What Insurance Rates and Loan APR % is everyone getting ?

[SargeDiesel]

I know you directed it at SP, but gap insurance pays the "gap" as you stated. It's the difference between what you still owe and the market value. If you only financed 20k you don't need gap.

Thank you, that's what I was thinking.

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[steveorama]

Thank you, that's what I was thinking.

I think there would be a lot more "accidents" if gap paid out what you owed AND you got a check for market value.

 

[ShadowsPapa]

Gap insurance is for times when you owe more on a loan than the vehicle is worth. The loss payee is the "bank" when you have a loan. If you owe 50K on a vehicle and it's totaled, insurance will pay the bank the current value of that vehicle (in most cases) and that may not be as much as you owe.
Once the remaining loan amount you owe is less than the fair market value of your vehicle based on miles, condition and so on - drop the gap insurance.
We had gap insurance on a Jeep we bought 10 years ago. We ended up trading it a couple of years later after paying it off and forgot all about having the gap insurance, This fall we got a nice check from the company we got the gap insurance through for a refund of the policy cost! Amazing.
Anyway, the need for gap insurance depends on your insurance coverage (most will pay an amount for a totaled vehicle or one that is badly damaged based on age, miles and fair market value in your area - like a KBB value just for example) So if you owe more than the thing would be worth if you were to wreck it and insurance pays fair market value - gap pays the difference. It covers your butt with the bank or loan company. Some people buy vehicles, put 20K on them in a year and the thing is worth less than what they still owe - especially on 70 and 80 month loans!! Gap helps there.

 

[ShadowsPapa]

I know you directed it at SP, but gap insurance pays the "gap" as you stated. It's the difference between what you still owe and the market value. If you only financed 20k you don't need gap.

Exactly, in a nut shell - that's it.
Some borrow the full amount and for very long terms and then put tons of miles on them in the first couple of years - market value will be less than what you owe. Gap is good then.

 

[Deleted member 30519]

This is great conceptually, but none of the lenders I spoke to would lock in a car loan rate for more than a few days, which makes no sense to do until my delivery is imminent. I'm all for it if you have suggestions, though.

The thread topic had nothing to do with people waiting for delivery. My fault I guess.

 

[SargeDiesel]

I think there would be a lot more "accidents" if gap paid out what you owed AND you got a check for market value.

Very true !

 

[Blade1668]

Insurance is dependent on so many factors many have no justification but in the insurance company favor.
Many factors on insurance start with sex, age, marital status, location, miles driven. Being male single no matter driving record your screwed until certain age. When I was in KY my insurance cost more than the note monthly until I could change over to State Farm insurance, if they would have let me use my H.O.R. I'd been paying 1/3 what had to in KY for full coverage or about $27-30 a month. (Then) but a single male under 27 in Army the real kick in the pants was statically males in the age group didn't have that bad of driving record but it was being pushed not to the ones that did..... Sorry to piss on rainbows but it was female's of certain age brackets that had the highest accident rate. That was in 90s how and where did I get that information higher ups at State Farm insurance my H.O.R. is near their HQ. and I knew some of them.
My condolences for all of you having to regularly having to drive around certain driver's in KY and otherwise.
Mine was financed at 1% rate that I paid off shortly after 5 months. The rate was due to my credit history and credit score that has dropped due to paying off everything and no loans.

 

[ecidiego]

credit score that has dropped due to paying off everything and no loans.

People forget this. Credit is based on proven record of repayment. A rich guy with no debt shows no proof of reliability!

 

[Blade1668]

Exactly, in a nut shell - that's it.
Some borrow the full amount and for very long terms and then put tons of miles on them in the first couple of years - market value will be less than what you owe. Gap is good then.

I'm normally in that bracket..,.. my JT I've had for 23 months has passed 50000 miles.? GAP can be critical for first few years of financing.

Glass coverage in some locations is a critical, 3 windshields in 6 weeks, in my LJ. Second one in my JT S##### roads and major construction. With in a 2 mile strip of 565 got my LJ's windshields all 3 times.
Something else is front and rear "Dash cameras" it's another insurance now! I've seen a few people who pull out and stop in front of people some don't even have brake lights that are out looking for lawsuits.

 

[Blade1668]

People forget this. Credit is based on proven record of repayment. A rich guy with no debt shows no proof of reliability!

Well I'm definitely not rich ? I just don't buy new S### all the time. ? My prior new vehicle was my 05 LJ in 05. Before that my 91 MJ in 91. the 90 XJ I got was dirt cheap when I bought it. My 91 XJ was to replace it. My house I bought was 46 K in 99 a repo house. Nothing of big $$$ here. As a "broke" single NCO I saved a good chunk of my pay and didn't go bar hopping all the time. My biggest debt was probably my guns and ammo bills.?
Yes when young definitely invest for later... But at 53 it's water under the bridge for me. At 15 and until my post A.D. I was saving or trying to.... Then to be screwed out of my retirement.
My goal is to not be in debt and can say F### it I'm out of here anytime I want. Not the same thing for all of you youngster here.

Sorry for a slight rant... I should be retired in Cozumel, Croatia or something right now.

 

[ShadowsPapa]

People forget this. Credit is based on proven record of repayment. A rich guy with no debt shows no proof of reliability!

True to a point.
If you pay your electric bill, taxes, credit card, water bill, whatever, it counts.
My son has a credit score only a couple of points behind me (I think he was at least 815 for one bureau and the credit union said they had only one other customer higher than us) and he'd had one house loan and one car loan in his life which I co-signed for when he moved back to the states.
The rest was based on his payment of monthly bills, credit cards and so on.
You don't have to have a car payment and home mortgage to have a good credit score - he's proof.
My wife and I still have credit scores that are about the highest of our credit union customers - they love to mention that when we go in and talk about our credit cards and other stuff.
If you want to build credit - you can do things such as HAVE a credit card and use it only occasionally and pay it off in full when due.
We were told when we switched things around recently - don't cancel your old card, simply don't use it, use the new one. They said that cancelling a card counts against you - having one and not using it doesn't count against you.
Because we always paid off any card before it was due or when it was due in full, they said we qualified for one of their special rewards cards with a lot more perks. All because we used cards but never carried a balance. They love us because we were "no risk" to them. (they get their income on the seller's end, I know that very very well as we had a retail business).

Anyway, proof of paying things does count - but it doesn't have to be a house or car. It's a total of many factors. We and my son are proof of that. Last car loan we had was years ago, and we'll pay off the house in a year or two. Tax guy/CPA said it would be a wash - let 'er ride or pay it off. I figure the hassle factor comes into play - less hassle to let it ride.

 

[ShadowsPapa]

My goal is to not be in debt and can say F### it I'm out of here anytime I want. Not the same thing for all of you youngster here.

Good goal.
I was really close when I handed my boss that letter at age 60. House worth 5 or 6 times what we owed on it, vehicle just paid off.
Frugal living, a wise wife who said "if we don't need it, put it away" each time we got a raise (which was twice in 12 years because being state employees, you couldn't just go ask for one, the boss couldn't give you one for good work, and the negotiators usually lost to the governor) There were "step increases" but I quickly maxed out on those.
My parents had squat, lived in a crappy tiny 900 sq ft. prefab 1950s house until they died, Mom couldn't work, Dad worked in a factory until they moved south for cheaper labor (and at his age he could only get part time work) - they never had a car loan, ever, and had only their house mortgage which they paid off in the 70s and yet when they went to the bank it was always "how can we help you" with big smiles. They had great credit ratings. And because my parents insisted when I was 12 that I have my own accounts and my own checking and then at 14 had my own car and my own insurance, when I graduated college I decided to treat myself (NO JOB YET!) and I walked into the bank, sat with the loan officer and said I wanted to buy a new car - he asked what I wanted and how much I needed. I told him an AMX and I needed 6 grand.
Done deal before I left the bank. I was 20 or 21.
I know times have changed - but still.................. there's a lot more to it than needing to put yourself in debt to have credit ratings.

 

[Klutch]

Interest rates are low, so why I see no reason to pay for a whole car at once. Then if it gets hit, I'm out of all my money, minus whatever insurance decides it's worth. Now, I have gap insurance. If I get hit, the jeep gets paid off, I'm out nothing but what I paid so far. Also, interest rates are low enough that I see no reason to buy a vehicle in cash. Many times the deals are better with a loan too, since the dealerships these days want their kickback. Someone hit my 2 year old car a few years back. Insurance decided it was worth 27000. It cost 45000. Thanks to gap insurance, I lost nothing, Other than the minimal amount of interest I'd paid so far. I'm in no hurry to quickly invest in something that depreciates, when my money could be better spent elsewhere. Interest rates with even decent credit are so low that I personally see no reason to pay for it at once. Low down payments and low interest rates mean my current funds are better saved or spent elsewhere.

This. Some people believe they have extra negotiating power if they pay cash for a vehicle. It's the opposite. The dealer doesn't want your cash. They want you to finance so they can get a kickback on the loan and so they can sell you extras, "for only a few more dollars per month!".

And I know some "radio personalities" are all about paying cash for everything. But yeah, interest rates are so low these days you can take the cash, invest it elsewhere and make more a return than you're paying in interest. Interest rates will likely go up in 2022, but unless there's a significant bump, loans with good credit will still be cheap.

Credit unions can sometimes get you the best rate on a vehicle loan, but not always. I always ask the dealer what kind of a deal they can get me on financing. They always have something very attractive. And sometimes if you agree to buy an extended warranty, they'll get you a really cheap loan which will more than pay for the warranty. If the dealer gets a kickback for selling me a really good loan, that's a win-win and I'm good with that.

 

[Klutch]

As with auto insurance, credit scores have many variables. My wife's sister is single with no dependents, has zero debt and no blemishes on her credit report. Yet, her credit score is low and she can't get a credit card. This is because she doesn't own a home, her income is low and she has very little credit history. If she needed a car loan, she'd be in trouble. It's too bad. She's being penalized because she's an honest and frugal person.

 

[ShadowsPapa]

This. Some people believe they have extra negotiating power if they pay cash for a vehicle. It's the opposite. The dealer doesn't want your cash. They want you to finance so they can get a kickback on the loan and so they can sell you extras, "for only a few more dollars per month!".

......................

Credit unions can sometimes get you the best rate on a vehicle loan, but not always.

That's exactly what they do.
And your cash doesn't matter because the dealer is going to get that bottom line amount either way! It's not like the dealer gets the money when the bank gets your payment. You pay them or the bank transfers the money to them - all pretty much the same day.
The bank gives them that dollar amount or you do.
The difference is they miss out on the "fee" earned for selling that loan for the bank.

It's also easier for them to sell you something more if it's only $5/month more, rather than telling you it's an extra 400 bucks or whatever. It's a huge deal.
They can really upsell when it's all about that monthly payment.

The good thing was always that our credit union was among those listed on the financial guy's screen when we went to handle paper work. When we did finance, they asked who we banked with, and our CCCU (formerly state employees CU) popped up and more likely than not, it also had the best rate. A couple of times we went with what the dealer plugged in and after a couple of months transferred the loan to our CU because we got cash back for doing so - win-win for us. Plus because our salaries were direct deposited there, we could choose to have the payments deducted directly from either my "check" or my wife's "check". It was slick and worked well and they had great rates and perks.

My wife's sister is single with no dependents, has zero debt and no blemishes on her credit report. Yet, her credit score is low and she can't get a credit card. This is because she doesn't own a home, her income is low and she has very little credit history. If she needed a car loan, she'd be in trouble. It's too bad. She's being penalized because she's an honest and frugal person.

That really sucks - if I were to loan money personally to someone, that's the sort of person I'd be more willing to take a chance on because of the pride and care with which they've lived. Someone like that likely takes pride in taking care of who and what they owe. That counts, but not in the business world.
Sounds like one of my wife's sisters - tiny tiny little rented house, no garage, a truck she's had for years and saved and worked hard to buy it. Frugal but I'd loan her money before I'd loan to the rest of her family.

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