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Thread: Subprime Auto Finance

  1. #1
    Senior Member
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    Dec 2010
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    Price County, WI
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    Subprime Auto Finance

    Spoiler Alert:
    1. Design your life so that ownership of a private vehicle is not what you want or need.
    2. Failing that, when you need to buy or replace a vehicle pay cash.
    3. Failing that,
    a. Realistically decide what you intend to pay for the vehicle you want. Do not allow a car dealership entice you to choose a "much better package" at a higher selling price, made affordable by extending the term of the loan to 4, 5, or 6 years. (Consumers should beware of being "under water" on their auto loan from the moment they drive the car off the dealer's lot.)
    b. While credit arranged by the car dealer may seem incredibly convenient to get, the Auto Finance Company is likely to charge a relatively high rate of interest AND to securitize your loan … into an Auto Asset-Backed Security. Somebody on Wall Street will probably buy your paper.
    c. Your local credit union makes auto loans at a competitive interest rate, AND the CU keeps your loan on their own books.

    I got these nuggets of insight from
    http://knowledge.wharton.upenn.edu/a...ubprime-crisis

  2. #2
    Senior Member
    Join Date
    Sep 2011
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    734
    Strongly agree, except when there is a special financing offer - we usually try to make our purchase including trade value in cash, but when offered 1.9%, we financed.

  3. #3
    Senior Member razz's Avatar
    Join Date
    Dec 2010
    Location
    Ontario, Canada
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    8,169
    I bought my Prius V after several visits to the dealer. The first time I had a half cash + trade-in quote and the interest rate. A couple of months later, I got a quote without the trade-in and the interest rate was 0%. It was a good deal with no regrets.
    As Cicero said, “Gratitude is not only the greatest of virtues, but the parent of all the others.”

  4. #4
    Senior Member
    Join Date
    Jun 2015
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    2,843
    We haven't financed a vehicle since 2001 (cash for 2 since then). We will finance only if the interest rate is significantly lower than our return on our investment account set aside for major purchase needs.

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