Question about financing for current BRZ owners

[Lytheum]

i have gap coverage through my insurance policy...never knew you could do it through financing?

[eikond]

Originally Posted by Dave-ROR

Gap insurance varies, the cheapest I can recall seeing is 6-7 bucks a month build into the financing.

For others who aren't sure if they need GAP..
Whether or not it's needed depends on how much you owe on the car. The main risk is that first year, unless the values of these cars takes a nose dive (highly unlikely IMO), after that you'd likely owe less than the car is worth.

If the car is worth say, 80% of it's value after you drive it off the lot, and you put less than 20% down it could save you some money if something happens, if you put 20% or more down it's unlikely to ever be used.

-Dave

Just to add to your point..

I'm not an insurance agent, so correct me if I'm wrong,... I think for clarification purposes it should be said that GAP insurance covers the difference between the value of the (now) used car, and your loan value. You were talking about down payment, but I think taxes should also be considered if people decide to finance in the taxes as well.

Many people finance the full purchase price as well as the sales tax (which can be substantial). A lot of BRZ owners will have loan principles that are $2k or more higher than the MRSP thanks to sales tax, title, registration fees, etc.. Then, when they drive it off the lot, it becomes a used car immediately.. Whlie it won't depreciate as quickly as most cars.. it still loses value.. It should certainly depreciate by at least $2k simply by becoming a used car.. at least as far as insurance companies are concerned..

So let's say you have an unfortunate accident in the first months of ownership.. you could very easily have a $4,000 deficit between your loan on the old car and what your insurance gives you as a settlement. For this reason, spending an extra few bucks on GAP seems like a pretty good idea to me..

[Turbowned]

I've got a couple questions:

I'm not a member of any credit unions nor have I ever applied for a loan in this large of an amount (I've taken out 3 student loans for <$10k ea. with a co-signer, and was just approved for a CareCredit loan for dental work for <$5k). I've paid those loans down significantly, have one credit card that'll have zero balance by June, and my credit score is over 720 so I'm good there, but I'm worried the banks might get skittish about approving me for some reason; I'll actually be spending less $$/mo with the Subaru than I do my Audi (leased through my company, handing it in before taking the BRZ). I'll be paying $3,000 up front which will be enough to cover sales tax, doc and registration fees, and destination charge, but not anything off the price of the car - will that be a problem?

If I wanted to become a member of a credit union say, this week, how receptive would they be to me applying for a loan in this amount if I've only been a member for 3 weeks? I've been with the same regular bank for >10yrs but their auto loans require you to put a minimum of 20% down and they don't advertise rates. Doesn't look like a good scenario there...

I know this isn't the financing forum but I thought maybe some more experienced ppl could help.

[Dave-ROR]

Originally Posted by eikond

Just to add to your point..

I'm not an insurance agent, so correct me if I'm wrong,... I think for clarification purposes it should be said that GAP insurance covers the difference between the value of the (now) used car, and your loan value. You were talking about down payment, but I think taxes should also be considered if people decide to finance in the taxes as well.

Many people finance the full purchase price as well as the sales tax (which can be substantial). A lot of BRZ owners will have loan principles that are $2k or more higher than the MRSP thanks to sales tax, title, registration fees, etc.. Then, when they drive it off the lot, it becomes a used car immediately.. Whlie it won't depreciate as quickly as most cars.. it still loses value.. It should certainly depreciate by at least $2k simply by becoming a used car.. at least as far as insurance companies are concerned..

So let's say you have an unfortunate accident in the first months of ownership.. you could very easily have a $4,000 deficit between your loan on the old car and what your insurance gives you as a settlement. For this reason, spending an extra few bucks on GAP seems like a pretty good idea to me..

Correct. I should have said "As long as your loan value is less than the vehicle's value" or "If your loan is 80% or less of MSRP". There will be an instant drop of the value of the car, maybe not 20% of the MSRP but there will be one.

So yeah, I didn't word that well I'm only financing 22 or 23k on a limited which makes GAP insurance basically worthless for me.

[ayau]

Originally Posted by Subaruwrxfan

Are you sure? If this is the case I will keep this in mind as a backup if I get a crappy rate from the dealer.

Yeah, I was about to sign up but found out my local Credit Union offered similar rates.

[Dave-ROR]

Originally Posted by Subaruwrxfan

Are you sure? If this is the case I will keep this in mind as a backup if I get a crappy rate from the dealer.

Yep, you can join Voices for American Troops for $15 or National Military Family Association for $20.

If you goto PenFed.org, click on Join PenFed, then "None of the Above" it gives you a short description of the two groups. Personally I'm joining NMFA for $20 if I go the PenFed route.

[Dave-ROR]

Originally Posted by Turbowned

I've got a couple questions:

I'm not a member of any credit unions nor have I ever applied for a loan in this large of an amount (I've taken out 3 student loans for <$10k ea. with a co-signer, and was just approved for a CareCredit loan for dental work for <$5k). I've paid those loans down significantly, have one credit card that'll have zero balance by June, and my credit score is over 720 so I'm good there, but I'm worried the banks might get skittish about approving me for some reason; I'll actually be spending less $$/mo with the Subaru than I do my Audi (leased through my company, handing it in before taking the BRZ). I'll be paying $3,000 up front which will be enough to cover sales tax, doc and registration fees, and destination charge, but not anything off the price of the car - will that be a problem?

If I wanted to become a member of a credit union say, this week, how receptive would they be to me applying for a loan in this amount if I've only been a member for 3 weeks? I've been with the same regular bank for >10yrs but they require you to put down a minimum of 20% down and they don't advertise rates. Doesn't look like a good scenario there...

I know this isn't the financing forum but I thought maybe some more experienced ppl could help.

There are multiple factors that will affect the rate. I assume you have had a carloan before? Some institutions increase the rate if it's your first car loan.

If your credit rating is excellent, your DTI ratio is good, steady employment, etc then I don't see you having a problem.

Regarding the length of membership for a loan, I joined credit unions by getting a loan which then required a savings or checking account at the same time, so I've gotten loans as a zero day member.. I'm sure that's pretty common.

[ayau]

Originally Posted by Turbowned

I've got a couple questions:

I'm not a member of any credit unions nor have I ever applied for a loan in this large of an amount (I've taken out 3 student loans for <$10k ea. with a co-signer, and was just approved for a CareCredit loan for dental work for <$5k). I've paid those loans down significantly, have one credit card that'll have zero balance by June, and my credit score is over 720 so I'm good there, but I'm worried the banks might get skittish about approving me for some reason; I'll actually be spending less $$/mo with the Subaru than I do my Audi (leased through my company, handing it in before taking the BRZ). I'll be paying $3,000 up front which will be enough to cover sales tax, doc and registration fees, and destination charge, but not anything off the price of the car - will that be a problem?

If I wanted to become a member of a credit union say, this week, how receptive would they be to me applying for a loan in this amount if I've only been a member for 3 weeks? I've been with the same regular bank for >10yrs but their auto loans require you to put a minimum of 20% down and they don't advertise rates. Doesn't look like a good scenario there...

I know this isn't the financing forum but I thought maybe some more experienced ppl could help.

banks primarily look at your current income to debt ratio. as long as your current debt isn't more than 50% of your gross income, then you should be approved.

for example, if you have $800 in monthly debt payments and take home $3,000 gross, you'll most likely be approved.

i signed up with the local credit union just for a car loan for my previous car. i don't think they care how long you've been a member. you're essentially providing business for them when applying for a loan. i'm not sure why'd they turn you down unless you're at a high risk of defaulting.

[Turbowned]

DTI ratio... hmmmm. I should actually be pretty good in that regard. After the CC is paid off I'll be paying <$500/mo vs. ~$3k/mo gross pay (Gahd I need a better job!!). To add another $500/mo car payment still equates to less than 50% and I don't have rent or mortgage to worry about. This is my first auto loan, though...

[ayau]

Originally Posted by Turbowned

DTI ratio... hmmmm. I should actually be pretty good in that regard. After the CC is paid off I'll be paying <$500/mo vs. ~$3k/mo gross pay (Gahd I need a better job!!). To add another $500/mo car payment still equates to less than 50% and I don't have rent or mortgage to worry about. This is my first auto loan, though...

everyone has to start somewhere. i had my first mortgage and auto loan within the same year, and they didn't tax me extra just because it was my first.

it's really simple. if you have a steady income job, above 720 credit score, and no late credit card payments (1-2 is fine), then you'll most likely receive the lowest interest rate.

[Turbowned]

This is all very good news, and makes me feel a lot more comfortable with my situation. I just didn't want to get the call that my BRZ is in, go to the dealer, and get denied financing or get stuck with some high interest rate and have to give it up to someone else after waiting for several months.

[WRXGuy1]

Originally Posted by Turbowned

This is all very good news, and makes me feel a lot more comfortable with my situation. I just didn't want to get the call that my BRZ is in, go to the dealer, and get denied financing or get stuck with some high interest rate and have to give it up to someone else after waiting for several months.

I'm in the same boat. I called one dealer who said they SHOULD be able to get me close to 2.9% APR for 72 months, but there was no guarantee. Another dealer said they wouldn't know until they find out what the deals are for June, when it is June. My thought is to go to the dealer with a backup plan of financing with a bank or credit union, but trying to get the dealer to match it. It's so much easier having the dealer take care of the financing then worry about having to arrange it yourself.

[Turbowned]

Yeah, a dealer can't guarantee rates to anyone until you fill out a credit application through them. And yes, leasing and financing programs can change on a month-to-month basis.

[dwcnmv]

I was going to go with the 2.9% my local credit union could get me but the dealer got me 2.39%. I've got Tier 1 credit. Obviously if you're credit isn't great it could likely be a higher interest rate. This was with no special financing programs. Should at least give you an idea.