Auto Financing Options

[a.s.]

My lease is up in a month and I want to purchase the vehicle. I'm getting rate quotes of 5.9 - 6.8%, which I think is insane. My credit is excellent and I was hoping to get an auto loan around 5%. Is this just wishful thinking? Does anyone have ideas or know where I can get a reasonable rate?

 

[JimN]

For a great low rate you can get online, go to The General and save some time.

 

[Paul H]

Is that quote from the dealer?

 

[a.s.]

Is that quote from the dealer?

The dealer is out of the picture. The car was leased through a credit union. I can finance through them or find my own lender.

 

[shrpshtr325]

yea thats where the rates are these days, unfortunately. Unless you are buying new and get a mfg promo rate. (i was offered (didnt take) a rate in the mid 4s on a new car loan early august from a local credit union, with excellent credit). On a used car your options are more limited (mfgs dont offer loans on used cars unfortunately for you)

 

[Paul H]

Could be wrong but I was told used car loan rates are just higher than new car loans

 

[MadisonDan]

5.9% is around 5%. It’s within 0.9% of it.

 

[Paul H]

5.9% is around 5%. It’s within 0.9% of it.

Lower margin of error than covid tests

 

[Carson]

PENFED, which is always touted as one of the best lenders, is in the 6% range for used car rates.

https://www.penfed.org/auto/used-auto-loans

Lease rates are up just as much, so turning it in and leasing another will not work either. $350 CR-V leases from 2020 are now closer to $450.

 

[a.s.]

Could be wrong but I was told used car loan rates are just higher than new car loans

Used car rates are higher than new car rates. Not sure why but lease buyout rates are even higher than that.

 

[Patrick]

Used car rates are higher than new car rates. Not sure why but lease buyout rates are even higher than that.

risk. used car prices are unusually high right now.
if they fall, and people go upside-down on the loan, they'll just stop paying and turn in the car.

take out a home equity loan, claim you are renovating your kitchen,
pay off car. pay off loan like your life depends on it.

 

[a.s.]

risk. used car prices are unusually high right now.
if they fall, and people go upside-down on the loan, they'll just stop paying and turn in the car.

take out a home equity loan, claim you are renovating your kitchen,
pay off car. pay off loan like your life depends on it.

Ugh. I hear you 😔. Not a bad plan.

 

[Patrick]

Ugh. I hear you 😔. Not a bad plan.

i should restate - home equity line of credit. an open HELOC is good for 10 years.
your credit union should be the best place to source it.

 

[a.s.]

i should restate - home equity line of credit. an open HELOC is good for 10 years.
your credit union should be the best place to source it.

So you’re saying take a HELOC at ~5% and use that to purchase the car … correct?

 

[iman29]

FWIW I had a 2019 Honda Odyssey coming off lease with only 22K miles back in July. It sat mostly in my garage during COVID. I researched everything and every possible way to extract the inflated value out of the car since I was so far under the miles (3 year 36K). Loan rates were not as bad as now but we’re all higher than a new car or lease.

My payoff was only 22,500 but this car was selling everywhere for 35K or more. However Honda doesn’t let you sell any leases anymore.

I was able to negotiate a value for the car from the dealer as if I was selling it to Carvana. and he applied that as credit to my new lease and even carried it forward when he realized he could only get a 2023 model since 2022 were done being made.

Even tho I paid a $2500 markup on the new lease I am still paying less per month than if I bought the 3 year old car and had to get a used car warranty (because shit always breaks when it’s off warranty ).

Used car loans always cost more tho in my experience and may not be worth it depending on your personal situation.

Just my 2.5 cents

 

[Patrick]

So you’re saying take a HELOC at ~5% and use that to purchase the car … correct?

Yes. They will use a 10 year payoff so the monthly payment will be lower, so you pay ahead. The interest is deductible along with mortgage interest. No prepayment penalty.

 

[a.s.]

Managed to qualify for a “loyalty program” with my credit union. They are giving me 4.8% on 60 months. I don’t think I’m finding anything better, even on a HELOC, but I’ll keep looking.

 

[Patrick]

Managed to qualify for a “loyalty program” with my credit union. They are giving me 4.8% on 60 months. I don’t think I’m finding anything better, even on a HELOC, but I’ll keep looking.

if you are itemizing on your taxes, heloc interest is deductible...

 

[rick81721]

Yes. They will use a 10 year payoff so the monthly payment will be lower, so you pay ahead. The interest is deductible along with mortgage interest. No prepayment penalty.

Nope. HELOC interest is only tax deductible if the money is used for home improvement.

 

[Patrick]

Nope. HELOC interest is only tax deductible if the money is used for home improvement.

This is correct. Nobody checks tho.