I'm curious if my thinking is correct, I'm sure this makes me sound like much a moron for asking, but.....

If I put a very large down payment on the car will that lower my monthly payments by any great deal or is there some limit that the payments always have to be above ? And if you don't mind sharing, how much did you put down?

 

Look for an on-line loan calculator. A lot of banks have them on their websites (the miniusa site might have one too... I've forgotten...) With the calculator you can play around with variables like the total cost of the car, different downpayments, and how long you want to be paying the loan.... and then see what the monthly payment will be under each scenario.

Good luck!

 

I don't know a thing about loans... what a good percentage rate is.. none of that... (at least I admit my stupidity right ) I wouldn't know what I was doing.

 

The downpayment reduces the amount you finance. Therefore, the more your downpayment the less you finance the less your payment is.

As for a good interest rate, that varies a bit. Generally, banks will put their interest rates online. The confusing part is that dealerships (at the moment) can generally offer about 1% lower rates. So, if banks are currently offering currently offering 6%, then the dealership can probably get you 5% and lower. For estimation of payments, this assumption can be deemed adequate.

Now to compute the payment...... that's where it can get fun. I,of course, have specialty software. But, there are loan calculators out there that will get the job done too. You can find them on just about any bank website. They'll get you within pennies of what you can expect for a payment.

Hope that helped.:smile:

 

Try to put down at least 20% - that way you'll have less chance of being upside down on payments (owing more than the car is worth).

https://www.bankrate.com/brm/popcalc...tization+Table

 

Fortunately, with the MINI, there isn't much danger of that.

 

One other thing to keep in mind is that the longer your loan term (e.g. 5 years vs. 3 years) the lower your monthly payment will be. Overall you are paying more in interest (that is money that goes to the bank vs. paying off the car) but it may be easier to manage the longer term, lower payments. However, you can always pay more than your monthly payment if you have the cash on hand. Anything extra you send in reduces what you owe allowing you to pay off the car earlier while still keeping your monthly payment as low as possible.

 

I agree. If you can afford more in fact, put down as much as you can handle. Don't let the loan officer try and talk you out of it (he's more concerned with getting as much in interest payments out of you as possible). If you have a large enough down payment, you won't need "gap insurance", which protects you in case the car is damaged beyond repair before the loan is paid off but your auto insurance payout is less than your remaining balance.

Most banks/credit unions have online loan payment calculators. Play around with one if you haven't already. Input different amounts of principle (AKA hypothetical down payment), interest, and loan term. Also examine the loan conditions. There might still be a lending institution that penalizes you for overpaying. Stay away from this...

I know a few people who are upside down on their auto loans. Not a good situation. If you're still confused, don't hesitate to ask more questions!

 

You can also use plain ole Microsoft Excel. Just open a spreadsheet, select insert,then function, then PMT. You will then need to put the interest rate you expect to pay (in this format: 5%/12), then the total amount of the loan and the number of payments and then hit enter. You'll have your payment.


don't forget, when you are guessing at your loan amount remember to add tax and title amounts in to that.

 

You are not a moron, this is the first step to being smart, asking questions!

The smartest thing to do at your age is to NOT buy a brand new car. What you don't know about loans is the tip of the iceberg. I would STRONGLY recomend that you study finances at least for the next year or two. read all you can! see if the talk radio station near you as money advice shows, Listen! You are not dumb, but your lack of knowledge about money should indicate that you might be getting a little ahead of yourself in life.

 

I would argue that the money could be easily invested at a higher interest rate than your car finance rate. In this case, there's no reason to part with the cash. Of course, if you're just going to spend the money on something else it defeats the purpose.

 

Just from my experience with my credit union also consider this:

Some banks (like my credit union) offer a better rate to their customers with a larger down payment. The theory is that when they see you willing to invest into the purchase and not borrow the total amount, you appear as a lessor risk.

Also my bank offers a better interest rate for those that have direct deposit of their paycheck into a checking account and even better discount rate when you have them automatically transfer the payment bi-weekly.

This is great if you are in the position to do this, and it might not be for everyone.

 

Another strategy would be to go ahead and put down the minimum (or none) and finance the entire thing for as long as they will allow. This will give you a small monthly payment and it will also allow you to pay on the principal when YOU want to. It keeps you flexible in terms of when you wanna pay more on the balance and when you do not (or can't).

And I would recommend GAP insurance if it is feasable.....my bank offers it for a measly 200 bucks (Credit Union).

But if there is one thing I can tell you is do the research! Ask questions.....fees, insurance, discounts, rates. Learn how to haggle or take someone with you who can.

 

On a MINI, GAP insurance is really unnecessary.

 

I intend to put about a third down on a 5 year loan to get the monthly payment down to a place where it is fairly easy to handle. However, I have no intention of waiting for five years to pay it off. When there is extra money I'll pay extra on the payments and when things are tighter I'll have a smaller, easier payment to deal with. This method worked great on my truck and it was paid off in about two years saving me lots of money in interest. It is a great way to ensure that other unforseen future expenses do not get in the way of making your car loan payments.

By the way, if you can get a loan with USAA, gap insurance is included for free and, if you can find a better rate somewhere else, they will beat it.

 

DANGER WILL ROBINSON....DANGER

loan people are in the business to make money.....by taking out of your pocket and putting it in their's. not a shot at the loan business and those in it - a statement of fact.

don't sign for a loan until you DO understand all this mumbo jumbo.

but if you decide to go forward blindly...give me a call, I'l finance your buy

 

Thank you all, you've awnsered alot of the questions I had.

As far as not being taken, my father is always with me when I go to do any such thing. He even came along on the test drive so the salewoman didn't blow me any $--t... He's an incredibly intelligent man and he looks out for me, I know he will always give me an honest breakdown of what he thinks of the situation as well and it's always nice to have an unbiased opinion...

and trust me, just b.c he's my father doesn't mean he cares when it comes to giving me an opinion

 

I used to work at a dealership (two actually) and I'm an accountant.... so you could say I know a little about finance. MINI's website does offer a payment calculator.

The best thing to do when getting a loan in your situation is to get a written quote and then go home and do your research. Find an online amoritization calculator (or just ask me to do it, I use this in industry software every day) and it will show you a break down of your payments in principle and interest... it will tell you the total amount of interest you will pay over the life of the loan and show you where your balance will be after any given amount of time.

Don't just fall in love with the car and take the first offer you're given right there.

Bigger the down payment, lower the monthly payment and the less interest paid over the life of the loan.

GAP insurance isn't a big deal with MINIs. I would suggest it only if you end up with a somewhat high interest rate.

I'll be more than happy to help you with this in any way I can.

 

When I bought my MINI the dealership's loan rates were higher than the rates offered by my credit union. MINI didn't need to offer incentives of any sort, including low loan rates, and they probably still don't.

You might consider going to the bank or credit union that you or your parents do business with to talk about pre-qualifying for a loan. If you know about how much the car is going to cost, and what you can afford in monthly payments, they can help you figure out the rest... and they won't try to sell you a car as part of the process! Then, when you do go to the dealership, you'll be ready.

My personal preference is to put down a sizeable down payment and pay the car off as quickly as possible. I suppose I could string the whole thing out as long as possible and invest the rest, but I've yet to find anyone who will pay me interest on my shoes or baubles!

 

Thanks JennB :smile:

Yeah, i've thought about going through the bank that my family does most of thier banking through, my only concern is that it's our small town bank and I don't see them having a decent interest percent rate.... But I'm going to have my father call around and make a list of the decent quotes he gets and from that list we'll go and sit down with someone.

I'm going to the north side today... I'll try not to let myself stop at D&R lol... Although Joe is going with and he wants to test drive one.. I'm pretty sure they wouldn't be too happy with me coming back for a second test drive though

 

Well... You're in luck going there on a Sunday. Nobody will be there. You can't sell cars in Indiana on Sundays. :smile:

As for the rate, in order to complicate things further: Watch for the "processing fees." A lot of places will offer an ultra low rate but the fees they charge to originate the loan may make up for it. Why take 0.25% lower rate for $45 more in fees?

Also, watch for prepayment penalties. A lot of places have introduced these in order to lower the interest rate. If you pay the loan off early, they can be a hefty sum (like 5% of the balance).

Just look around. Use the web. All these fees and such are disclosed somewhere on the site.

 

Hey! I test drove twice... no one seemed to mind

 

We NEVER mind when you buy a car!:smile: Remember, we're paid on commission!

 

Exactly, when you BUY one......... some of us want the perks before we'll give our buisness to someone. Maybe I'm a hard buyer to deal with though

Davisio>> We didn't go past there, which is probley good b.c I would've driven Joe nuts checking out the stock lol. I think he heard enough Mini Lovin' madness on the drive we took anyways though

 

Tiffany, Keep us informed... I know that you will be needing a car soon. And if ya gotta make payments... It ought to be on something you want. I will have my digital camera charged and although it may have to wait for the weekend but I want to get pictures when you get your MINI.

I hope that you are feeling better!