One of my kids is interested in buying a used car and possibly getting a car loan. My only car loan was for my first car and I borrowed the money from myself through my 401 k. That was 30 yrs ago. Since that time whether buying new or used we have always paid cash. Also even when we bought used we bought local. My kid is looking for a specific car and will have to search widely. We also have never bought the warranty offered by dealers. The mechanic I used suggested S get a warranty on this specific used car.
I have no idea what kind of advice to give him.
Would love advice on how to go about getting a good auto loan. Dealer, bank etc.
Advice on extended warranties?
Also getting a used car checked out. When we buy local we have several mechanics we trust. If the car is 100 miles away I pretty sure they aren’t going to let him bring it to our local guy.
What is so special about this car that it has to be hunted down, and needs an extended warranty?
Re: auto loans…is your son employed? Is there a credit union where he loves? If so, have him join. Their used car loan rates are usually decent.
S just bought a pre-owned 2013 Audi a4. It came with the Audi 5 yr warranty for some things - not exactly sure what because I am not a car person - but he also purchased another extended warranty. He discussed with my H and told him having it would just give him peace of mind.
He got the car loan from our CC - where he also has an account. 2. something percent. H did have to co-sign because even though his salary is more than enough to afford this car - his credit history is short since he’s on,y been out of college and working 10 months.
Thank you emilybee- just the kind of information I’m looking for. He has a savings account at a local Credit union. He should call and find out interest rate. We will not co sign but I think he won’t need us. @thumper1 he has been employed since college graduation 5 years ago so has plenty of employment history. He has a hefty savings account and will need to decide the pros and cons of a car loan or buying outright.
The car is a BMW 328i coupe. There are plenty of 4 door used for sale but it is harder to find the 2 door. He also has a price and mileage cap. I’ve owned a BMW and I know the costs associated with owning a high performance car. Our advice to him would be to buy a Honda or Toyota but he wants the BMW.
He is 26 yrs old. He paid off his student loans in the first 6 months of working. He has few expenses beyond rent and a good start on his retirement savings. It’s a purchase for a young man who can afford to make a frivolous decision.once he has a spouse and children he won’t be buying or driving a car of this type. He has always loved cars and he is a designer so lines are important to him. He loves the design of this particular model.
The extended warranty is up for discussion because once this car hits 60000 miles it will likely begin to need repairs and BMW parts are expensive. I don’t know if they are worth buying.
The general rule of thumb with extended warranties is that they generally are not worth the cost, that if the car is expensive and prone to need repairs, it will be very expensive, and if it is relatively cheap it either doesn’t cover a lot of things, or won’t be needed.
Most new cars come with 3/36k bumber to bumber coverage, then usually between 60 and 100k for major powertrain stuff (engine/transmission). I suspect that an extended warranty plan might exclude a lot of the weables on a bmw that would be expensive, things like brakes and clutches and such, so getting a warranty will mean taking a look at what it really covers and looking at the cost.
If he is going to buy the car with relatively light mileage (let’s say 25,000), and isn’t planning on putting a ton of mileage on it, he may be better off paying for an extended warranty like that. BMW’s are relatively reliable cars, and if he buys a certified used car from a dealer he may get a warranty on it to boot, I would look into that.
The other thing is has he looked into insurance? While 26 is a kind of magic number when it comes to insurance rates with men, he still may face stiff premiums with a young, single guy with a relatively expensive performance car, and he should take that into account. Having a loan, he will need comprehensive and collision on it.
Have him do a cost-benefit analysis. How good is the extended warranty? Is it from the seller in the town 100 miles away or is it more general? Would he have the willpower to put the money he would otherwise spend on the warranty into a dedicated fund for repairs – i.e., self-insuring himself? If any repairs aren’t needed soon, he’s likely to come out ahead – and he could shop around for a mechanic rather than possibly being limited by the terms of the warranty.
On the other question, car loans are a good way of building credit history. Borrow a reasonable amount. Pay on time. Lenders like to see that. Paying cash all the time does not reassure them when/if you need a loan/mortgage/etc.