How are your monthly payments, and interest?

<div class='quotetop'>QUOTE(mywhitenoise @ May 22 2006, 04:07 PM) [snapback]259352[/snapback]</div>

I'm putting mine on my home eq. line of credit so I'm not in the same boat you are. I can give you a few factors that are not in your favor though.

At 20 you probably don't have much in the way of a down payment to lower the amount of the loan. More money borrowed means higher payments. No shock there.

Also you probably don't have much of a credit rating if at all. The lower your credit rating the higher the interest rate on your loan. When I went for my test drive there was a young guy sitting near me with another salesperson. I listened to his shock when the salesperson told him the interest rate for him would be over 16%. You might be able to do better at a bank or credit union. A cosigner for the loan might help as well.

 

I paid cash, so that's not going to help much either.

Tom

 

I'm only slightly older than you, and my Prius is my first car loan as well. Here's the best advice I've got for you.

Check out this website where you can figure out payments based on the rate and amount of the loan.
http://www.bankrate.com/brm/calculators/autos.asp

It also has the average loan rates for different time periods as of last night.

Shop around for your loan. Check your bank, online banks, credit unions, etc. You can check with the dealer, but have a preapproved loan before you go in. Don't tell them how much you were approved for, but tell them you have a loan at X%. If they can beat it...they will. Worst case, you use what you've already found. My loan (from February) is a 3 year term at 5% interest. I got it from my credit union. The best rate I saw was Navy Federal Credit Union, but I was not eligible. If you're a Costco or Sam's Club member, they also have discounted rates.

Ask for discounts, and prepaypment penalties. I got a discount for having the payment automatically withdrawn every month, among other things.

Before applying for a loan, get a copy of your credit report. Get all discrepencies cleaned up (at 20, you may have several open accounts from applying for cards to get free t-shirts).

Good luck and happy shopping!

 

Obligatory old man admonishment: WTH are you spending $20K you don't have on a car for ??

If you won't pay attention to the above, then check out credit unions for loans. Penfed.org is very competitive. Anyone can join for a few dollar contribution.

 

<div class='quotetop'>QUOTE(EricGo @ May 22 2006, 08:44 PM) [snapback]259463[/snapback]</div>

Sorry, but I just had to respond to this as a 23 year old Prius owner.

Do most people buy their homes outright in cash? If not, and I followed the logic above, I'd have no mortgage as I don't have the $175,000 needed to pay for a new home. I'd also not have a Prius and thus not being doing what I feel is my moral obligation as a citizen of this planet since I drive 35k a year and would otherwise contribute much more pollution to our already off-kilter environment.

Some people mistakenly enter into car loans and home loans and are unable to keep up...but to group all people with such a broad statement as the last post is unrealistic. To answer your question, it's really hard to say. I have excellent credit, so I got a 72-month loan at 5.95% a year ago on my Prius after a lot of shopping around. I wanted a loan that long because I also bought a home right out of school, and even with a 4.5% locked mortgage rate, there's no reason to over stretch your income. I have no problem paying my bills, and while I suggest that you weigh all of your long term plans against your financial plans, I won't ask why you would take out a loan on a car that you want. Everyone starts somewhere....

 

<div class='quotetop'>QUOTE(ambrothe @ May 22 2006, 07:04 PM) [snapback]259502[/snapback]</div>

Homes generally appreciate, cars generally depreciate. Borrowing to purchase appreciating assets is considered to be investing. Borrowing to purchase depreciating assets should be mimimized.

 

"... pay cash ... depreciation... etc." I doubt anyone considering a Prius would choose to pay interest if they could afford cash. The fact of the matter is, sometimes, it's unavoidable.

I'm 24 and bought my '05 financed because I really didn't have a choice. My previous vehicle was a '94 Dodge getting 13 mpg on my commute (better on HWY) and things were starting to break on a regular basis. The engine started to eat oil and run hotter than it should, there was a small leak in the radiator, and the electronics started to go out. (I had to do a 300+ mile trip to get home once w/out fuel, tach, speed, or temp displays... everything but my signals and high beam indicators.) The car was 11 years old and needed to go before it stranded me somewhere; the maintenance costs would've negated my first year's interest anyway.

I had/have a good job, but I haven't had a lot of time to build up savings (thank goodness for my good credit), and I made sure my monthly payment was *well* within my budget. Just avoid dealer financing whereever possible. Sometimes their incentives are nice, but you can pretty much forget them on the Prius right now.

If you can make that '95 car last another year and in the meantime save up a hefty down payment, that might be a better way to go. If you're in the same boat as me and you really need to get rid of the thing, and want a Prius, let me tell you... you're going to love it. Mine's 11 months old and I plan to drive it until the day the traction battery dies... check back with me in ... what? 200K? 300K miles?

 

Being older, having a well-paying job and excellent credit helps a lot.

I was originally going to use a home equity line of credit. Then I was able to get a 36-month loan at 5.24% from Capital One (through Costco).

I put $10,000 down to make sure I had instant equity in the purchase. The monthly payment is $504. The home equity LOC would have been at 7.75%. After being able to write off the interest on that loan, the total cost would have been about the same. I decided to not use any equity and own the car free and clear in 3 years.

 

Everyone has to start somewhere. If you can afford the payments and can't pay cash go for it. But, for the future, pay it off as soon as possible and continue making the payments to yourself in some sort of savings. Then next time you will have the cash available to buy a new car outright.

 

Here's some advice from someone who went through the same thing. Hopefully you'll listen!

Ok, I don't recommend buying this car for someone who is only 20 years old. When I was 19, I bought a Ford Focus. Then, naturally, I went through jobs, school, etc, and, eventually, I could no longer afford the car. Why? My insurance was through the roof and I got screwed with a high monthly car payment because I had no credit. Trust me...just because the dealer sells you a car, does NOT mean you can afford it. I was 19 with zero credit, and I got whooped with a $17,000 Ford Focus for $330 a month plus $220 insurance. Yeah, the dealer actually approved me, because they made a lot of money on me.

So anyway, you know what I did? I gave them the damn car back after 2 years. Seriously. I had it "voluntarily reposessed." Dropped it back off at Ford, told them they could keep their stupid car. And, being that I'm irresponsible, I haven't paid them a dime back for the rest that I owed on the loan. They wrote off the loss, but I can't buy a car, house, or get a credit card until that drops off my credit report.

Now I'm 25, and I still can't get a credit card. Fortunately my wife has stellar credit and we're *finally* making a little more money (dual income really helps!). Now we might be able to afford a $30,000 car (package 7 , but that would mean a lot less money (if any) to play with every month.

So, remember that you'll be stuck with a high payment for a good 5 years. Unless you can put like $5000 or more down, you're looking at $400-500 a month for a car payment, plus high insurance because you're under 25 years old.

A Prius costs the same as some BMW's and other luxury vehicles. Can you really afford to buy a car that's meant for professionals with a career and stability? That's what you need to ask yourself. So listen to my little story and think about it. I'm not saying it'll end your life, because I'm financially well off, I have a great car (wife's), and things are looking good, but you really want to avoid this hassle.

 

'Starting Somewhere' does not have to mean starting in debt. Start out with some savings, and avoid a lifetime of lenders living off you. A home should not be compared to a car. A car is typically a convenience if not a toy, and a depreciating one at that.

Being able to make the payment is the favorite line of a car dealer. That should tell you something. OP, I am curious. What is *so* wrong with your corolla, and how much would it cost to fix ? Waiting and saving now might put you in a position to buy a super cool PHEV in a couple of years.

People will do what they want, but buying expensive toys on credit, no matter how cool they are, is foolish. In a way, Prius stands for rational use of the Earth, and acknowledgement that the future should not pay for today. Treat you own finances to the same courtesy.

</off soapbox>

 

Is $2000 your gross monthly income? If this amount is before taxes and cuts, I don't think it's a good idea to get a Prius at all unless mom and pop is chipping in big time. If I were you I would really consider keeping the Corolla longer... Paying cash for a car is the best way to purchase if you'd ask me, but it's not possible for many people. But it doesn't mean you need to go and finance a $26k+ car either! There are cheaper alternatives...

Perhaps you should reconsider your budget and take into consideration insurance. Pick up the phone and call some insurance companies and ask them quotes for the Prius, plus a few cheaper alternatives like another Corolla, Civic, Yaris, Scion or the Fit. (Don't forget you can get a used 3 or 4 year old Prius fairly cheap too.) Also since you have no credit, you'll probably have a hard time geting financed below 10%. Financing a $26k car @ 10% will make the car at least $28k! That's over your yearly income.

Don't make a rush decision... perhaps you can fix and keep your Corolla a little longer, or buy a used car in cash, then save for the Hybrid Fit or the newly redesigned 2009 Prius. I personally think the Prius is too big of a purchase for a $2k/mo salary. There are many other "smarter & less risky" ways you can build credit.

Keep in mind that you're 20 years old. You may want to leave a little room in your budget to consider moving out one day.

 

<div class='quotetop'>QUOTE(clintd555 @ May 23 2006, 10:27 AM) [snapback]259686[/snapback]</div>

Well said.
There are hundreds of ways to build credit that *pay you* for the privilege. A simple rewards credit card paid on time *in full* does the trick nicely.

 

<div class='quotetop'>QUOTE(j24816 @ May 23 2006, 12:19 AM) [snapback]259532[/snapback]</div>

No real argument with your logic... BUT - reliable transportation to get to a job is darned hard to argue with. The kid's not trying to buy a Lexus or one of the wild two seater impratical wallet-rockets. Give him a break.

Following your logic - what's YOUR excuse for making a Prius purchase - it's a depreciating asset, after all?

 

Have you considered the Civic Hybrid? It's a bit cheaper than the Prius and you'll still get the benefit of driving a hybrid.

The amount of interest you pay is dependent upon how much you borrow, your credit and other variables. Your monthly payment will vary depending on the length of the loan.

If you have AAA, consider financing through them. Of course, it's "better" to pay cash for a car, but I understand this isn't an option for you right now. Getting an affordable car loan and paying ON TIME, will put gold stars on your credit report. There is such a thing a good debt.

As someone else suggested, start building your credit now by getting a credit card and paying it off IN FULL every month.

Good luck!

 

<div class='quotetop'>QUOTE(taaustin @ May 23 2006, 10:26 AM) [snapback]259702[/snapback]</div>

I hate to comment... but actually the Lexus IS series starts at around $30,000 brand new... Since they aren't in as high demand as a Prius, I bet you can bargain the dealer down a couple thousand dollars. Therefore a Prius is not that far from the price of a new Lexus. :huh:

To add to that, A Ford (gross) Mustang will cost half the price of a Prius... a Honda S2000 is around the $30k mark too. Mini Cooper convertible around $21k-$25k, Acura TSX starts at $27k, Audi TT $33k, A4 $28k, BMW 3 series $28k... well you see my point. Ithink he should lower his budget for the car and if he seriously wants a hybrid, just buy a used one or wait a couple years until there's more to choose from.

 

<div class='quotetop'>QUOTE(mywhitenoise @ May 22 2006, 10:56 PM) [snapback]259521[/snapback]</div>

I, on the other hand ( ), will assume you know what you're doing.

Off the top of my head, with 0 money down (maybe a few hundred $ for your old Toyota (if that's even possible in your case)), no co-signer, I say you'll be looking at around $500/mo. +- $75, and whatever else for insurance.