Possibly financing my first car from a dealer (R53 Cooper S) any tips?

So with my first 'real job' came 'real money' and I am beginning to get the itch for something newer as a DD for when the Alfa is parked. I test drove a BMW E46 and found it somewhat bland, drove a R53 Cooper S though and boy did I have fun! Then I happened to find one in my absolute favorite color combo and in my price range...

http://www.paulytoyota.com/used/MINI/2003-MINI-Cooper+S-004463a10a0d048e00eca93c1583adf5.htm

I have never purchased a car from any dealer before, let alone financed. I have about $3k (and growing) to put down, and I already have the dealer looking into financing for me in addition to my local credit union. The goal of financing is to help me establish some credit since I am young and have a so-so history (FICO score was 658 as of last month) and worst case scenario, if I lose my job or something I can easily sell the Alfa and gain 100% ownership of the Mini.

I guess what I'm wondering is, should I try to negotiate? How do I negotiate at a dealer? How do tax/title/license fees typically work into financing and the final out-the-door price? On that note, this Cooper seems priced pretty well to me from my numerous searches - is my goal of <$10k OTD selling myself short?

That is pretty cheap. I wonder why.... Do a carfax yourself looking for accidents and salvage title.

Check for oil leaks at the oil pan. Also check for coolant leaks as the thermostat housing and overflow tank both tend to require replacement. Check the Power Steering hoses. Those tend to leak.

Credit Union financing should be a good option to get you started. All the fees are typically added onto the price and the dealer takes care of it.

I'd try and check out your local BMW / Mini dealer also. They sometimes extend the warranty when offering a CPO car but not sure if that would apply to something older model like the R53. The extended warranty comes in very handy with German cars...

Given some dealer shenanigans when it comes to financing vehicles for buyers with less than stellar credit, I would want to make sure that the dealer has the financing approved before you consider their financing (so they don't pull the "oh, we couldn't get the 3% APR financing we signed you up for after all, please sign the papers for the 12.5% APR deal" stunt). For that reason alone, approved financing by your credit union might be the way to go.

Regarding the negotiation, part of it is knowing what those cars really go for in your area. Don't also forget the first rule of negotiating anything - be prepared to walk if you don't like the deal.

Personally, I always negotiate an OTD price--I give you a check, you give me the keys. It is the only way to ensure no hidden fees or surprises.

As mentioned above, Credit Unions have great rates and often do secondary lending with most local car dealers.

Keep in mind, the newest r53 is 6 years old this year...... While they can be reliable, aging is starting to show more issues with the car. Paying on a broken whip is a terrible idea.

Get the loan through a credit union. Do a standard option contract if you need the time to get the credit union paperwork in order.

99K miles on a R53 automatic mini IMO is a stupid idea. The transmission is going to fail and soon.

It's a 6-speed..it just happens to be an AUTOMOBILE

mndsm wrote: Keep in mind, the newest r53 is 6 years old this year...... While they can be reliable, aging is starting to show more issues with the car. Paying on a broken whip is a terrible idea.

I understand that but there are guys on the NAM forum with 200k+ these days too. Much like ANY car, some owners are better than others, and some just get lucky. I'm not saying you're wrong, but considering Toyota's recent troubles (just one example), it seems like you can get screwed on anything these days.

I have researched the car pretty heavily and have decided it is right for me. Just need advice on the transaction...

Truedeltas numbers scared me off used minis

Financially Slick I made the same decision you did and regretted it. Contrary to what they tell you car credit is not some magic bullet for your fico. If you want to build fico then you have to have some debt all the time but never too much.

If you want the car get the car but the credit bit is just them trying to give you a reason to finance something at an interest rate that is awful

Are you willing to pay 50% more than the list price for this car just so you can get an attaboy from some other creditor in the future?

(I bought a then new ford focus svt in 2002 in a very similar situation cost originally 22k 12+% interest over five years pay it off end up selling it with 32000 miles in 2007 for 8500 mistakes all over with that but an excellent car)

Wow, dude. $22k at 12% is insane! I'm looking at financing $7k or less over three years and it looks like my interest rate will be somewhere around 8%. I can see how ya got boned there. I also do actually want the car, I've always liked the early Cooper S.

Drive crappy cars for a few years and pay cash.

Auto loans are for chumps.

/guy who paid cash for a C5 Corvette and an F250 Powerstroke.

93gsxturbo wrote: Drive crappy cars for a few years and pay cash. Auto loans are for chumps.

Best post in the forum.

and...

Most ignored post in the forum.

Yes, but $7k over three years isn't bad. I did pretty much the same thing when I was about that age. You pays your money and takes your chances. At 42 I lean towards the "save and pay cash" advice, but I also know that's easier said than done.

You're young; I've been there and financed cars when I shouldn't have. It doesn't help your FICO very much. If you must finance, try to do it on a car that still has a warranty; making payments on a car you can't drive would really suck.

Try to get financed through a credit union on your own, first, then let them compete against that. If you just show up, they'll take your information and spam your application out to dozens of lenders.

In short, finance a newer car, or just save your money. Think of all the things that it might be time to start replacing on that Cooper. The dealership most definitely will not be paying for that stuff.

Kram wrote:

93gsxturbo wrote: Drive crappy cars for a few years and pay cash. Auto loans are for chumps.

Best post in the forum. and... Most ignored post in the forum.

I disagree. Stupid auto loans are for chumps. Reasonable auto loans are, well, reasonable.

Kram wrote:

93gsxturbo wrote: Drive crappy cars for a few years and pay cash. Auto loans are for chumps.

Best post in the forum. and... Most ignored post in the forum.

I also completely disagree, guess I'm a chump. It's not always possible to have $10,000 or more laying around. And I don't buy the argument of "Well, if you don't have $10k cash, then don't buy it and just drive crappy cars". If you use your brain and make sure you know what you're getting into, and don't finance over your means, I see no problems with it. The problem comes when people sign terrible deals from predatory lenders and/or finance more than they can afford. But done right, there's nothing at all wrong with a loan.

OP, nice color choice...I've got an '08 MINI in similar blue. If you're convinced by the R53, great, but just be really sure to have it checked carefully. They're not known for reliability. The biggest challenge you may face is the age of the car. Many banks don't want to finance a car more than 6 years old. To them, they're financing a 9 year old car. That's a risk to them from a collateral standpoint. Credit unions may be a good idea, but again be sure about the terms. 8% is pretty high, but given the age of the car, it may be the best you can do.

In reply to Klayfish:

I agree, financing a vehicle is fine, you just have to be aware of your situation financially so if something happens you aren't caught unprepared, that's what happens to most who have problems, lack of preparedness.

The way I work with dealers is find a deal I like, usually online, get out a business card, write down my out the door price, including tax, tag, title, fees, etc, with the interest rate I want for the amount of time I want, thus I define ahead of time what my $/month is. I usually go under what I can afford to push the dealer/financers to figure out who gets what markup % between them. Then I go in and place my offer on the table and wait to hear back from them. The last 2 times I did this I got exactly what I asked for on the spot since my offer was reasonable and I have good credit. I like this method because it also cuts out all the strategy and crapola of the 4-square sheet, trade-ins, dealer negotiations, etc.

It is a good idea getting the loan from your credit union, BUT you can let the dealer try to match/beat it since they'll actually shop credit unions and banks to secure your loan. Both times I had my financing lined up with my credit union, only to have the dealer beat it, and then sell my loans back to my credit union . If I were in your situation financing a used car I would absolutley not put any $$$ down as long as you can still make your payments work. Afterall, money in your pocket and not in a deprecating assest can be much safer if something happens since it buys you time. Be prepared to walk if you don't get the payment/rate/terms you want.

I just can't stand the thought of someone making money off me just because I am desparate to have something RIGHT NOW!

Not to mention if you just took this job, make sure it works out before taking out a loan that you need the job to cover the note on.

Check out your credit unions first.

There will be issues here. I know my credit union will charge over 7% for anything that old and with that FICO score.

As for the cash vs. finance debate, It's all a matter of return on your dollar. My car loans are under 3% interest rate and my investments have been returning over 7%. So I would be stupid not to finance the car. It's just the best use of my money.

bmw88rider wrote: As for the cash vs. finance debate, It's all a matter of return on your dollar. My car loans are under 3% interest rate and my investments have been returning over 7%. So I would be stupid not to finance the car. It's just the best use of my money.

Nuh uh, payments are always the DEVIL............ALWAYS!!!111!!!111!!!

OP, if you have decent income and good credit, it shouldn't be too hard to figure out what type of interest rate you should qualify for.

Let the salesman/finance guy know that if they come back with a stupid number the first time, you will walk and look elsewhere.

bmw88rider wrote: As for the cash vs. finance debate, It's all a matter of return on your dollar. My car loans are under 3% interest rate and my investments have been returning over 7%. So I would be stupid not to finance the car. It's just the best use of my money.

Exactly, you just have to be smart about your financing. Heck when my 401k was not doing well I took a loan against it for a car just because I payed myself back at 4% interest with the 401k loan which was better than the return it was getting at the time. Now, not so much, so I'll use someone else's money.

My credit union stated no cars over 6 years old and 80,000 miles.

That was the only thing I did right.

In 2007 I took out a loan on a 2002 Nissan Frontier Crew Cab longbed with 63,000.

I only put down $200 so my payments were $331 @ 9% for five years. Next month is my last payment.

Kept the fluids changed, did the timing belt with a buddy.

It's a stout vehicle and a truck is always usefull to have around. The crew cab has allowed my to cart my wife, 2 car seats, and gear in the bed.

Just figure on keeping a vehicle at least double what the financing term was to average the costs.

Even at 8% it's not a bad deal to improve your credit score. You're essentially buying a better score for about $500.

A good credit score is absolutely essential in this day and age. It's nice to think that driving a crappy car will enable you to pay cash for whatever you need, but consider that a 650 score on a mortgage will usually cost you around 2 more points compared to an over 720 score. That will cost you almost $100,000 more in finance charges over 30 years on a $200,000 house.

I'm not saying buying the car or financing it is bad just don't do it for credit score reasons.

Buying the car won't really improve his score two things will

Having SOME credit long term And time for whatever bad stuff happened in the past roll off due to time.

Get a couple small credit cards use them, pay them off then cut up the cards and throw them away.