My situation is a bit frustrating, and I would greatly appreciate advice from anyone who knows anything about cars and finances.

The car that I have now is a 92 Chrysler. It was an "in-between" car, so I had something to get me from point A to point B until I had saved up enough for a car. I have been in love with the Fit for years now. Now, winter is approaching and this car (that I bought for $1,000) has too many issues and the repairs would cost more than what the car is worth. What's more, I live in PA and even if it survives the winter, it is too dangerous to drive in during the winter season.

So that brought me to my car shopping search. I found the Fit that I wanted, and I prefer the Sport (the sound system matters to me more than anything) and although I have excellent credit, I have a good job, and everything checks out for me... I don't have a credit history that is long enough to get financed without a cosigner. And that's where my heart dropped: I don't have anyone, anyone, that could co-sign.

This is where the advice comes in. The man is trying to push to see what he can do to possibly get it pushed to go without a co-signer. But the thing was, the interest will be very high.

What should I do? If he says he can get it pushed through, should I accept it if the interest rate is under 10% and then in a years time refinance and get my interest rate adjusted when I have more credit history?? Or should I buy another junk car altogether and keep doing that until I have enough history to warrant me to get financed on my own?

I feel a bit hopeless right now.

 

Try applying for a loan at your bank. Another place to check is through your insurance company. State Farm wanted to finance my car when I called them to add it to the policy.

If you refinance after the car is 6 months old (not sure of the cutover age) it will then be a "used" car and not qualify for as low a rate even if your credit status improves.

New car rates are about 3% with a good credit history. I don't think you should pay more than 5 or 6% with a lack of history and not "bad" history.

If the dealer you're talking to now wants too high interest, walk away and shop for loans, then negotiate for a car.

edit: be very careful how much you pay for the car. My spidey sense tells me they may be trying to take advantage of you.

 

Agree with Steve.
This is what I would do if I were in your shoes:
1.Sink as little money in the 92 Chrysler as possible. That can be a money pit, especially there is no love for it.
2.Make an honest assessment of my financial status – how much car can I really afford?
3.If that Fit is too much for me at this time, an older Fit or Civic can be an option. I can always upgrade once I make the money in the future.
4.Borrow money with little credit history is viewed as high risk, translates to higher cost in interest. I would build up my credit before getting a sizable loan.
5.After all that, if I still want that Fit, then it is time to shop around for a loan with the best interest rate I can find. Check with my bank, may be a broker.
6.Don’t forget insurance cost for the Fit may be higher than the 92 Chrysler.

 

If you can get the Fit financed, even at high interest, and then can make more than the minimal payments and pay it off sooner, you are in essence "making your own interest rate". But don't know if you could do that.

Examine your budget and cut to the bone so you will have $ to put toward a car one way or another. Maybe you can make it a little while longer in the Chrysler. Or even without a car for awhile.

Good luck.

 

From someone that bought used without warranty and paid dearly for it: Don't spend another dime on that Chrysler. Regarding financing, shop around. Look into credit unions, look for loans that hav no early payoff penalty. If you plan on keeping the car for awhile, new or certified preowned would be the way to go. But if used is what you can do right now, find a good reliable vehicle with ample parts supply that is affordable.

 

Getting financing through the dealer is dangerous. They don't have a legal responsibility to be honest with you. If they feel that they can sell you a high interest loan over a cheaper one, they will. Even if the bank is willing to write the loan at 5-6% the dealer can sell the loan at 8-10% and pocket the difference.

To that end, you should seek out a few alternate loan sources. Your local bank/credit union is a good first step. They can often offer a lower rate based on more than just a credit score. They see your paychecks and spending for example, so they have a better sense of those.

You can also try the national banks and websites like bankrate.com or lendingtree.com

 

The other thing you should do is pull your credit reports, just to be sure that everything on there is correct. If there's something erroneous dragging down your score, that might affect the rate you are eligible for.

 

I think the dealer could make it work, I mean I have an extensive credit history but my score was around 700 and I still got 4.1% through Honda financial.

 

What can happen if you don't know the rate is that the finance guy will quote a high rate because he makes more money that way.

 

Thanks everyone for your input and opinions. My Chrysler is making really scary noises. It sounds like pots are bumping around down there and it's quite frightening. Still, I feel like putting any money towards it will be money wasted.

The dealership called me back and told me that they couldn't finance me without a cosigner. I have very good credit, I'm just young and I have less than a years history. But what I do have is excellent. My issue is, I keep trying to get something else attached to me to build more credit, but everyone is turning me down because of my short history. It feels like a vicious cycle and I'm trying to break it.

Anyways! I still want the fit, but I'm going to wait two years. My goal is to find a good Honda (I know that Honda is one of the best, and even an older used one is going to be good to be) that is used and under 5500. If I put down a large downpayment and finance the rest to pay off in two years (I'm being an optimist when I set this goal) then it should help me build more credit so that in two years time, I can get the car that I want.

Thanks everyone for your input. And I definitely did not know that about the car dealerships pocketing the rest and just charging you higher interest. @.@

 

Just curious if you tried talking to a local credit union. Credit Unions are member owned and can usually give you a fair rate. Also a good place to do your banking.

 

I do have a credit union, actually! I have an appointment with someone today to discuss loans and whatnot. Thanks c:

 

Actually that was a fantastic rate for me since my local bank was only going to offer 6.9%

 

yah, consult your bank and also credit union, i suppose. GL!

 

Well, going through Honda Financial directly can work better, because then the loan is part of an incentive program to sell the car. And because you shopped the loan around, you knew it was a pretty good deal.

Edmunds has some good "confessions" articles about things the dealers can pull
Confessions of an Auto Finance Manager - Edmunds.com

Knowing what rate you should get makes a huge difference in the negotiations. For the OP, I have no idea what rate he should qualify for, but just asking the dealer is a bad idea.