta he'd likely be back in the same bracket.

 

[al77]

Originally posted by PRMoon
This may be harder to acheive then you think. With gas prices at the levels they are, used japanese cares are in high demand. I'm actually looking at getting a used honda or toyota (the tC is just not doing it for me) and the 02-04 models I'm looking at run from 10-19K depending on the model. A comparable car to the one hes looking at (like an accord or a vigor) in decent condition will run just as much as that 02 jetta.

Also I wouldn't expect the insurance for an 18 year old to be too much cheaper on any type of mid sized four door sedan. Maybe if he droped down a size (like to a civic or an integra) it we be a few hundred cheaper per year at best. But then again if he got say a golf as a opposed to a jetta he'd likely be back in the same bracket.

Demand yes, but don't forget the other part of the equation: there are way more Hondas in US than Jettas. Essentially it means it is easier to find, easier to sell and easier to repair (cheaper). Parts\laber still are going to be much cheaper for a honda than for a jetta.
I don't argue about "nice ride" thing: jetta is better, but money wise it is pure luck to find anything better than those honda\toyota.

I don't know much about insurance for different people. But I know a lot about prices in different insurance companies.
I went to about 4-5 large ones. And later a buddy told me about horacemann. They gave me a price...2.5 times cheaper!
Believe me or not.
I am not saying it is the best company, I am saying it is worth to consider it (ie. get a quote from it) if you want to save a buck.