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I'm looking to buy a new car and have found one that I really like. It is priced at $4500 (with taxes). I currently have $2700 in my savings account. I would like to get a loan for $2000 (leaving me with a little over $200 in my account).

I have talked with my bank about getting a loan and they said they usually don't make loans for under $7000. Where can I get a loan for $2000?

Also I would like to get a loan that doesn't penalize for early payoff.

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6 Answers

up vote 3 down vote accepted

Ask yourself what would happen if you wouldn't buy the car. If the answer is nothing, don't buy it

Phrasing Warren Buffet:

  • I never buy anything unless I can fill out on a piece of paper my reasons. I may be wrong, but I would know the answer to that. "I'm paying $32 billion today for the Coca Cola Company because..." If you can't answer that question, you shouldn't buy it. If you can answer that question, and you do it a few times, you'll make a lot of money.

  • You ought to be able to explain why you're taking the job you're taking, why you're making the investment you're making, or whatever it may be. And if it can't stand applying pencil to paper, you'd better think it through some more. And if you can't write an intelligent answer to those questions, don't do it.

Don't get yourself into a loan unless you have to. Sorry if that isn't the answer you were looking for...

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I think the quote is good advice, however it won't work in my situation. I need my car to get to work and people are getting tired of me bumming rides. ;-) –  Lucas McCoy Oct 19 '10 at 0:33
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Then off course you have a good reason to buy a car. Consider buying one that won't get you into debt. There are all kinds of hidden costs to getting a loan. And you are corroding your 'emergency fund' that should be around 3x - 6x your monthly income. So, that is another thing to keep in mind. –  GUI Junkie Oct 19 '10 at 6:15
    
Unless off course you pay for the gasoline. That must be cheaper than a car... –  GUI Junkie Oct 19 '10 at 13:38
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Check with other banks or credit unions in the area. You should be able to find one who will accomodate your needs.

Try opening a line of credit instead. Then, when it's paid off, you still have it available for other large purchases (your refrigerator breaks, or something, and you need to buy a new one).

As a last resort, take the $7,000 loan from your bank, buy the car, and immediately pay $5,000 against the principal of the loan. They might have early payment penalties, though, so check their fees before you decide on doing this.

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+1 for credit union. They should want to help rather than make a profit. –  MrChrister Oct 18 '10 at 18:28
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+1 for line of credit –  duffbeer703 Oct 18 '10 at 20:16
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You can try Prosper.com or LendingClub.com.

What about getting an unsecured loan at your bank? The interest rate will be higher but you can probably get it for the amount you need.

Don't even know if this is a possibility but what about putting the balance on a credit card?

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Can you provide some more information on the unsecured loan? Also how can I put it on a credit card? The car is at a small dealership who doesn't offer financing. –  Lucas McCoy Oct 18 '10 at 3:35
    
You can get an unsecured loan from your bank. It's a general-purpose loan. Unlike a car loan where you have to actually buy a car, you can do whatever you want with this loan. That might be a way to get past the $7,000 floor. As for the CC I don't know. It was just a thought. –  mbhunter Oct 19 '10 at 1:42
    
Unsecured loan, such as a Personal Loan. –  MattMcA Jan 20 '12 at 0:58
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When we bought our car, I applied for a Capital One Auto Loan. Once I was approved, Capital One sent me a blank check. When we bought the car, I filled out the dollar amount and signed on the dotted line. When the check was cashed, I had an auto loan.

Edit: Just wanted to mention that there were not any penalties when I paid the loan off early.

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What kind of rate did they give you with that kind of flexibility? –  Troggy Oct 18 '10 at 17:58
    
I used capital one as well. It was really simple and they have the process worked out really well. The rates were competitive. –  Michael Pryor Oct 18 '10 at 18:07
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@Troggy: I got 6% on a used car loan in late fall, 2006. It was the best rate I could find at the time. I found out about this loan via BankRate's auto loan center. –  Pete Oct 18 '10 at 18:59
    
Well that would be great except they won't make a loan for under $7,500. i.imgur.com/zNI6M.png –  Lucas McCoy Oct 19 '10 at 0:22
    
@lucas It looks like they've changed the program substantially. You also can't use their blank check to pay another person. It has to be an approved dealer. –  Michael Pryor Oct 20 '10 at 12:45
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for better or worse, I've had great luck with pentagon federal credit union - its open to anyone who's i the military or related to someone in the military OR someone who makes a one-time donation for the national military association - see #7 here

They have the best rates I've ever seen on auto loans - I refinanced a used auto loan I had at 6% interest rate down to 4% interest rate. Now thats a damn good deal.

They have no prepayment penalty that I'm aware of, but I dont know their minimum loan amount. One option you have is - as long as you find a place that'll accept a $4,000 minimum loan but has no prepayment penalty, take out a $4k loan and just pay off $2k immediately. That'll work well for you.

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For military or relations, USAA is also a good option. –  justkt Oct 19 '10 at 12:26
    
+1 for the $4k loan with immediate prepayment –  bstpierre Oct 19 '10 at 17:05
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Have you considered asking the car dealer? They are likely to be eager to help you in any way they can to sell the car and might be willing to finance the loan through their credit department.

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Yes I did this but it is a small car lot and they don't have a credit department. –  Lucas McCoy Oct 21 '10 at 0:03
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protected by Chris W. Rea Apr 21 '12 at 15:49

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