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Old 10-10-2012, 02:34 AM   #1
mightymints
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Default 72 Month financing

About to finance a 2013 STi. Any input on what is required to get 72 Month financing? Pretty new to all that stuff here in the USA... (Totally different from the UK credit wise)
I will be putting down about $6000 on the car which will be sold to me at invoice...
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Last edited by mightymints; 10-18-2012 at 01:44 AM.
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Old 10-10-2012, 02:42 AM   #2
thought
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Pass a credit check. That with your down payment will do it. The credit check will check your debt load, income, and your credit score. Keep your debt load under 30 (sometime 35) percent of your gross income and you should pass that (with a credit score of at least 650 for Canada at least).
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Old 10-10-2012, 02:44 PM   #3
Winston
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Take that $6k (or even better yet, $5k with $1k in reserve) and buy a car outright. Car payments are for chumps -- especially 72 months worth of car payments. That's a sure sign you can't really afford the car. If you have 5-6 grand in your pocket, you can get a really good used car. No, it won't be an STI or even a WRX. There was a GC 2.5 RS for sale on CL a few weeks back for $5k though; that would have been totally worth it.
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Old 10-10-2012, 02:47 PM   #4
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^ I take it you don't work for a car dealership
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Old 10-10-2012, 02:51 PM   #5
Winston
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No, but I always thought that would be pretty fun! My dad sold cars for a long time when I was a kid, and I still love dealerships to this day.

I'm not saying I haven't ever financed a car. Yep, I've made that mistake plenty of times. But you come to a point in your life where you realize how dumb that is, and so you try to help the younger guys avoid the same mistakes you made. When you realize how that cash could have been working for you instead of going to a depreciating asset, you gain some perspective.
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Old 10-10-2012, 03:03 PM   #6
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if you don't have the cash to buy one outright then you need to finance it - in houston, you have to have a car or you can't work (or it's very difficult)

interest is chump change on car loans nowadays

what is it? 5%? so if you finance 20K then you pay $1K a year in interest - what's that 80 bucks a month? bfd

(fwiw, I've paid cash for my last 5 vehicles)
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Old 10-10-2012, 03:22 PM   #7
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Pretty much pass a credit check and have a downpayment they are comfortable with. I don't have a problem financing a new car. I'd rather do that than have a 6k car which may or may not start having serious issues. And as stated before interest rates are chump change, my wife got 4% on a 2012 gti.
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Old 10-10-2012, 03:24 PM   #8
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I'm with Winston. I have financed 2 cars, but won't do it again. If they're doing special financing below 1.9%, I'd really take that into consideration just because I could handily beat that with a conservative investment. I financed my '09 mini (second financed car) at 0.9%. BUT I walked into the dealership with my check book intending to buy it outright.

General financial advice aside, if your debt-to-income ratio is within their (soa, dealership, etc) limits, usually under 30-35% as stated above, and you have an EXCELLENT credit score, you usually qualify for any loan. Excellent being 750 or better, not 650. If you don't know your credit score, annualcreditreport.com. DO NOT USE freecreditreport.com. It isn't free. http://www.ftc.gov/bcp/edu/microsite...ts/index.shtml
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Old 10-10-2012, 04:01 PM   #9
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1. I agree, you pretty much need a car in Houston because our public transportation system sucks and the city is so spread out. However, nobody said you need an expensive car.

2. Paying interest is a great reason not to finance a car. Throwing away $1k a year for no good reason is a big deal. If it's no big deal to you, I'll PM you with my PayPal address and you can give me some money. Gift only, please.

However, let's suppose you get zero percent financing. Free money. Why not finance then?

At risk of sounding like a financial planner stick-in-the-mud, here goes:

Simply put, if you have to finance a car because you don't have the cash to pay for it all at once, the total cost of the car is almost certainly a financial burden and the simple act of paying for a car that's out of your financial league will impact your finances for the rest of your life. Sure, you may be able to make the payments just fine... but what could that money be doing for you instead of rotting inside a depreciating asset? It could be working for you, making more of itself. Of course, I want to retire while I'm still young enough to enjoy it, so YMMV.

Now, if you have plenty of cash on hand and could buy the car outright without a second thought, then it's worth it to get zero percent financing and invest what you would have paid for the car in something that will make you money.

So how much car should you buy in the first place?

Here's a good gauge to determine how much car you should buy:

(your annual income) * 20% = the maximum you should spend to buy your car.

For example, if you make $35,000 per year, you should pay no more than $7000 cash for a car.

If you want that STI, you should be making

($32,263 (base)) / 0.20 = $161,315 annual income!

I know you probably think the "20% rule" is insane. That's fine. However, it works well in that it allows most folks to buy enough car to not be driving a total hooptie, yet keeps the financial losses to a minimum when compared to their overall nest egg. At least it's not as extreme as this guy's 10% rule (which is the one *I* actually follow now):

http://www.financialsamurai.com/2012...e-must-follow/

I certainly don't ascribe to all of his rules/advice/opinions, but I happen to like the 10% rule. For most people it's too extreme, though, which is why I brought up the 20% rule.

Oh, and FYI I'm not some finance/money manager/blogger guy. I'm just an engineer with a regular 9-to-5 (well, 7:30 to 4:30 typically) job that's trying to save a fellow TXICer from overbuying.

Last edited by Winston; 10-10-2012 at 04:16 PM.
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Old 10-10-2012, 05:08 PM   #10
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^ cliffs?
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Old 10-10-2012, 05:12 PM   #11
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there is no way in hell id put $6k down and finance the rest for 72 months

id buy a cheaper car..a MUCH cheaper car... and finance for 48 months or less and make SURE i got gap

if ya cant afford the payment at 48 months....dont buy the car


what ya gonna do with the 05 sti???
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Old 10-10-2012, 05:29 PM   #12
Winston
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Quote:
Originally Posted by Big_Hitter View Post
^ cliffs?


Cliffs: If you've only got $6k to put down on a car, you need to buy a $6k car (or less).
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Old 10-10-2012, 05:48 PM   #13
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thanks, the orignal post was quite long and i'm very busy

the op didn't say that the only had 6K to put down, but that he would be putting down 6K

maybe he's investing the rest of his cash in private equities or something that earns greater than 1.9%

financing defintely makes sense for some people, maybe not just for you or me

OP: i'm with scotty - what are you doing with the 05?
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Old 10-10-2012, 06:10 PM   #14
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Quote:
Originally Posted by mightymints View Post
About to finance a 2013 STi. Any input on what is required to get 72 Month financing? Pretty new to all that stuff...
I will be putting down about $6000 on the car which will be sold to me at invoice...
When you say "at invoice", does that mean you are paying MSRP, or dealer cost?
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Old 10-10-2012, 06:12 PM   #15
Winston
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Quote:
Originally Posted by Big_Hitter View Post
the op didn't say that the only had 6K to put down, but that he would be putting down 6K

maybe he's investing the rest of his cash in private equities or something that earns greater than 1.9%
Possible, but doubtful. He's 23 and he's asking about qualifying for 72 month financing. Not a good combo. BTDT. Maybe he'll chime in when he reads this thread.

Quote:
Originally Posted by Big_Hitter View Post
financing defintely makes sense for some people, maybe not just for you or me
True, but it only makes sense if the money you make off of investing the cash is more than the interest you're paying. I understand that some folks just flat don't have any cash and they need a car for work and/or school. That's a sucky situation, but that's what $1500 beaters are for -- no financing necessary (let's hope).

Quote:
Originally Posted by meanjoaquin View Post
When you say "at invoice", does that mean you are paying MSRP, or dealer cost?
Neither; invoice is somewhere between the two. It's the price that the dealer theoretically is paying Subaru for the car, but most of the time the actual cost is less than invoice.

From Ask.com:

“For most vehicle makes, the published invoice price is not the true dealer cost because of dealer holdback. Holdback is a portion of a car's sales price (typically 2 percent to 3 percent of either the invoice price or MSRP) that an automaker returns to a dealer, usually on a quarterly basis. It's a way of boosting the dealer's cash flow and helps the dealer keep his lights on.”
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Old 10-10-2012, 07:23 PM   #16
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some points for you to learn from me since i bought mine last october with 72/mo finance...

1) you're wanting the 72 months because of the lower monthly payment
- i got mine at 4.9% with a decent (not anywhere near perfect) credit score

2) buying it at invoice is a moot point. you don't want to put all of your $6k down because you have to understand there are some extra costs your way. knowing the average sti owner, you'll mod it within the first year.
- if you buy it now, you'll get stock summer tires, but need all-season/winter tires (Conti DW/S - $900)
- if you get clear bra ($600+ at a shop or 800 at the dealer)
- you'll get window tint ($100+ at the shop or $350+ at the dealer)
- gap insurance from the dealer ($200-400)
- if you get an after market alarm ($400-600)
- Cobb AP v2 for the times you get angry in S# ($400 used to $550 new)
- your insurance rate will go up
- Boost gauge and oil pressure gauge ($300+)

If you can roll without the car payment and liability insurance, I would agree like all the others and grab a 98 RS for $5k and go 300k+ miles like my buddy in WA. You just have to make sure you can afford it.

Last edited by vanillaZ; 10-10-2012 at 07:29 PM. Reason: forgot about the gauges... those don't come stock.
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Old 10-10-2012, 08:19 PM   #17
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I have never financed a car, but I can't imagine anyone would want to have a 6 year car loan... If payments are the issue why not buy a new WRX or look for an older STI.
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Old 10-10-2012, 08:21 PM   #18
HonduHunter
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I bought an 02 wrx for under $6k. Just make sure the maintenance is good. I'm over financing cars. Done it a lot. And now that im a little older I hope I'm done financing.

Last edited by HonduHunter; 10-10-2012 at 09:36 PM.
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Old 10-10-2012, 09:33 PM   #19
SGC2CIC
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OP already owns an STI
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Old 10-10-2012, 09:47 PM   #20
mightymints
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OP here.

Payments are not really an issue, I just want to be sensible.

I cannot afford the car outright, otherwise I would, but I can put more than that down, thats just how much I am getting from selling my STi and can just roll it into a new one.
With a $500 car payment on this car, even with 72 months, I will never be upside down from how well Subaru STi's hold their value.

I was actually approved today for 1.9% for 72 months, and could finance the whole car if I wanted to with that.

My MAIN reason is credit. I am from the UK and have only been here for 2 years. My credit is very limited, only a score of 707. I want to have a car payment so I can both have a nicer car, and also build my score, so when I buy a new house, I can get a really good rate.

Anyways, it looks like I am selling my 2005 STi tomorrow. I will miss my 2005, but I feel the need for something more practical. I do have fun in my STi and I still want that too, which is why I want the hatch. And I pick up the new STi on saturday. Very excited!
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Old 10-10-2012, 09:49 PM   #21
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Looks like he's selling/sold it:

http://forums.nasioc.com/forums/show....php?t=2416469

OP, why sell such a beautiful car only to put yourself into massive debt (for 6 years!) by buying a new one?! If your current STI is paid off, just enjoy it; if it's not, pay it off or sell it and use the proceeds to pay cash for a cheaper car. What you're talking about doing makes no sense.

EDIT: You posted while I was typing, so I'll just respond here. I guess what's done is done, BUT -- 707 is a fine credit score. The evidence of that is the fact that you were just able to finance for 72 months at an awesome rate. You can buy a house just fine with a 707 credit score. What matters most when buying a house is how much CASH you have on hand when you buy, and what your debt-to-income ratio is. So while you could be banking $500 a month to buy that house, now you will be forking over $500 a month to pay for a depreciating asset while having a higher debt-to-income ratio. Buying a new car is the LAST thing you should do if you're considering buying a house. I speak from experience, having purchased two houses now.

Maybe it's not too late to back out!

Last edited by Winston; 10-10-2012 at 09:59 PM.
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Old 10-10-2012, 10:06 PM   #22
mightymints
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Its not too late, but I have no regrets. $500 is allot of money for anyone really, but its not really that bad on an STi.

If you think about it, the STi is actually one of the least depreciating cars on the road today. My car is my hobby. I love driving my STi. $500 a month is pretty much my membership fee for my hobby, so its really not that bad in that respect as nothing else really costs me money besides gas.
Its like someone who shoots guns all the time. Ammo is really expensive. But if its what you enjoy, its what you do.
After this STi, I will most likely back down into something less expensive as I will be planning on having kids around then. This is kinda like my chance to have a car that I consider to be a very very nice car.
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Old 10-10-2012, 10:12 PM   #23
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Quote:
Originally Posted by Winston View Post
Looks like he's selling/sold it:

http://forums.nasioc.com/forums/show....php?t=2416469

OP, why sell such a beautiful car only to put yourself into massive debt (for 6 years!) by buying a new one?! If your current STI is paid off, just enjoy it; if it's not, pay it off or sell it and use the proceeds to pay cash for a cheaper car. What you're talking about doing makes no sense.

EDIT: You posted while I was typing, so I'll just respond here. I guess what's done is done, BUT -- 707 is a fine credit score. The evidence of that is the fact that you were just able to finance for 72 months at an awesome rate. You can buy a house just fine with a 707 credit score. What matters most when buying a house is how much CASH you have on hand when you buy, and what your debt-to-income ratio is. So while you could be banking $500 a month to buy that house, now you will be forking over $500 a month to pay for a depreciating asset while having a higher debt-to-income ratio. Buying a new car is the LAST thing you should do if you're considering buying a house. I speak from experience, having purchased two houses now.

Maybe it's not too late to back out!
Your credit tier also matters a lot.

I have excellent credit for instance, but at a very low tier, to purchase a house right now, I'd probably be able to buy an STI cash with the money I'd spend in extra interest on the house because I don't have a high enough credit tier.

And with all that said, money isn't everything, if owning and driving a newer, for him more practical STI is worth $500 a month, who are we to say he shouldn't.
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Old 10-10-2012, 10:20 PM   #24
mightymints
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I was told I was tier A credit, the only one above it would be A+. He said I am well on the way, just need to wait another year roughly. He was actually surprised how high my credit was for 2 years. I just try not to spend more than 50/60% on any of my cards. Any I never pay late of course.
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Old 10-10-2012, 10:24 PM   #25
mightymints
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Oh, and some how my insurance only went up $3 a month from my 2005 to 2013. Apparently the Sedan is a Sports Sedan. The Hatch is a "Family Wagon". If only they knew.....
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