Does this sound good, bad or ugly?

[HAP]

My husband and I are looking for a used second car (not wanting to spend more than $6,000 to $7,000).

Our local Federal Credit Union we belong to said they would loan us maximum of $6,000 at 10.75%. We would have to put down 20% of value of car (we had planned to have a $1,000-$1,200) downpayment anyway).

They also said we would need to pay for 6 months of insurance up front for the car (which I'm hoping that will come back and say they don't need as we get our insurance on our other car direct debited through Nationwide and 6 months up front would be an additional $700 plus in cash we'd have to come up with).

They also said that we would need to set up a savings account through them where the amount of the car is debited from our direct deposit and then paid through them with a direct debit (sounds reasonable I guess).

I guess I'm just trying to figure out if this sounds normal or not.

I also went through Roadloans first and was told they had approved us for up to $18,000 at 16% with at least $1,750 down (I said no thanks).

Finally, my dad would probably co-sign on a loan with me, but I really didn't want to ask him to do that and not even sure if that would help us on the rate or downpayment required.

Thanks for any opinions in the matter.

[krielly]

The insurance issue is a new one to me, but as you said, you may be able to avoid that. Everything else sounds pretty reasonable to me. Good interest rate considering your recent BK.

We have 2 vehicle loans through a local credit union, and we had to open a savings account which is debited every month for the payments. I think auto payments earn you a slightly lower interest rate.


Plus, I think there is something to be said for financing locally when you can. I think it sounds fine.

[StartingOver08]

Sounds like you got a great deal so soon after discharge. Congratulations - its much better than roadloans or anything like it. Also, I agree it is better for you to do this on your own rather than taking a loan with your Dad as a co-signer.

[carbk]

Wow thats really cool that your credit union is willing to lend to you since you have a recent bk on your credit. i don;t think mine would be willing to do that. But I don't know. Everything they are asking for sounds sounds reasonable though and that also is a pretty good rate.

[krielly]

Its really interesting when you think about it. On one hand, when you file, some can be really nasty with the whole cross-colateral thing, but yet my DH and I were both able to finance vehicles with a local CU in the middle of our 13 with 11.75 and 11.25 rates respectively.

Go figure.

[HAP]

Thanks for the replies everyone. The credit union told me that normally they make people wait at least two years after discharge before they will consider giving them a loan but we had several car loans with them some years ago and they were all paid off (and on time payments) so the manager told me that helped us.