Car loans

Hey there,
I’m looking for some real talk regarding taking out a loan. I’m pulling in about $2500 a month, living solo, and my rent and utilities eat up roughly $567 plus another $767 for groceries, clothes, and whatever else comes up. I've got my eye on a new ride that runs about $36667, which works out to a monthly payment of around $767 if I stretch it over five years. Honestly, looking at my take-home pay versus these expenses... would you guys actually pull the trigger on a loan like this?

No. My plan is to scrape together a few tens of thousands in cash first, keeping my monthly payments somewhere between $1,400 and maybe $533. That’s how I’ve always handled it. I saved up $30,000 for my first car and financed the rest, then did $20,000 for the second one. Right now, I’m paying off a $0.40 over a five-year term. Taking out a loan for the full sticker price is always my absolute last resort.

Just wait eighteen months and pick up a $60k car $0.00 with cold, hard cash 🙂

Or you can just toss your financial independence down the drain for some overpriced hunk of junk...

Though, if you're single, I guess you might have an easier time landing a date if you show up in a flashier ride...

But hey, it’s your call, right?

You're missing the most important part of the math here—what's the actual purpose of the car?

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slyorca11 said:You're missing the most important part of the math here—what's the actual purpose of the car?

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Commuting to work, getting around town, hitting up clients every now and then, and a few trips out to the Midwest.

Hey there

I’ve been working at this really solid private company since March 3, 2008... it’s doing great. My average take-home pay is currently $2667, though starting October 15th, I’ll be seeing $5000 because I actually got a promotion.

I need to pick up a car ASAP—like, an absolute Emergency Services situation—because I'm totally stuck without one for work. So, I was looking into taking out a loan for $33333 over 7 years... the monthly payment would probably land somewhere around $1,700-$600.

I’ve already checked with a few different places—JPMorgan Chase, Bank of America, and Wells Fargo—and every single one of them is insisting on a co-signer. Unfortunately, I don't have anyone who can jump in and sign with me. It's not like my parents can help, and my friends are all way too young... they're basically just getting their first jobs and barely qualifying for anything themselves.

I just don't get why they won't let me fly solo on this loan. Isn't there some kind of rule where if the payment is only about a third of my paycheck, they'll just approve it? Maybe it's because I'm currently overdrawn on my checking account... that might be the snag?

My main account is over at JPMorgan Chase. When I originally asked about credit, everyone kept trying to push me toward a personal loan instead. They said that might go through without a co-signer, but only if I could front them $3333 upfront... and I definitely don't have that kind of cash sitting around.

This falls squarely under the creditworthiness category 😉
JPMorgan Chase has this policy where they insist your monthly car loan payment doesn't eat up more than a third of your paycheck—it's all about that debt-to-income ratio. The vehicle itself serves as the collateral, plain and simple. 🤷

Sorry if I'm totally derailing the thread here, my bad...

So, basically, they just own the car outright? All I need is enough credit score to make sure the monthly payment is less than a third of my paycheck? No co-signer, no guarantor, no extra insurance requirements, nothing like that?

You have the option to opt out of collision coverage if you really want—it's your call as the owner—but keep in mind they’ll slap an alienation clause in the title, meaning you can't flip the car until the loan is cleared. Instead of full collision, you could just stick to the mandatory liability insurance (which isn't optional anyway) and call it a day. The interest rates are significantly lower than a standard personal loan—though you'll deal with slightly higher notary fees—and that’s pretty much the long and short of it. 😍

Awesome! Now that I have this info, I’m heading straight to my banker at JPMorgan Chase. Thanks!

Also, is it possible to sort out that sale down the road? Like, maybe I could take out a mortgage and use part of the cash to pay off the car loan, then just sell the car?...

You can't use a mortgage to pay off an auto loan—mortgages are strictly for housing, and right now, the bank is demanding proof of how you spend every cent, even just a fraction of it. 😉
Once that car loan is fully settled, the bank will issue a lien release and clear the title—just a heads-up, though, don't be shocked when it takes about ten days for the paperwork to actually process through the DMV.

So, can someone actually take over my car loan instead of me? Like, if I sell the car, could the buyer just step in and keep paying the same loan at the same bank...

It works—either they step in to take over your loan entirely (a formal assumption of debt), or they secure their own financing to buy out your car and settle your balance in one go.

I mean, they could just take over my loan and then pay it off immediately with cash...

In that case, there's really no need to take possession of the vehicle—not when you're just paying more in fees based on whatever ridiculous schedule JPMorgan Chase decides to charge you. Instead, just sign a bill of sale specifying that a portion of the funds will go directly toward settling your loan, and the buyer hands you the rest in cash. Once the loan is cleared, the bank issues a lien release, and you simply transfer the title to him. It’s much cleaner.

That’s just how business works... sales are moving along just fine without any drama.

Thanks a million, you really made my day.

So, just how effectively are you going to explain the 🤷
process to your average car buyer? It’s one thing—but when it comes to dealing with the bank, you can certainly pull 😉
off.

So, I’m thinking about picking up a used car, and honestly, I have zero clue how the whole financing thing actually works. Before I go wasting my breath knocking on doors at places like Chase or Bank of America, can someone walk me through the process? Since I’m pretty convinced most dealership guys are just looking for any excuse to rip you off, I’d much rather buy from a private seller—you know, just find something decent on Craigslist or Facebook Marketplace. My big question is: can I just walk into a bank and be like, "Hey, good morning; look, I want to buy a car, but I haven't found the right one yet, so can I just grab the cash now so when something pops up I can snatch it up immediately without all the extra headache later?" Is the bank just going to give me that look—you know, the one where they basically say, "Please take as much money as possible so we can fleece you like a sheep"—or are they going to demand things like a pre-purchase inspection or some other bureaucratic nonsense I read about online? Because if that's the case, how on earth are people buying and selling so many cars privately? I hope this makes sense—I'm just looking for a little enlightenment here. Thanks. 👍

Of course you’re going to need an invoice, a pro forma, or a signed contract... I mean, how exactly did you think you were going to secure a targeted loan without any documentation?
And don't even get me started on the insurance requirements... you can't just skip that part. The funds aren't even hitting your pocket first—the bank sends the money directly to the seller. It's how it works.

If you’re planning on grabbing the cash upfront and then hunting for a vehicle later—fine—your only real move is a standard personal loan 🤷
just watch your step, though; the interest rates are higher and the insurance requirements can be a total headache...