advice on finanacing a used TDI needed, Thank you!

[mixin]

Hello,

Since TDI demand has inflated used TDI values way above NADA retail, how do I buy one without alot of cash in hand? My budget dictates I will probably end up with a 1999 or older TDI. I don't mind being "upside down" in one since I never plan on selling it, but will a dealer finance me this way? (I know my credit union won't) Any recommendations of Michigan area dealers for this type of purchase would be appreciated also. Thanks for your kind responses.

 

[dieseldorf]

You've got three major issues challenging you. You're trying to finance a vehicle that is carrying a super-premium price (in relation to "book value"). You have little available cash to put down which is likely to be required. You're trying to finance a car that's 7+ years old and that doesn't excite your local loan officer, as you've already determined.

Good luck.

OTOH, I will suggest cars.com (or equiv.) and find an older/less expensive TDi at a VW dealership. They'd be able to offer financing and would have a higher likelihood of getting it done for you.

Plan B: Honda Civic

 

[b1gmoose]

My bank helped me out a bit ...

My credit score was 635 when I bought my 2002 TDI last month. The final sale price was $12,500. The best loan I could get was for $9K @ 10.75% with no co-signer, not bad for a 23 year old college student with a wife & 1 kid. Since my wife does not work, her credit score of 742 does not count :-(. We're trying to keep our scores seperate, that way, if mine gets hosed up b/c of something dumb, we'll still have a decent score for her when we are ready to buy a house. But back to the subject at hand.

My bank, USAA valued the car at $13,900 (same as VT DMV for some reason). What they told me was my loan for $9K could only be used for up to 100% of the value of the car. So if the car was worth only $7K, the loan could only cover $7K, even if my purchase price was $15K.

I lucked out with my bank, they have treated me well over the years & I continue to be their customer. I also pay an extra couple of dollars each month for insurance, that in the event of my death, the loan is paid off 100% and allows my wife to get a loan on the current market value of the vehicle if needed.

What you need to do, is get a list of 10 cars of the same A3 body style (99.5 & older), similar mileage, similar GL/GLS options, etc. See what the NADA, KBB, etc values are. See what the current market values are, and then call your local DMV & see what they say the value is. Ask you bank what they value the vehicle at, and get a loan for 100% of the vehicle value, then kick in with cash, the remainder of the purchase price.

I've had way too much coffee, let me know if this is confusing to you, i'll organize it better later if needed with an edit.

HTH

~ryan

 

[Matt_OToole]

Ryan,

Was that $9k based on a percentage of the value of the car, or just the most the bank would let you borrow?

USAA is terrific, especially for car loans and car insurance. I'm sure you're paying considerably less interest than you would elsewhere. Credit unions are usually good for car loans too.

My philosophy with car finances is to avoid paying interest on a depreciating asset like a car. Not all of us can pay cash, but we can at least minimize the damage!

 

[Matt_OToole]

You're trying to finance a car that's 7+ years old and that doesn't excite your local loan officer, as you've already determined.

A lot fewer loans are available for cars older than 5 years. Consequently, cars tend to take a big dip in value at the 5 year mark, as the pool of available buyers shrinks.

 

[b1gmoose]

Ryan,
Was that $9k based on a percentage of the value of the car, or just the most the bank would let you borrow?
USAA is terrific, especially for car loans and car insurance. I'm sure you're paying considerably less interest than you would elsewhere. Credit unions are usually good for car loans too.
My philosophy with car finances is to avoid paying interest on a depreciating asset like a car. Not all of us can pay cash, but we can at least minimize the damage!

The $9K was the most my bank would loan me given my credit score without a co-signer. IT's not the best interest rate at 10.75%. I have another personal loan with USAA. I've had that one for 14 months now, so next year, after having the car loan for at least 12 months, I'll see if I can re-finance & consolidate the 2 loans to 1 loan & payment.

I ended up breaking into my Roth IRA for some of the $3500 cash I needed for the down payment on the car. Since the Roth IRA is after tax contributions, I took out some and since I didn't touch any interest generated portion, I won't pay capitol gain tax on it. It also keeps me in the game for the first home purchase penalty free withdrawl from a Roth IRA.

I use USAA for my renters & auto insurance, I love the dividends at the end of the year. I had an accident with one of my BMW's a year ago. I turned left in a 50 zone & wasn't looking. Very much my fault, they paid for the damage to the car I damaged & didn't hike my rates at all since it was my first claim on the policy.

The nice thing is the TDI won't depreciate as fast as a gasser would, but I needed a 2nd car, with Air Bags & under 100K miles. I got this with 107K, so close enough to 100K. Now I just have to fix the oil pan leak in my 89 AWD BMW with 242K miles on it.

~ryan

 

[mixin]

Thanks Dorf, I'll comb the dealerships. How can they expect me to pay a price they wont finance? Right? As for the civic, I had a mint 91 HB, but the wife was right when she said it wasn't safe for infants with all the SUVs and F250 powerstrokes as the commuter vehicles of choice here in MI. So it had to go. She feels safer with a bigger car, are the A3s smaller inside and out than the A4 jettas? Maybe I can find a B4 on a lot, but I doubt it in Michigan. Thanks for the great advice and your future response!!!

 

[catmandoo]

there is an 02 jetta gls here in n.w. iowa at a vw satelitte dealer has 180,000 one owner miles very nice car if i didn't already have mine i would be driving it now.they are asking 9995.5sp,s/r,heated cloth seats,monsoon,black/black.

 

[ensanity]

I luckly had another car that I had paid off, luckly the bank did not know that it was a piece of crap, so I put up the chrysler so that my loan is for the chrysler and the Jetta. That helped me ALOT!

 

[mixin]

I put up the chrysler so that my loan is for the chrysler and the Jetta. That helped me ALOT!

You used the CRYsler as collateral or did you use the equity in the car? I'm confused - how does that work? Thanks for your response!

 

[mixin]

there is an 02 jetta gls here in n.w. iowa at a vw satelitte dealer has 180,000 one owner miles very nice car if i didn't already have mine i would be driving it now.they are asking 9995.5sp,s/r,heated cloth seats,monsoon,black/black.

Thanks for the tip man, I'm realistically a month or so out from my purchase, so I am just trying to figure out how I'm going to make it happen at this point. Thanks for your response!

 

[No Exit]

If you dont owe on your car you can take a loan out on it... kind of like if you were gonna buy it from someone else.. there's value in the car. It's as tho you got a loan on it and purchased it from yourself. If you dont have it paid off but its worth more than you owe and your bank will give you a loan on it, sometimes you can refinance it. Think of it as buying a house.... almost the same concept in that aspect.

 

[Smaug]

Looking at it strictly financial, now is not the time to buy a TDI. Prices are way up so the possiblility of getting any kind of cost savings on fuel is low.

Other threads talk of TDIs going for $2-3K OVER sticker. That price spread (invoice cost to $3K over sticker) buys a lot of fuel.

It's up to you how you factor in the fun factor and cool diesel factor.

 

[No Exit]

Guy didnt ask if he should get a TDI or not... he asked for financing options. While I do agree that if you cant afford it, its probably not a good idea... this shouldnt be turned into a debate on the timeliness factor of his decision.

 

[mixin]

Guy didnt ask if he should get a TDI or not... he asked for financing options. While I do agree that if you cant afford it, its probably not a good idea... this shouldnt be turned into a debate on the timeliness factor of his decision.

That's ok, I personally don't consider that threadjacking as it's a pertainant point. (but thats how the jack starts sometimes!) Maybe he's right, I did miss my window to purchase a TDI for finanacial gains unless I'm putting 50k+ miles a year (which I'm not, maybe 15-16k, any stats majors might weigh in here on how many miles you need to put on a year to justify the inflated price of admission today). Since I'm pretty good at turning wrenches, I might just keep rolling my rusted 94 grand prix sh!t box, 160K-It's fuggly and the damn thing wont die... Maybe wait another year and see what happens to the market.

 

[NOVAJettaWagon]

As an employee of a car dealership...my first thought is depending on your credit I should be able to get you financed. I just got a guy approved the other day on an older Subaru. If you're less than A tier on a car older than 5 years old, and with more than 60,000 miles on the odometer, the likelyhood of being financed drops significantly. Usually if you have two of the three getting financing takes some work, but isn't out of the question. But...if you don't have two of the three, I'd say wait until you have the cash for the car, or see how the payments fall on a newer one. If you take a longer term on the loan, (60 or 72 months), the payments should stay relatively low (the average car payment in the US right now is $400 a month). I'd recommend leasing a new one, except VW doesn't subvent the leases on them very well, and the fuel savings from leasing a new 2.5 vs. leasing a TDI would not make up the $100+ difference in payment on an equivilant car.

On that note, if you're credit challenged, it's a lot more likely that I'd be able to sell you a new car than anything used at all. Just a thought.

 

[mixin]

Well, maybe I could trade my 2001 GTP that I owe 10.2K on and roll the negative equity into an used TDI! Maybe I'd have the 1999.5 A4 of my dreams with a note for 15K! Ah...only in America...

 

[lildevildee]

Waiting another year for a TDI might not be a great idea either since there will be no new '07s. While I understand you're looking at used, I think the market is going to stay on the high side for TDIs.

Interestingly enough, I've always been able to beat USAA's interest rates through a local credit union, Navy Federal, or even VOA! Their auto insurance rates though - can't beat 'em.

Good luck with whatever you choose!

 

[Mcgink]

Other financial options could be using home equity for the funding if you have a house. Try to amortize it for the same period as a car loan and stick to the payment schedule though.

I constantly get Credit card offers w/ checks that promise around 6% till the balance is payed off. With this one you just have to make sure that the payment is not even 10 minutes late or the balance will go to the Default rate, OUCH !!! The other important thing to keep in mind w/ this one is that you need to dedicate that account to that balance only because anything else you put on that card which caries a higher % rate will get payed only after the lower % rate balance is payed off.

With either of these, You'll want to keep full insurance on the car till it's payed for and try to stick to a car-loan type payment time frame.

I used the second method w/ my truck and transfered my Bank- car loan to a 1.9 % fixed credit card offer. It's the only balance on that acct, and I keep full ins. and make the payment ahead of sched every month.

I did my former TDI the same way, but the rate was around 5%

It's worth considering but definitely requires more fiscal discipline than traditional loans.

 

[michigandon]

Guess I got lucky. I got a five year note on my A3 this winter @ 9%APR. Fortunately the seller was only asking $875 over NADA retail (what they were willing to lend on it), so I just bit the bullet and paid that out of my own pocket. Didn't want to do it that way, but I needed a new car like NOW, and it was gonna be a TDI or nothin'. I had spoken my peace and counted to three! The payment is like $96 and some change, I've been sending them $100 every month. Yes I plan on paying it off early. don't think I've ever had a car loan that I didn't pay off early (either sold the vehicle or paid the balance off one way or another).