New Car Loan Turns Lemon Into Lemonade

Needless to say, Clark was angry and frustrated. He decided that he’d rather try an inexpensive new car than to deal with all the hassle of an older used car again. Here’s his car buying experience.

“I remembered that I was approved by a local credit union for a 48-month car loan with a 16.8% interest rate before I bought the lemon. A friend of mine suggested I apply to Capital One online to try and get a car loan with a lower interest rate.

I was approved for a 48-month car loan with Capital One with a 13.2% interest rate. The amount of the loan was capped at $12,500. The loan was tiered. These terms were for a brand new car. If I chose a used car, the interest rate would go up one percent for every year the vehicle was older.

The loan terms made me decide that I should buy a new car to keep my interest rate low. But then I had to figure out what new cars I could buy for $12,500 and less.

So then I went online and did some price research. I found several cars that were listed under that amount. I narrowed it down to the Toyota Yaris, Hyundai Accent and the Chevrolet Aveo. Then I researched the rebates and incentives for all three cars. I ruled the Yaris out because the rebates wouldn’t bring the price down enough for me to buy it.

I wasn’t too impressed with the Aveo. I had a friend who had a 2006 Hyundai Accent and he said it hadn’t given him any problems. Also, the Accent model had been around longer. Hyundai’s warranty was far superior to Chevy’s. Plus, I really liked Hyundai’s new Assurance program.

Also, the car came with XM radio, which was a nice extra in my opinion. So now that I had test driven the Accent and decided it was the car for me, I wanted to see what kind of deal they would give me.

I had pre-approved financing, so my first goal was to negotiate the price. The salesperson kept asking me how much down payment I was going to give or what kind of car I would be trading in. I didn’t have a down payment but all I told him was that I wasn’t sure. I kept hearing how you’re not supposed to show all your cards until the end of the deal, so that was my tactic.

I did tell him that my previous car had died so there would be no trade-in. I knew I had to get the price down to about $10,500 for the car. I had to have room for title, tags and fees. He came down to $10,750. But that price was for the base model Accent, which doesn’t come with air conditioning or a radio. I knew those were two things I needed, so I had to buy the next level model, which bumped the price up.

The MSRP for the model with the radio and air conditioning was $13,525. The MSRP of the base model with no radio and air conditioning was $11,070. They gave me a $1,500 rebate, which essentially covered the options in the mid-level model I wanted. They knocked enough off the price of the car to cover fees, title, etc. I walked out the door paying $12,025 for the Accent. I didn’t have a down payment, so it was 100% financing.

Hyundai couldn’t beat the financing I had already been approved for, so I took the car loan from Capital One. You have to show proof of approval for the pre-approved car loan, so I had to show Hyundai the email I received from Capital One saying I was approved to spend the blank check.

Hyundai filled out the blank Capital One check and then they gave me a loaner car since the exact model I wanted wouldn’t be ready until the next day because it was at another dealership. I took delivery the next day and in that time, I had switched my insurance from the lemon to the Accent.

The next day, I picked up my charcoal grey Accent. I felt relieved that the process was over. I spent four hours at the dealership the day before. In hindsight, if I had more patience, I probably could have negotiated a better price on the car. Also, I may have received a better deal if I had bought the car at the end of the month.

I wish I would have never bought that lemon. I could have used that money as a down payment on a new car. But I’m happy that the Accent is great on gas, has a fantastic warranty and gives me piece of mind that it won’t break down since it’s new. I couldn’t be happier.”