lou

Im 20 years old and looking to get a 2011 mustang in late 2010 maybe January of 2011. My first question is do you think I will be able to get one in late '10 early '11? Or do you think it will be like the camaro SS where they stopped taking orders?

My second question is financing. Ive had two car loans in the past. One car loan was for four grand, cosigned by my father and payed back pefectly when I was 18 years old. Last July I was financed on my own for 15 grand for another car at 19 years old, Ive payed that back pefectly. The first loan was payed off from the toyota dealer, and the second loan would be payed off from the ford dealer when I trade it in. I have no credit cards so I have no "potential debt" that I can accumulate, I have no mortgage, I live with my parents. My real only debt is with my car, which would be payed off from ford when I trade it in. I have about 4-5 grand equity in my car. So this mustang im looking at is about 33k (we can only assume based on pricing for '10). I would cut 4 grand off for trade, than I am thinking of like an additional ten grand down. My loans will put me at building credit for 2-2.5 years. Both loans were on time every time. Income is roughly 25k. So does this sound like my only chance is to get a cosigner, or should I excpect to be financed on my own?

Thanks.

2k7gtcs

I think on the loan history you'd be fine, but that income is gonna be a problem I think. You'd be financing roughly 20k with taxes on a 25k income.


I'm guessing you live at home because you are dong well to save 10k and pay off a 15k loan in only a few years. That's good. But if you can get your income up a little more I think it would help you to get the loan on your own and get you a better interest rate.

lou

I should probably state i borrowed 15k and only reported 12k at that time a year ago. Idk if that makes a difference.

2k7gtcs

What was the term? And the rate? Just out of curiosity.


I should say I'm not in finance anymore. But I did work in it for a short time.

lou

Interest rate is 8% at 63 months with 3600 cash down and 2k in equity from trade.

2k7gtcs

You should have a very solid history when the time comes.

I'm surprised about the 15k loan on 12k income but hey they did it and you're paying it back. Just don't get any other debt that would raise your debt to income and you will be solid. You're doing good for 20 years old. Just make the payments and you'll be golden. You've already built a good credit history.

lou

Ok thanks. I treat my loans religously.

2k7gtcs

That's the only way to go.

Gooch

The most important criteria is what your FICO score is and what your debt to income (DTI) ratio is. These two factors determine your credit worthiness and are what banks will look at to determine your risk and what term and interest rate they will loan at. Something that will help is the percentage of the total purchase price you will be putting down, this will also minimize the risk to the bank should you default on the loan and they have to turn around and repo/resell your vehicle. Higher the down payment less risk for the bank on that asset. Your best bet to make you more attractive at this point is to bring a decent down payment (20% if possible) to the deal.

On a side note, having credit cards isn't a bad thing to see on your credit report, the balances those cards are at is more important. A balance of 20-30% will show a responsible borrower where a person with 80-100% shows a person that tends to live at their limit/capacity. Something to keep in mind as you are building your credit is that longevity of account is important. If you have a credit card for 5 years and have shown responsible balances and no lates during that time this will help build your FICO score very quickly as oppossed to buying a car and paying it off quickly (before term of the note). Banks and lenders like to see they are going to make money off you afterall and they don't do that if you pay off early.

Good luck in your purchase of an '11 GT my friend!

lou

Ok, so ten thousand down excluding trade is close to thirty percent than another four from trade so thats really putting a dent in the price tag. When i pay the monthly payment i pay whats due, i figured thats what built the credit. I have no other debt because i hace no credit card so they will probably like that. The more i think of it the stronger it sounds ill be approved. I hope everything works out when the time comes. Thanks guys.

lou

Yea I just figured out that my percentage down with my trade would be over fourty percent so that and the loans should really be helpful.

Adam

They'll have no problem finding a loan for you. They don't care if you can actually afford it.

Bert

what's this about they stopped taking orders on the Camaro SS? There will be a cut-off date for the 2010 model shortly before they start taking orders for the 2011, but I haven't heard anything about them stopping taking orders . . . maybe you talked to a dealer who had already used up their alotment? (each dealer has a predetermined alotment of a specific number of Camaros)

Anyway in late 2010 I don't think you will have any problem finding a Mustang, either by ordering one or by taking one off a lot. But I'd suggest you shoot for December 2010, because you will probably get a better deal when they are trying to beef up their sales numbers and get rid of their inventory before year end.

Regarding the financing, I think that has already been answered, I am not in finance but having a car loan that is more than your anual income seems a bit high to me -- I think you should save a substantial down payment.

The other question not asked -- is this really what you should be doing with all your money at your age? Where will this lead you in life? Have you considered investments in yourself like college? Yes a new Mustang is a lot more fun than saving for college . . . although college is a lot of fun in a different way . . . but will a new Mustang prepare you for a good paying, long term career?

lou

Im not going to college, im in construction with my dad, as far as Im concerned Im a painter until the day I die. Ill probably eventually take over his buisness, ive been painting since I was 13 years old, and full time since 16. I did not like school.

As far as the camaro, I remember on the camaro boards chevy sold so many 2SS that they were finished with the 2010's before 2010 even came around, I was curious if you guys thought Ford was going to do the same thing, or if they were really going to keep up production.

Thanks for the replies.

zeindog

I agree schools not for everyone, and it sounds like you have a good work ethic so you should have no problem making money and paying back the loan. As long as your parents are ok with it go for it, everyone says to save, I say spend but within your reasons. My advice would to at least get one credit card even if its a low balance and use it for little things and pay it off. My buddy ran into a problem getting a mortgage because he never owned a credit card. The more credit history you have the better.

lou

Yeah ill eventually get a credit card, I just dont really want one at this point, maybe after the mustang, this will be my last loan for a while. Im good with money, even my parents tell me that, I can afford a 20k loan no problem, just want to make sure ford financing knows that lol.

tmclaugh

A credit card is always good to have. I schedule one bill to land on my credit card each month and pay that off on the first of the month. I used to have credit issues in part because I paid all my bills on my debit card which doesn't build a credit history.

As for the car, a $33K car on $25K salary is a bit lopsided. You have a fair amount up front but you need to calculate what your monthly payments will be along with your insurance. Additionally, you need to figure out what you'll do if paining work dries up for a period of time. (Yup, there's a pun in there.) Not sure if you're a contract or a salary employee but if you start missing payments do to a downturn in work you could get screwed for many years.

Putting on my no fun hat, you're 20 years old and you have a chunk of cash during a down market... Invest it or something. You will really thank yourself in 5-10 years for having done that.

lou

I think I figured a 20k loan at 8 percent interest rate at 60 months is like $405 a month. I dont see a reason why I couldnt have the car and still save money, this car isnt going to cost me anywhere near every nickel I make for the month. I would also keep some money in my pocket after my down payment, to run myself dry like that would be stupid.

Bert

OK, we all choose our path . . . you have a lot of time ahead of you, most people change careers at least two or three times during their lifetime these days, so you never know and you have plenty of time. A strong work ethic is probably the most important foundation and it sounds like you have that going for you.

about the Camaro, I think that is a bit of misinformation -- I'm 99.9% sure you can still order a Camaro SS today or tomorrow if you want to; plus the dealers have more and more of them on their lots every day. So no I wouldn't expect any troubles getting a 2011 Mustang in late 2010.

lou

I got another question. How long do you guys think the '11's will have to be out until we can see them for sale around MSRP?

Thanks.