Financing options in today's market?

[Kaya]

I have a friend of mine who is looking at a new 08 Viper, and he asked me about financing options. Other than the traditional dealer, or local bank routes, what are your experiences with exotic car lenders like Haggerty, etc.? He is looking to go 84 months on this car and is just getting started with the process. Thanks for the input. Kaya.

 

[bluesrt]

im afraid to say at this time in our economy,unless u have super high credit score and a healthy amount to put down with that loan,its hard to get someone to pull the trigger for a loan on a viper.

 

[Lee00blacksilverGTS]

My suggestion would be to indeed try the traditional dealer, they have the most clout and the most incentive to get your financing done. But try a site supporting Viper friendly dealer first.

Woodhouse
Roanoke
Tator
Ringgold
Buhler
Palmer
Max
Tomball

 

[plumcrazy]

call woodhouse or tator.

 

[VENOMAHOLIC]

A Home equity line of credit (HELOC) is by far the best way I know to get a Viper. Rates are variable but are fixed for me at prime rate minus 1/4. Currently rates for me are at 3% and interest is tax deductible. I pay interest only for the term of the contract and then it turns into a mortgage payment plan.

I used it to buy my Viper 4 yrs ago and have paid it off since. Rates are so low at 3% that I took it out again and used some for a 5.1% bank CD and the rest in a 4% FDIC insured online savings account.

 

[Nine Ball]

84 months? Seriously? Ouch. Banks are still willing to loan at decent interest rates if you can put a lot of cash down. I'm talking 30-40% cash down. I wouldn't recommend anyone buy a Viper if they needed 84 months to pay for it, just save up while the economy is in the dumper.

 

[Steve 00RT/10]

This a good way to go if you can. The trick is to pay the additional principle off as if it were a car loan......in 4 years or less. I hate to be a grinch on Christmas, but if you can't pay a car off in 4 years...you should be looking for a cheaper car. It is not wise money management. 7 year car loans should never have been created.

Steve

A Home equity line of credit (HELOC) is by far the best way I know to get a Viper. Rates are variable but are fixed for me at prime rate minus 1/4. Currently rates for me are at 3% and interest is tax deductible. I pay interest only for the term of the contract and then it turns into a mortgage payment plan.

I used it to buy my Viper 4 yrs ago and have paid it off since. Rates are so low at 3% that I took it out again and used some for a 5.1% bank CD and the rest in a 4% FDIC insured online savings account.

 

[dave6666]

I used the Bank of Dave. Now that may seem a little odd, or maybe even a joke, but the Bank of Dave is available to anyone.

For yourself, it would be the Bank of [your name here].

Here's how it works, and what I did to buy my '01:



-> Save enough money to buy car in cash.



That's it folks!

Or you can continue the American tradition of greed and gluttony by borrowing money for something which at that point should be a very low priority in your life.

Moral of story: Borrow money for things like your house and your modest daily driver, but pay cash for your unnecessary toys.

 

[RDunn]

I used the Bank of Dave. Now that may seem a little odd, or maybe even a joke, but the Bank of Dave is available to anyone.

For yourself, it would be the Bank of [your name here].

Here's how it works, and what I did to buy my '01:



-> Save enough money to buy car in cash.



That's it folks!

Or you can continue the American tradition of greed and gluttony by borrowing money for something which at that point should be a very low priority in your life.

Moral of story: Borrow money for things like your house and your modest daily driver, but pay cash for your unnecessary toys.

while a nice idea, i dont know to many people that save up a 100k just for a car. and most of the people that pay 100k cash for a vehicle are prolly not to worried about it.

the way i look at it, if i cant afford the payments for the car on a 3 year loan. I dont buy the car and i ALWAYS put a min. of 20% down in cash. Usally more.

but, while paying cash for toys is nice. I dont consider it a necessity.

 

[dave6666]

while a nice idea, i dont know to many people that save up a 100k just for a car. and most of the people that pay 100k cash for a vehicle are prolly not to worried about it.

the way i look at it, if i cant afford the payments for the car on a 3 year loan. I dont buy the car and i ALWAYS put a min. of 20% down in cash. Usally more.

but, while paying cash for toys is nice. I dont consider it a necessity.

You have proposed a practical balance between the 2 extremes; cash vs. 7 year loans.

 

[Steve 00RT/10]

I used the Bank of Dave. Now that may seem a little odd, or maybe even a joke, but the Bank of Dave is available to anyone.

For yourself, it would be the Bank of [your name here].

Here's how it works, and what I did to buy my '01:



-> Save enough money to buy car in cash.



That's it folks!

Or you can continue the American tradition of greed and gluttony by borrowing money for something which at that point should be a very low priority in your life.

Moral of story: Borrow money for things like your house and your modest daily driver, but pay cash for your unnecessary toys.

I stand corrected. Good advice. I still think it a good idea to use the tax write off if you can..... especially if you have the cash to buy it and invest that cash properly during the loan period....using wages to make the extra principle payments to retire the loan in 4 years or less. Also a good idea to have no other car loans if you're going to buy a Viper.....and zero credit card debt. If you have credit card debt, you really can't afford ANY car loan.

7 year car loans are the auto industry equivalent of the sub prime housing mess.

Steve

 

[ViperTony]

I wouldn't do an 84 month car loan. Maybe 24/36 months tops with the intention of paying it off much sooner. I can't imagine being in the 6th or 7th year of payments and STILL paying off a depreciated asset.

 

[Martin]

I agree and disagree with the HELOC approach to buying a big toy... My HELOC is also at 3% right now, which is unbelievably cheap. I haven't drawn it down at all because I use it as 'mortgage insurance' in the event that my job goes the way of many of my friends here in Silicon Valley (it's getting brutal out there). On one hand, a cheap 3% tax-deductible loan makes a lot of financial sense compared to standard non-deductible auto loans at 8%. Also, with HELOCs getting pulled left and right these days by nervous banks, there's some logic and reason to drawing them down before they get pulled - once the money is in your hands and you're staying up to date with payments, they can't call it back. On the other hand, drawing down your HELOC will definitely lower your credit score - your loan to available credit ratio goes way up, and when you start bumping up against the point that makes lenders worry that you're approaching overextended, you may as well forget about new loans for a while. If refi rates come down to the 4.5% levels that are widely predicted for ultra-premium borrowers, it's probably wise to nurture your credit score so that you can take advantage of those rates. Also, if your house is in the jumbo category of loans, you might use that HELOC to bring a refi loan down to conforming levels and save yourself a ton of money in the long-term - especially since the Conforming Limits are coming way down as of Jan 1 for those houses that were adjusted up recently.

My take on it is this: if you can somehow get an absolutely screaming deal on financing through a dealer, that's a good way to go. Cash is better, but opportunity cost might be high since there will be some excellent investment opportunities out there in the VERY near future, and it might make some screaming good sense to pay down a mortgage to bring it down enough to qualify for the insanely good rates that we should see soon.

Ten years ago my opinion on all of this would have been a lot different... Now, it's a lot more important to make sure I have a house over my (and my GTS's) head because second chances are getting harder to come by.

 

[dave6666]

HELOC??? Isn't that what you fix bad bolt hole threads with?

 

[Martin]

HELOC??? Isn't that what you fix bad bolt hole threads with?

Close - that's a HeliCoil. A HELOC can also help to fix a stripped nut in some situations - but if used incorrectly, can cause that stripped nut to also be broke

 

[Sellshomesdrivesviper]

HELOC: Home equity line of credit

 

[Steve 00RT/10]

I agree and disagree with the HELOC approach to buying a big toy... My HELOC is also at 3% right now, which is unbelievably cheap. I haven't drawn it down at all because I use it as 'mortgage insurance' in the event that my job goes the way of many of my friends here in Silicon Valley (it's getting brutal out there). On one hand, a cheap 3% tax-deductible loan makes a lot of financial sense compared to standard non-deductible auto loans at 8%. Also, with HELOCs getting pulled left and right these days by nervous banks, there's some logic and reason to drawing them down before they get pulled - once the money is in your hands and you're staying up to date with payments, they can't call it back. On the other hand, drawing down your HELOC will definitely lower your credit score - your loan to available credit ratio goes way up, and when you start bumping up against the point that makes lenders worry that you're approaching overextended, you may as well forget about new loans for a while. If refi rates come down to the 4.5% levels that are widely predicted for ultra-premium borrowers, it's probably wise to nurture your credit score so that you can take advantage of those rates. Also, if your house is in the jumbo category of loans, you might use that HELOC to bring a refi loan down to conforming levels and save yourself a ton of money in the long-term - especially since the Conforming Limits are coming way down as of Jan 1 for those houses that were adjusted up recently.

My take on it is this: if you can somehow get an absolutely screaming deal on financing through a dealer, that's a good way to go. Cash is better, but opportunity cost might be high since there will be some excellent investment opportunities out there in the VERY near future, and it might make some screaming good sense to pay down a mortgage to bring it down enough to qualify for the insanely good rates that we should see soon.

Ten years ago my opinion on all of this would have been a lot different... Now, it's a lot more important to make sure I have a house over my (and my GTS's) head because second chances are getting harder to come by.

I guess I didn't take this into account. I've never worried about a credit score in my life. When I borrowed money for my house, they asked how much I wanted and when. ....that was before any credit check. The loan was internally approved before I finished the application paperwork. I have no clue what my credit score is nor do I really care....all I know is that it's good....and that unless something really bad happens, I will likely never borrow money again.


I do have a question. Why can't you just redo the house mortgage instead of a HELOC?....or are they one and the same?

Steve

 

[Darbgnik]

A HELOC adds more flexibility than re-mortgaging. You only borrow, and therefore pay interest on, what you want at the time, then you can pay it back the next day, or make low minimum payments on it. Whatever you wish. With a new mortgage you're locked into however much money you borrowed, with fixed payment terms. Not a preferrable way to buy a toy. All this is better for you Americans as its tax deductible. Here in Canada its not.
Would be cool to write off a Viper

 

[Martin]

Hi Steve,
You can obtain or refinance a house mortgage without having a HELOC or even considering a HELOC. The big difference is that a mortgage is a defined loan, paid out by the bank in one lump sum, that has defined repayment terms. A HELOC is an adjustable interest rate line of credit that you can tap into if you want, or just leave it there - if you don't touch it, it doesn't cost you anything (typically, some companies charge a fee to maintain it). Also, the main mortgage is collateralized by your home and takes first priority in the case of default - a HELOC is also collateralized by your home, but generally gets secondary treatment in the event of default (hence a lot of lenders pulling them these days). I've personally found that having a HELOC is a great way to 'insure' your mortgage without having to consider other expensive insurance plans (like those plans that will make your mortgage payments if you become unemployed). It's basically a checkbook that allows you to draw, at your will, anything up to your HELOC limit. Depending on who underwrites the HELOC, the same lender who did your mortgage, or a separate lender, can affect how easy it is to obtain and keep. Many mortgage lenders see a HELOC as a 'safety net' for borrowers because they know a borrower will draw on the HELOC before defaulting on a loan. If the HELOC lender isn't the one that lent on your main mortgage, the situation is reversed - they know that if you're about to default, you're likely to draw down the HELOC to pay your primary mortgage. If the house goes into foreclosure, the HELOC lender will more than likely end up with nothing in that situation.

EVERYONE should obtain a copy of their credit report and score at least annually! You'd be amazed at how little things can DRASTICALLY change your credit score. These days, you need a really good score (750+) to get a loan with the best terms, and you need a much more 'acceptable' (650+) score to get any kind of loan at all compared to just a few months ago. There was a time when a 650 score was really good - now that score can cost you a lot of money in higher rates and/or points.

The best time to get your credit in order is when you don't think you have to... $hit happens in life...

Martin

 

[Sellshomesdrivesviper]

Hi Steve,
You can obtain or refinance a house mortgage without having a HELOC or even considering a HELOC. The big difference is that a mortgage is a defined loan, paid out by the bank in one lump sum, that has defined repayment terms. A HELOC is an adjustable interest rate line of credit that you can tap into if you want, or just leave it there - if you don't touch it, it doesn't cost you anything (typically, some companies charge a fee to maintain it). Also, the main mortgage is collateralized by your home and takes first priority in the case of default - a HELOC is also collateralized by your home, but generally gets secondary treatment in the event of default (hence a lot of lenders pulling them these days). I've personally found that having a HELOC is a great way to 'insure' your mortgage without having to consider other expensive insurance plans (like those plans that will make your mortgage payments if you become unemployed). It's basically a checkbook that allows you to draw, at your will, anything up to your HELOC limit. Depending on who underwrites the HELOC, the same lender who did your mortgage, or a separate lender, can affect how easy it is to obtain and keep. Many mortgage lenders see a HELOC as a 'safety net' for borrowers because they know a borrower will draw on the HELOC before defaulting on a loan. If the HELOC lender isn't the one that lent on your main mortgage, the situation is reversed - they know that if you're about to default, you're likely to draw down the HELOC to pay your primary mortgage. If the house goes into foreclosure, the HELOC lender will more than likely end up with nothing in that situation.

EVERYONE should obtain a copy of their credit report and score at least annually! You'd be amazed at how little things can DRASTICALLY change your credit score. These days, you need a really good score (750+) to get a loan with the best terms, and you need a much more 'acceptable' (650+) score to get any kind of loan at all compared to just a few months ago. There was a time when a 650 score was really good - now that score can cost you a lot of money in higher rates and/or points.

The best time to get your credit in order is when you don't think you have to... $hit happens in life...

Martin

Well said.

 

[plumcrazy]

84 months ? you gotta be kidding me ? thats a pretty damn stupid idea for a loan on a toy. (might as well go for a 30 year loan then)

tell him to save his money and pay cash. thats the only smart thing to do. if you cant afford it, dont buy it. pretty simple rule. how ya gonna afford the gas or insurance if ya gotta spread it out 7 years ?

 

[Darbgnik]

84 months ? you gotta be kidding me ? thats a pretty damn stupid idea for a loan on a toy. (might as well go for a 30 year loan then)

tell him to save his money and pay cash. thats the only smart thing to do. if you cant afford it, dont buy it. pretty simple rule. how ya gonna afford the gas or insurance if ya gotta spread it out 7 years ?

Sad as it is, thats quite normal these days, nobody looks at principal, interest, or halfway debt remainder, all they look at is payments. Sure the purchase price is crazy high, but if you take it out for 10 years look at how little it costs per month! Problem is, most times, 2 years in, the novelty wears off, the car is worth half of its initial value, but lo and behold, you still owe close to the full amount. Can't even afford to sell it. But its also the fault of dealerships that will buy the residual debt and tack it onto the next vehicle if you trade. Sad road if you don't know what you're doing.

 

[VENOMAHOLIC]

One last suggestion I have for using the HELOC is to use it to take a chunk out of your mortgage or if possible pay it off. I used my HELOC to pay off the rest of my mortgage off 6 yrs ago. It was worth it because it was not only a much lower interest rate than my mortgage but I also got my escro money back.

 

[Martin]

One last suggestion I have for using the HELOC is to use it to take a chunk out of your mortgage or if possible pay it off. I used my HELOC to pay off the rest of my mortgage off 6 yrs ago. It was worth it because it was not only a much lower interest rate than my mortgage but I also got my escro money back.

Very, very true. Or, if rates come down to where they're supposed to (around 4.5% if the Gov does their mortgage-backed securities purchase thing as is being planned now), your HELOC might be a very good tool to bring the primary mortgage principal down to a level that qualifies you for a Conforming Loan.

As an example, say you owe $725k on your house in the Bay Area of CA and you are sitting on a $100k HELOC. Right now, you could theoretically refi your primary mortgage into a Conforming Loan since the limits were temporarily adjusted last year to account for high-cost markets - but it probably won't net you anything because the lending market is brutal and your 'conforming' rate will still be around 6-7%. Come Jan 1, the Conforming Loan limit drops down to $625k, which puts you back into the Jumbo Loan (non-conforming) range - and the proposed rates won't apply to you at all. But, if you pay down your $725k loan with your $100k HELOC, you could technically qualify for a Conforming Loan again by applying for a $625k primary refi. Getting your interest rate down to 4.5% from 7% would put some serious coin back into your pockets! Of course, you could be adding years to your payback period so in the long run you might end up paying the same in pure dollar terms - but then there are things to consider like inflation dollar-devaluing, tax deductibility, etc., that make this strategy pretty darn compelling. Figure a 3% rate of inflation over the next 30 years, and a 30% deductibility of interest paid, and that is really cheap money to borrow - almost free...

 

[VENOMAHOLIC]

I only suggested the HELOC because Bernacke said rates would be kept low for a long while. Rates will go up again so the amount you transfer to it should be limited to how much you can pay off before rates return up. Remember that the lower HELOC rates offered are VARIABLE.

 

[FrankBarba]

Go for it, but you better make the payments. Instant Gratification. This is the only way to live....

 

[Steve 00RT/10]

Hi Steve,
You can obtain or refinance a house mortgage without having a HELOC or even considering a HELOC. The big difference is that a mortgage is a defined loan, paid out by the bank in one lump sum, that has defined repayment terms. A HELOC is an adjustable interest rate line of credit that you can tap into if you want, or just leave it there - if you don't touch it, it doesn't cost you anything (typically, some companies charge a fee to maintain it). Also, the main mortgage is collateralized by your home and takes first priority in the case of default - a HELOC is also collateralized by your home, but generally gets secondary treatment in the event of default (hence a lot of lenders pulling them these days). I've personally found that having a HELOC is a great way to 'insure' your mortgage without having to consider other expensive insurance plans (like those plans that will make your mortgage payments if you become unemployed). It's basically a checkbook that allows you to draw, at your will, anything up to your HELOC limit. Depending on who underwrites the HELOC, the same lender who did your mortgage, or a separate lender, can affect how easy it is to obtain and keep. Many mortgage lenders see a HELOC as a 'safety net' for borrowers because they know a borrower will draw on the HELOC before defaulting on a loan. If the HELOC lender isn't the one that lent on your main mortgage, the situation is reversed - they know that if you're about to default, you're likely to draw down the HELOC to pay your primary mortgage. If the house goes into foreclosure, the HELOC lender will more than likely end up with nothing in that situation.

EVERYONE should obtain a copy of their credit report and score at least annually! You'd be amazed at how little things can DRASTICALLY change your credit score. These days, you need a really good score (750+) to get a loan with the best terms, and you need a much more 'acceptable' (650+) score to get any kind of loan at all compared to just a few months ago. There was a time when a 650 score was really good - now that score can cost you a lot of money in higher rates and/or points.

The best time to get your credit in order is when you don't think you have to... $hit happens in life...

Martin

Martin……Thanks for the info. I see the difference and the advantage. Reading all the above, I see there’s a few ways to skin the cat with these things. I guess the premise of the HELOC discussion above was to use it to purchase the car....not to meter it out.....or not spend it at all. If the HELOC amount borrowed and used to buy the car is a set rate for the duration of the money borrowed --- I don’t see the advantage of the HELOC over locking in a rate on a refinance – given the same interest rate. Simple interest also applies for a HELOC I would assume. If the HELOC is adjustable over the duration of the loan, I would much rather lock in a rate with a refinance……and refinance again if the rates dropped a point and a half or so. An adjustable loan rate on what is basically a car loan would not seem sensible. I haven't carried disability insurance since it was mandatory on my first house in the 70s when we were starting out. Defaulting on my mortgage was never a word that entered my conscience.

No matter how you go about it -- the bottom line to me is: if you can’t buy a car in 4 years MAX (less is better)….you need to look at a cheaper car. AND if you need to borrow money to buy a Viper, you probably should have no other car debt. I know that doesn't apply to those few with a pocketful of gold, but it certainly does to someone looking at needing 7 year loan to buy a toy.

I know one should probably check their credit score once a year in case somebody done you wrong. I checked a couple years ago for the first time ever. Where I live, even if there were some shenanigans on my credit history which dropped my credit rating….I would still be able to get the lowest rate available from the bank I deal with….before cleaning up whatever the mistake was that caused the lower score. I’m all done borrowing money…….have been for quite a while.

But.....I think I'll take your advice just for the heck of it and see what it says. I don't remember what it was before. Thanks for the push

Steve

 

[Martin]

Checking definitely isn't a bad idea - I learned very recently how some 'little' things can make a big difference. For example, I have a few credit cards that I use regularly - but I started only using one card for everything about a year ago. Even though I pay the whole balance off every month, and don't ever carry a balance from one statement to the next, just because I was always up against my credit limit on that card it lowered my score over 40 points. My report said that I was continually carrying a high balance on a card, which indicated to the credit scoring agency that I might be overextended. That couldn't be further from the truth - I was paying off the balance every month, and was just using that card for everything because I liked getting the cash back bonus. But, just that one card caused my score to go from one that was in the top 98% of all borrowers to one that was better than 75% of borrowers. When I went back to spreading my purchases across all cards and paying cash more, after a few months, my score went right back up to where it was before. It definitely opened my eyes as to how these things work - and the timing is good because I'm keeping my fingers crossed that rates will come down to very low levels soon. A refi that saves me $2k a month in mortgage payments would go a long way toward me contributing to the economic recovery

 

[Bobpantax]

Let me get this straight. An individual wants to borrow money for 84 months to buy a Viper which comes with a 36 month warranty which can be extended to seven years but the extension does not cover everything. Assuming this is correct, what does that same individual do if he or she needs to borrow money for something essential like medical care that is not covered by insurance or long term care for a parent or other loved one? We are in the mess we are now because people do not understand debt and what it is for and what it is not for. Buying an expensive ( the term is being used subjectively) depreciating personal asset with debt is questionable financial planning at best. (Particularly for someone that needs a seven year term to make it work.) The answer to the initial inquiry should be that the individual involved cannot afford the purchase and needs to do a little self education with respect to the use and accumulation of money as do the millions of people who bought far more than they could ever realistically afford and now find themselves in severe financial difficulties. With freedom comes responsibility.

 

[Chrissss]

I certainly wouldn't be taking a home equity loan, aka second mortgage, on my house to buy a Viper. 7 years also is way too long for a car that doesn't appreciate. Work through the dealer or through a credit broker or credit union for the best deal. If that is out of the question, then so should also be the Viper. Just my **.