laserred38

Hey all, this is going to be my first car purchase, and I'm trying to not ask my parents for help/advice as much as possible. My buddy (finance major) told me a good rule of thumb is 20% of the purchase price. I'm working on paying off my CC debt and saving up the down payment at the same time. I have my eye on a 2010 that's pretty much exactly the way I want it. I should be ready to pull the trigger by late April, so if that car sells I think I'll wait a bit more and order an 11. I really want the 10, because the extra price increase compared to the 10 isn't worth it to me, for what you get, but I'm not betting on that 10 being there in 2 months once the 11s hit the lots...

I'd like some advice from some of you old farts!

Skotty

Advice on what? The downpayment, or anything? 20% is a good responsible number, but 10% would probably suffice. What you need to do, if possible, is find out how much Ford would be willing to finance you for on one of their low percentage deals they have right now on 2010s (I assume you will be interested in one of those deals). That may ultimately decide how much down payment you need. I would think a good dealer would be able to help you figure that out.

laserred38

Well advice on how much down payment. I'm almost certain I won't qualify for the 0% financing, but hoping for 3.9%. I don't want to run a credit app just yet, until I pay off most of my card. Thanks for the head up. I don't really want to waste the salesman's time until I'm closer to pulling the trigger. Just trying to do research now.

YSUsteven

20% min, that way, you don't owe more than the car is worth.

tmclaugh

Make yourself a budget and figure out all your monthly expenses. Then subtract that from your income and figure out from how much you have left over what you're comfortable with paying as a monthly payment. Your down payment would be however much will keep your monthly loan payments at that level. I want to keep my monthly payment around $300 so starting last month I've been putting away more than I initially planned per month towards my down payment.

And there's nothing wrong with asking your parents. I'm nearly 30 and I've been running numbers by my mom and my brother-in-law who is an accountant. Never ask a dealer though or let them know what you're planning on a month or even your planned down payment amount. Knowing that it gives them better ability to keep the price around your limits. (Unless you're dealing with a place that has a flat pricing structure like a few of the dealers on this forum then it's not really a problem.)

Ministang

I always try to either put enough money down up front so that I'm never upside down on the loan, or make higher payments for the first few months to achieve the same goal. Your new car's value will drop by at least 10-15% the minute you take possession and drive it off the lot. 20% is a good number if you can swing it, 10% should be considered the minimum IMHO.

Ltngdrvr

If you are worried about what the cars resale value will be in the short term, as in say a year or two, then you should order a new 2011, if you buy the 2010 then you will be starting out a year in the hole value-wise.

Personally, I tend to not worry about that stuff as I generally plan to keep my cars for a long time.

Of course, if you can put a bigger down payment then you can get lower payments or get a shorter term and pay it off sooner. A paid in full car is the best one to own!

karman

Seeing as I qualify as an old fart (I have kids older than you), I can tell you the bank doesn't ask me for down payments anymore.
For you younger people, you need to put everything you can to get to a comfortable monthly payment.
My first new car loan I put down about $4000. At that time, that was more than 1/2 the price of a new car.
Until that time, I had always bought used cars. I was over 25 when I bought my first new car.
That put my payment for a 2 year loan at a whopping $145 a month.

2010MustangGT

I agree^^. it isn't about what down payment you feel comfortable with, it's about what monthly payment you'll end up being comfortable with. So if it takes an extra 500 bucks and you can swing it, then by all means. But also the interest and term (how many months) play a part as well.

Play with this a little bit:
http://www.cars.com/go/advice/financ....jsp?mode=full

cdynaco

Who you callin' an old fart? LOL

I'll take 3.9 money all day long and all they'll give me. But I'm a disciplined saver and payer. Think about it, that's a better rate than loans secured by houses (kind of my benchmark comparison).

I had to put down 10% to order my Bullitt in spite of my exc credit - but I'm a long hair so they probably 'profiled' me. LOL So I put 3k down using my 3.9 credit card. The pmts were enormous at 498 (6%x84mos), but I had a plan. Sure enough a little over a year and I had my Title in my formerly payment stained fingers. So if the rate is good, and you can handle the pmts, I'd put down as little as possible and save the rest in my emergency fund or retirement account. Plan your work, work your plan.

FordBlueHeart

Good post Charlie. Hey Laser, if you qualify for 3.9, you will probably qualify for 0% as well. BUT neither are the holy grail its made out to be! The lower your interest rate, the lower down payment I would make. Why, you may ask? Because as Charlie said, that's a lower rate than what you can get otherwise. Might as well use their cheap money instead. The caveat is that if you pay it off before the loan matures, you threw away any savings that you would have realized by making minimum payments through out the loan. Make sure you look at all the options available. If you are going to pay it off early or put lots of money down, see how much the rebate is first. You get the rebate immediately, the savings you get from 0% or 3%, is gradual, over the life of the loan.
Its been a while since I've computed the savings, but I'm sure with some patience, you can figure it out. If my memory serves me right, a $2500 rebate is about the same amount of savings someone would incur by financing about $25,000 at 0% for 60 months(5 years). I would rather take the savings now, rather than wait for the life of the loan to save it. What if I sell it before its paid off or if I unfortunately total it? Not only did I lose out on savings, but I owe more than I would have if I had taken the rebate. Hope this makes sense.

Dave07997S

The above 2 posts are right on the money. If you can get the interest rate for 0% - 3.9% I would say let OPM do the work for you. The issue is if you have never had a large purchase before on your credit profile than they may require 20% downpayment. My advice is to put down the minimum needed to get into the loan. If you have to bankrupt yourself just to afford the car it may not be a good purchase for you. If you plan on keeping the car for awhile I wouldn't worry about it. With such a low interest rate the payments principal to interest ratio will already be favorable. Here's an amortization schedule for 3.9% over 60 mos. 30k loan amount.


Interest Principal Balance
2010 $908.08 $4,603.35 $25,396.65
2011 $888.86 $5,724.86 $19,671.79
2012 $661.55 $5,952.16 $13,719.63
2013 $425.22 $6,188.49 $7,531.14
2014 $179.51 $6,434.20 $1,096.94
2015 $5.35 $1,096.94 $0.00

As you see the amount of interest paid vs. principal is very favorable. Normally with higher interst rates you are paying more interest than principal, in this case you are paying much more principal than interest as the loan has to amortize over the 5 yr. payment (60mos.) schedule.







Dave

Cusp

Work it the other way. Like was mentioned above. What payments can you afford? Will paying thousands in interest over the course the loan keep you awake at nights? Figure your actual costs and how much of a hit your pay check can withstand. That will allow you to figure out how much down you need to have. Oh remember, your state will be interested in whacking you for a few thousand more in tax and fees as well. Enjoy.

Adam

I put down $0 because I got 0% financing I could have paid cash money but it wouldn't have made sense financially.

I wouldn't buy a new car if any if any of the following situations were present:

1. Have credit card debt
2. Live with parents
3. Majority of monthly income goes to car payment/insurance/gas

My loan will be paid off in a little over 2 years.

Bert

I think everyone else covered the financial side of it pretty well; it comes down to

(a) what does your budget allow -- and be conservative, don't stretch it . . . . remember this little financial crisis that was caused by people over spending?

(b) what will the bank give you -- we cannot answer that, only the bank can answer

(c) the more downpayment the better

A different but important point for your consideration:

I'd suggest you compare the 2010 GT to the 2011 V6, not the 2011 GT. (I assume you are talking about a GT, if not then forget this comment.) The 2011 V6 will have about the same performance as the 2011 GT but with much better gas mileage. So for the 2010 GT to be a good deal, you need to pay less than you will be able to buy a 2011 V6 for in a few months. I have done this comparison and my "buy price" for a 2010 GT Premium is about $25-27K depending on options and financing incentives, which is quite a bit less than they are charging right now.

laserred38

Nope. I have a V6 now. While the 2011 V6 is interesting, it won't be seeing my driveway.

Adam brings up a good point, and I think that may make me hold off for now. I'm going to be moving into a condo with a buddy in a couple months, much closer to work. I've been looking at 03-04 Cobras more. We'll see. Thanks for everyone's advice.

Steven

Good choice. Moving ALWAYS costs more than you think it will. A bunch of little expenses start to add up and I don't think you'll want the extra stress of a high car payment.

Ah, I remember when I moved out of my parents house. What do you mean the apartment doesn't come with plates?

2011 Fastback

Coming from experience (Bankruptcy and Divorce), do not ever get in over your head, it is the worst feeling of all time...I will never feel like this again so I will be putting 10k down, just let your gut tell you and not emotions.

cdynaco

Well that sounds good in theory but most working folks are only 1 or 2 paychecks from being pushed over the edge financially. Do you know how few people have the recommended emergency fund of 3-6 months of reserves in cash savings?

Although never pushed as far as bankruptcy, I have lived on the edge for many years from time to time. And in my case, the debt actually helped during a divorce. So take note men, here's how you keep your house through a divorce:

Assuming no kids, a marriage of 10+ yrs, a judge is going to divide the net worth along the lines of 50/50. Although I had assets of home & land (with pmts), cars, horses, 401k; there was also massive credit card debt from a closed business. In the end, 50% of the net worth amounted to a car. She took the car that I had to continue making pmts, I kept my home, land, horses, 401k, my old truck and... ate all the debt - which I rolled over and over on 0% - 3.9% card offers while applying debt acceleration techniques until they were all paid. Sometimes had to take a loan out on my existing vehicles to get over a hump. Of course paying perfectly (which required sacrifice in other areas) was critical to receiving continued great credit offers.

So my experience has been that debt protected my dream of living in the mountains, while the loser went her way. That left me driving old clunkers for 12 yrs while I worked the debt down and padded savings/retirement. But I was solid in my career, did the math, put my head down like the Missouri mule that I am, and worked through it. Not everyone is as determined & disciplined.

Back during that time my net worth may have been lousy, but by using Other Peoples Money, I continued to control the assets. I have since recovered from that era, built a new home on my land, and have used low interest credit cards as a source of funds responsibly and effectively for 20+ yrs. (until the party ended with the implosion ).

In the end, its a math equation, career situation, and the issue of how determined and committed you are to your dream... assuming you have a dream...

xlover

20% is a good number if you can afford the payments. are you getting any trade in value cuz you can mentally add any of that to your cash down payment might make it a bit easier.