In a YouTube live stream on May 5, 2020, the team at Maverick Car Company in Boise, Idaho, described three tactics for lowering your vehicle payment. These could include trading down to a less expensive vehicle, refinancing for a lower interest rate or longer-term, or consigning an extra vehicle.
A full transcript of the presentation is below.
Hello & Welcome
Armando Roggio
Hello. Welcome. I do want to thank you for joining us for this presentation. This is the first time that Maverick Car Company has offered a how-to seminar, if you will, and the first time we have tried a live streaming event, so I hope you’ll be patient with us. We were just, as we were preparing, talking about our various backgrounds. Austin and I, I’ll introduce us in a second, are both at the dealership right now.
We actually have some customers down there. I was going to go into our center office and have a nice window in my background, but I am now upstairs in the unfinished section of Maverick, so I have a great background. Austin looks good and then Shawn, who I’ll introduce here in a second, too, was telling us about the artwork he has in his background for today’s presentation, I think courtesy of his family.
We had the idea for this presentation, frankly, because of the coronavirus, or perhaps more accurately, how the coronavirus has impacted us as a nation, a state, and individually. Some of our customers asked us how they could lower their automobile payments, and they have a lot of reasons for this. Some were furloughed. The stay-at-home order impacted their employer or their business.
Others just wanted to have more room or margin in their finances. One customer wanted to apply for a new home loan and needed to shed a car payment. We thought, given that we help folks lower automobile payments all of the time, that we could share some of the ways that you can do it, and we tailored our list of things to include, the techniques, if you will, to things that would make sense in the wake of COVID-19.
Introductions
Armando
Now before I go too much further, I should introduce myself and the two gentlemen who are joining me for this presentation, and hopefully you can see their names right there on the screen.
My name is Armando Roggio. I have about 25 years of marketing and promotional experience. I’ve worked in some local companies you may know, including Micron Technology and D&D Supply, and I am now marketing for Maverick Car Company, and because I know how to run the live streaming software, I am here.
Fortunately for you, I do have two subject matter experts with me. Austin has been part of Maverick Car Company’s leadership team since shortly after their expansion and as a finance manager, he works directly with clients to accomplish their purchase goals and with lenders to secure the best purchase options he can for Maverick’s customers. Austin, please say hello.
Austin Cegnar
Hello. Thanks for having me, Armando.
Armando
Yep. Shawn manages the consignment program for Maverick Car Company. He has owned over 50 vehicles personally and knows a thing or two about trading up and trading down, buying and selling, and as the advocate for the customer or the consumer, Shawn is always looking for ways to improve the Maverick client experience and he genuinely loves what he does and loves working with people. Shawn, say hello.
Shawn Gower
Hello. Thanks for having me, Armando.
Yep. Thank you guys for for being present. A few minutes ago, Shawn was asking if we could just do this another night, so I do thank you for being here, for knowing stuff and for caring. I also wanted you, those watching us, to know what to expect from this presentation and discussion, so I put together this really fancy slide for you right here.
Agenda
- Trade down
- Refince
- Sell Your Vehicle
Armando
We’re gonna go and try to touch on all these topics in no more than about 20 minutes total, including the time that I’m taking right now to make these introductions and share this agenda with you. Trade down, that’s moving from a relatively more expensive vehicle to a less expensive one. Refinancing, just like you would with a home mortgage. There’s some lower rates possibly available out there, and then you could sell an extra vehicle, which is the ultimate payment reducer, if you will.
After our presentation, we do also want to take some questions you might have. We’re going to be saving about ten minutes for those questions, so please do you know chat them in right there along with the video as you think of them and just know that we will be saving those probably until the end of the presentation.
I should say that the goal of this presentation is not to provide a definitive or comprehensive how-to guide for each of these payment-lowering tactics. Rather, we’re going to try to reintroduce you to each of these and provide you with enough information and insight to know if this is something that you want to pursue.
I said reintroduce because I don’t expect this to be the first time that you’ve heard about trading down, which is just, again, trading your current vehicle for a less expensive car or truck, nor do I think it’s the first time that you’ve thought about refinancing or selling. Instead, Austin and Shawn and I just hope to shine a little more light, if you will, on each of these topics.
Trade Down To Lower Your Car Payments
Okay. Moving along, I recently wrote a description of trading down for some social media posts that we did, and frankly, I did a decent job. Here’s what I said.
When you go from driving a relatively expensive vehicle, imagine a massive SUV with seating for a soccer team or a sports car that goes 0 to 60 faster than a speeding ticket to cruising in a more practical sedan or truck, you are trading down.
Austin, how’d I do? How would you define trading down for our audience?Austin
Armando, I think you’re spot on. There’s a couple of different reasons why somebody might do that, but trading down is going to be moving from one model to another model, can’t afford it. An example, we had a client who traded down from an SUV that they had, fully loaded, originally purchased it for about a $70,000 price point, and wanted to get into something that didn’t have as much of a loan on their monthly budget, so I think a lot of times what people are thinking of when they’re thinking trading down is they have to take a sacrifice, and while that might be the case and that might be the best decision for them financially, in this case, that client was able to trade into something that had just as many features in it and still were equipped with the leather and seating functions and sunroof, and what a lot of folks would consider to be nice vehicle, so it wasn’t the case for them. They just moved into something that was going to free up some finances for them.
Armando
I want to talk a little bit about the ways trading down can lower automobile payments, because when I think about buying a vehicle, I often think about it as adding an expense, not reducing or lowering an expense, but in fact, it is possible to make a vehicle purchase and lower my monthly automobile expenses. Shawn, would you mind getting us started? Talk to me about how trading down might reduce my monthly payment.
Shawn
Absolutely. Before I get started, I wanted to let everyone know, this is my first time on this live stream thing so I did us all a favor and made some bullet points to try my best to stay on track, and I gave Armando and Austin free reign on whipping me back into line so I stay on the course, but yeah, absolutely. There’s so much, when you first asked me if I would do this, absolutely. I had 50 different ways to do so, and how simple trading down is, but then I realized in this current time, the COVID-19, how many people I know personally that it’s affected and kind of wanted to step back just a bit before I get into that and say, the thing that we’re seeing as a lot of people wanting to trade their vehicles. They’re, as Austin said, a $40,000 or $50,000 vehicle.
This seems to be just a very common thing, for a lesser vehicle, but then we’re also running into people that have no pay for the last month and it’s over-extended themselves, and so they’re doing it from a practical standpoint as opposed to just the money. It’s like, “I’m stepping back.” I think that’s something that we’re good at helping people with. The reality is that everyone, every situation that we’re seeing at this point in the dealership, people looking to do this, be it the person who came in and wanted to trade a Q5 in but still needed all-wheel drive, enabled to get into a Forester. Yeah, they don’t have the bells and whistles, but it’s not permanent. That’s what we kept telling them. This isn’t permanent. This is what you need. It’s a need versus want right now.
Really, the big thing with trading down, and I’ll have Austin touch on this in a bit, a bit more, but it’s, of course, the price, the number. The price tag, if it’s $40,000 and you’re rolling your $40,000 vehicle into a $15,000 or $20,000, essentially, your payment should be less, but there’s so much that goes into that, because every situation’s unique. How much money did you put down on your $40,000 vehicle? What do you owe on your $40,000 vehicle? There’s so much that goes into it, and rate, your interest rate, your term, all those come into play, and Austin could touch on that probably a bit more than myself.
Austin
Sure. I think you hit on the big ones. Price point’s going to be one of the largest influences on what somebody’s monthly obligation requirements. A great example of that, if you’re purchasing a $100,000 home, typically you’re going to have, your monthly outgoing is going to be less than if you’re purchasing a $300,000 home. That’s the easy one. A few other ones that are not necessarily directly related to lowering payments would be overall debt obligations. We have a handful of clients here that are moving to the Treasure Valley. We see more people moving here. It’s an influx. It’s happening each day, so for a lot of those folks, their motivation is not necessarily going from one car payment to a lower car payment. Their motivation is just to free up debt and reduce that expense from a $45,000 car down to a $25,000 obligation.
Shawn touched on a couple of things. Newer cars, of course, this may not be as much common knowledge as well. Newer cars will typically give you the most flexibility on what you’d like to set up for your monthly payments, and also going to give you the most flexibility or the most advantage, I should say, based on interest rates.
Armando
Austin, as you mentioned interest rates, obviously, which is going to play an important part in our next payment-lowering technique, refinancing, it made me think about the fact that I guess payments, etc., etc. I guess I want to talk about one of the major concerns with trading down, which is negative equity or being upside down in my vehicle. Could you take a minute and describe negative equity, and is it a deal killer for trading down?
Austin
Sure. Negative equity, some people, negative equity is owing this much on your car, more on your vehicle than what it is worth, and before I answer your question, I think I’ll preface that with, I think the most common feeling that people have when they are in negative equity is just the, “Oh, my gosh. I’m the only one.” Because we’ve done this for so long, I can very comfortably say you’re not. We work with clients every day who are trading vehicles that they owe more than what we’re able to value them at. There’s a handful of other things that are going to come into play with that. No, it’s absolutely not a deal killer. For the majority of the clients that we see, it’s an absolute possibility. The big things, it’s going to be a case by case scenario. It’s going to largely be on the shoulders of borrower history, but overall, you’re able to make up for these things in a handful of different ways and you’re trading in negative equity and adding something on top of your loan.
You can play around with some things to help alleviate that and maybe even help stay in some of your monthly budget or the same monthly payment that you’ve had. There’s also sales tax programs that come into play when you trade in a vehicle. In most states, you are able to utilize the sales tax saving help away at a portion of that. I think Shawn would be able to add to a handful more things on that, but really, case by case is going to be big one and largely depending on what you’re trying to purchase, your current history, and maybe if you are a member of current credit unions or have great relationships with them.
Shawn
Yeah, absolutely. I will say, just to confirm, I guess, that the majority of folks that do come in, I would say it’s probably more than 50% would trade a vehicle, do carry some negative equity. I don’t know the exact number, but I can tell you from a consignment standpoint, I’ve had folks come in recently that are trying to get rid of that extra car or whatever it is, and same scenario. They have a car that they owe $33,000 on, and it’s worth about $30,000. Not the end of the world. They’re able, fortunately, they had savings. They’re okay because in the end, if it’s going to cost them $3,000 to get rid of $30,000 in debt or $33,000, so they’re happy, but as Austin was saying, I truly believe that every one of those situations are case by case. You cannot. I would love to say, “Here’s the magic formula. Plug this in, and this is what it’ll look like.” That’s just not the way it works, but we’re happy to look at each and every individual’s case.
One thing I would like to say, kind of from a personal standpoint and from things that I’ve learned is take the time and step back and acknowledge and realize what got you in this situation to start with, because much like our toilet paper shortage, I would say that people jumped the gun and more or less freaked out. It was like, “Everyone’s buying toilet paper. I’m going to buy it, too.” That doesn’t necessarily mean that people are trading their cars or trading down. That may not be the absolute best case for you or the best scenario for you. Really, take a step back, and that’s something that we’re able to look at. Did you trade something in last time? What got you here? Let’s figure that out and then see how we can truly help you, really help you going forward and not just for the next three months, because three to six months is not long.
Is this going to help you for a year or two years down the road? Planning long-term as opposed to, right now, my payment will be $100 less. Great. Unfortunately, it’s $100 less, but it’s for 84 months instead of the 60 you’re at right now. Is it really less? That’s something just to kind of take into consideration. That’s my thoughts on that.
Armando
It makes sense, and I like that you mentioned the toilet paper shortage because we did think about a toilet paper promotion where you could get free toilet paper when you traded down, so I think that would be good.
Shawn
It’s not too late.
Refinance To Lower Your Car Payments
Armando
Gentlemen, I- it’s not too late. I told the folks watching that we would keep this initial discussion to about 20 minutes, so I do want to move on to refinancing. With refinancing, I’m not getting a new or different vehicle, am I?
Austin
No. No, you’re not. You may be getting a lower payment. Overall with refinancing, similar to a mortgage, you’re recalculating the terms and that’s as simple as it is. You’re taking maybe a 15-year mortgage and turning it into a 30 or a 30-year mortgage and turning it into a 15. It’s the same thing with a car. There’s a lot of talk about interest rates, which I think is important to know what you qualify for. I believe that it’s important to never pay too much, especially since banks have a lot bigger buildings than most of our homes. The honorable mentions that I make, though, is that that’s not the only thing that’s going to make … and make up your monthly payment. Oftentimes, overlooked are the length of time that you’re financing for and that’s going to have the largest impact, along with price, on your monthly outgoing, your monthly payment on that car.
The way that works in that whole business world or the mortgage world is 15-year is more money than a 30-year, which I think that makes a lot of sense. Same with car payments. A three-year loan term is going to be a larger payment than a five-year loan term, and once you really get a grasp on that, I think it’s important to recognize, why would I go with a three-year instead of five? Those are going to be largely determined by who you’re working with as the lender and their flexibility on that, but also the model year of your car. Newer cars qualify for better terms. That’s the flexibility I was talking about earlier. That means that instead of being stuck with this three-year, paying it off in three years and have to make this large payment, you may be able to stretch that out to five. You may be able to stretch that out to six. I’ve seen as long as seven-year loan terms that give you a lower monthly mandatory obligation. … the government sends you money or maybe you’re jumping back to work, that sort of thing.
Interest rates are lower, though, and I don’t think that’s something to ignore. Shawn and I were talking about this one earlier, too. You can discuss that?
Shawn
No, yeah. That’s what we were saying. When you look at interest rates, especially for used cars or used vehicles, they’re approaching if not even hitting, I didn’t verify this, but definitely coming close to an all-time low and that’s something that maybe I should verify but I’ve seen rates in the low 2’s, whatever it is, advertised. I’m like, “Wow, that’s insane.” It’s awesome. At the same time, when you start talking about refinancing a vehicle, I don’t think many people really sit down and use a loan calculator or whatever it may be, but two or three percent less, two or three percent less on a loan, on a refi, could change drastically. Obviously, we know that on a home loan, but even on auto loans. It’s something that’s worth people looking at.
Armando
It’s interesting. I was going to say, I’m sorry. Go ahead, Austin.
Austin
No, go ahead, Armando. I interrupted you. Go ahead.
Armando
No, I was just going to say it’s interesting that you mentioned the two or three percent, because one of the things I learned as we were preparing for this presentation was that consumer auto loans, the loans we’re discussing, are closely tied or related to the prime lending rate, which has come down a lot, as Shawn mentioned. Last year, April of last year, the prime rate 5.5%, meaning that folks with the best credit ratings were getting car loans at around that rate and this year, right now, I checked this morning. The prime rate is 3.25%, and that’s a huge difference. In fact, that’s the couple of percentage points Shawn was just talking about. While we did talk about terms and other things, am I right that the fact that interest rates are this low could make refinancing a good idea for some people right now?
Austin
Absolutely. That’s full circle on the conversation that we were talking about earlier this week. Even if you had bought a car earlier in 2020, even if you purchased a car recently in 2019, even if you’ve got great credit or nothing has changed, it’s still a great idea to revisit that. Again, case by case scenario, you may have locked in the best terms at full swing, but oh, my gosh. If you were leaving the opportunity to put $30, $40, $60, $100 a month back in your pocket, wouldn’t you want to do that? There’s a lot of talk about it. There’s a lot of advertising for buying a brand new car in order to get great interest rates. That’s just not the case. A lot of times, folks can go right back to their local credit union or even the lender that they’re working with on their current vehicle and talk to them about the programs that they have. That alone is going to make a difference, absolutely.
Shawn
Yeah, and in regards to refinancing, there’s a lot of things, kind of what I was talking about earlier. I know it’s all case by case and I’m going to say that probably throughout this entire conversation, just for the simple fact that, again, there’s no algorithm that says, “This is for you” or “This isn’t for you.” It’s, we’ve got to talk to you and see your picture, but the other thing with refinancing is that you have the ability. We’ve all seen how quickly you can go from feeling pretty secure to feeling, have a lot of uncertainty in life, so going through with a refinance, be it through us or whomever, looking at the idea of adding a warranty or a service contract to that refinance, doing it at that lower interest rate and just, again, it’s something where you can just essentially control what your outgoing is.
That’s something that’s really important to folks. There’s times like this that you can’t control your incoming because things happen, but ultimately, setting yourself up now for the future, again, by making sure you’re protected so you don’t have those $1500 bills that come out of nowhere, so to speak, that you weren’t expecting. It’s important.
Austin
If you really look at everything as far as we say incoming and outgoing, there’s all sorts of verbiage out there in the world, but you have two different kinds of things that you’re going to have in your life as far as function. Those are going to be assets. Assets make you money, and those are also going to be liabilities. Liabilities are things that cost you money. An asset would something that pays for your monthly expenses each and every month. Your job or your income, for instance, would be an asset to your family, but vehicles, cars can, will always will be a liability. You’re not just looking at the purchase price of the vehicle. We all know that we have to buy the car in the first place, but you’re also touching a plethora of other things that you’re going to pay for. Gasoline is one of those, good old rural drive country here, and that means that gasoline can be a huge expense for a lot of guys here.
On top of that insurance, you’ve got maybe monthly payments. You have maintenance on the vehicles, oil changes, brake pads. Largest thing is repairs with cars, and you’ll get a check engine light or you’ll get a bunch of things lighting up when everything is terribly wrong, but most of the time, you don’t get a huge heads up on when stuff is going to happen. Having a vehicle service contract really is just protecting your budget, same as making sure that, just like anything else that we’ll probably plan for in our life, if you wagered out $400 for something, oh, my gosh, is it going to feel uncomfortable when we start paying $600 and $700 and $800 for that thing that we just budgeted for. A vehicle service contract just, simply put, to your point, Shawn, does exactly that. It takes care of the repair. You have a copay or a deductible, if you will, and it gets the vehicle back on the road.
Shawn
No, and to even add to that, the idea of doing even the prepaid maintenance, and there’s a lot of groups out there that offer that. It’s something as simple as, if you’re prepaying for, and that could go into a refi as well, but having your oil changes, your tire rotations, all your basic maintenance taken care of. What we’ve found in the times that we do this is that people that pay for it, they use it. They typically, if your car is, it’s like going to the dentist or doctor. I’ll use a dentist, because I recently started going to the dentist more religiously. All of a sudden, you don’t have these big surprises. It’s like you know, I had a cavity starting, but not bad enough for a filling. Same idea, if you’re getting your car serviced, it’s, essentially, you’re going to have an idea if something’s going on.
You know what? Next time you’re in here, we’re probably going to need to look at tires, but it’s not a surprise. You’ve got a belt showing on the inside. Again, it’s not a surprise, and I think that, with everything that just happened, if I could go back and say anything, is just preparing yourself. These are all things that we all know we need to do, but they’re not on the forefront of everyone’s mind. I think it’s important for people to realize, during this reset, what can I do to stabilize myself, my family, my budget? This is a really good way to go about that.
Armando
Makes sense. I am watching the clock a little bit, and so I’m just going to try to sum up, as we move on. Interest rates are low right now. You have lots of term options and when you refinance, you can not only lower your car or truck payment, but you might be able to protect your budget, if you will, with a service contract or with prepaid maintenance. Is that correct?
Shawn
Yes.
Austin
That’s all correct.
Sell You Car
Armando
All right. You’re both nodding. That’s good. Let’s move on to the last section. Back, all the way back in 2017, the US Department of Transportation released some figures or data around how many cars or trucks there are in the United States. This is actually the most recent data available, and it showed that a typical American household had 1.88 light passenger vehicles, so unless that is counting my son’s broken down Isuzu as a .88 of a vehicle, what it really means is that many families have more than one car. That is particularly true here in Idaho. You can see that. That very same data showed that for every 1,000 men, women and children in the state of Idaho, there are 1,122 vehicles. Again, that means that many families, many families have two or three cars, and frankly, selling one of those is the ultimate form of car payment reduction. Shawn, if I want to sell my car, what are my options?
Shawn
I’d say your top three answers or options, I should say, would be sell it to a dealer, sell it private party, Craigslist, Facebook, the old sign in the road on the side of the highway, or you could sell it via consignment, which is, I think, new for a lot of folks. We’ll talk about that a bit more in a few, but I guess we’ll just go through each one of these and maybe give the upsides and maybe some things to caution you on as you do them or consider them, I should say. Selling to a dealer, I feel, is probably the quickest. It just, essentially, is. You pull up whichever dealership you choose, a few different, ideally. You say, “I would like to sell my car.” They typically could cut you a check the same day, and you’re done.
Now, downside to that is you’re probably going to get less than you wanted, and to be fair, as someone that buys vehicles from people at times, you have to understand that depending on the vehicle, that dealership is then taking on all the responsibility for the reconditioning, the conditioning, total mechanical condition of the vehicle and then has that, again, as a liability, now has to sell that vehicle as well. There’s no guarantee on return or when the return’s going to come. I think keeping that in mind, but ultimately, that’s a way to really quickly get rid of a car.
Again, going back to what I said earlier, I believe this comes down to, it’s situation by situation. If you’re someone, “I need to get $10,000 today because X, Y, Z. I own my car outright.” That might be your best bet, but I think there are better options out there for folks, private party is one that I think would probably be a better option to at least try prior to doing that. That’s my take on it. Austin, what do you think?
Austin
I think you’re spot on, too. Private party for, at least in Idaho and those northwest markets, can make a lot of sense to people. We have a lot of clients who tried to sell things private party. They either had bites on it or they didn’t, and then they move forward accordingly. The most important thing is, again, going back to the things that you’ve touched on, Shawn, be honest with yourself about your situation. If it doesn’t affect you and it’s not going to impact your life and your day to day operations and family and your overall lifestyle, your well-being to carry that liability, to try to sell that car on your own, then do. If it is, be honest with yourself about that, too. Where are you going to be at in two weeks, if this doesn’t sell? Is your lifestyle going to change?
Dealers, of course, they’re going to take the car in. Their goal is to recondition it and make it presentable, advertise it, and they’ve got to pay for that advertising, and sell it for a profit. Naturally, there’s going to be a margin that they need to build in in order to do what, essentially, you’re trying to do. Again, being honest with yourself. If you’re at high risk or really don’t want to be outside of your home right now, maybe having a bunch of people coming over to drive your car doesn’t make sense, but for most of the people that we work with, at least giving it a run for a couple of weeks can, and it absolutely has, a lot of people.
Shawn
Yeah, and consignment. Armando, as you mentioned earlier on, I manage our consignment department here at Maverick, but truth be told, I used the program as a consumer, client prior to actually running the program, and I can tell you that it worked, and it worked well, and that’s not a sales pitch. I’m just letting folks know that ultimately, it’s kind of that, I guess you could say, middle ground. It’s not for every vehicle, but ultimately, if you have a vehicle, what we find is when people start breaking that $10,000, $15,000 range and you’re getting above that, trying to sell that on your own is tough. Not very many people have that cash in hand, and we’re able to offer all the payment options. We’re able to do financing on the spot, and we’re able to get folks in the car.
What that looks like from the consumer or the individual consigning the vehicle is, they’re going to ideally try to get closer to that private party number, so they’re still getting what they’re wanting to get without having the answer the calls, answer the emails, meet people at Walmart parking lots or wherever it is they want to meet them, depending on who called and how they called them and so on and so forth. Ultimately, I think the consignment program or a consignment program works really well for most situations. I’ve encouraged folks in the past, said, “Hey, try it for a few weeks on your own, private party, and if its’ not what you want to do, and it’s not working, give us a call.” It’s been good. It’s been a good way. Those are really the main three ways that come to mind, and we could probably go into consignment a bit more detail, but I’ll leave it at that.
Questions
Armando
Sure enough. Shawn and Austin, we have gone a bit over our 20 minutes, like ten minutes over that we had logged for this discussion, so I do want to move on to the questions, but I do also need to take a minute to reiterate what we’ve discussed so far. Our goal was to reintroduce you, those watching, to three ways that you can lower your monthly automobile payments. Our suggestions were to trade down to a less expensive vehicle, refinance the vehicle you’re driving now and perhaps even protect your budget with a service contract or prepaid maintenance and then number three, sell an extra vehicle, maybe consigning it to get the ultimate form of payment reduction.
With that, I do want to read some of our questions. We’ve had a couple come in. The very first one I want to tackle is from Bill. Bill says, “I have an expensive SUV. Would like to downgrade, but I don’t want an old, unreliable car. Are there good cars that are less expensive? Any suggestions?”
Austin
Shawn, I’ll start on this, but I’m sure you’ve got lots to share as well. Rewinding to reliability really is going to be based on a couple of things. We live in a world that, we are so fortunate to be able to do some research or at least have access to information that are going to give us some insight. Those don’t have to come from dealerships any more, though they oftentimes do, because that’s what we’re immersed in. That’s what we do every single day. The information out there, there are a lot of times when Consumer Reports, for instance, is going to come from people who own that car. How has their experience been?
First and foremost, doing a little bit of research on what it is you’re wanting to replace that with, and the second part of that is doing business with a reputable place. If you’re not going to go out and seek out a vehicle for yourself, if you’re not going to go out private party and try to purchase something, then working with a dealership or a business or maybe even with a mechanic that is reputable, and will be honest … . I don’t believe in today’s world, with as many options as we have out there, that trading down ever means having to sacrifice, necessarily having to sacrifice reliability. Shawn, do you have anything more to add to that?
Shawn
I agree, and again, I keep defaulting to the situation by situation, but my first questions would be, why the larger SUV? Is that something that, do you need a Sequoia? Do you need a Yukon XL? Is it family-related? Is it, hey, I’m towing my boat and I like to have enough space for my stuff? I think a lot of that would come down to the questions, but to touch on what Austin was saying, I don’t think you have to sacrifice for liability, but I do think there’s ways, there are ways to go about that. Again, Consumer Reports, looking at vehicles, having inspections done, third-party inspections and to be able to confirm the mechanical condition of the vehicle you’re looking at. I would want to ask Bill a few questions, just clarifying questions to really figure out what he’s looking for, see if we could point him in the right direction.
Armando
I do understand that, right? Talking to Bill or anyone would help you to identify the specific needs for the vehicle, and you could put them in something reliable, but I also want to help Bill out here on this chat. If you were looking at a vehicle, you know he’s coming from an SUV, what are some vehicles that you might recommend? He says expensive SUV. Are we talking about a 4Runner, or are we talking about going all the way to a Subaru? What do you guys think?Shawn
Yeah. I think you nailed it. Again, it’s tough, because I can appreciate that, but yeah, what’s he driving? Expensive SUV? Is he driving an Escalade? There’s a lot of, do you need the third row? It’s a lot of different SUVs come to mind, but I’ll always say I’m not sponsored by them yet, but I’ll always say Toyota anything. You really can’t go wrong. Anything Toyota, Honda. Again, I would need to know more about what exactly he’s doing with it. Is it a commuter? Is it around town? Any of those vehicles work, any Toyota 4Runner, the third row, if that’s what’s needed. Honda Pilot, does he need as big as the Sequoia? I’m not sure, but there’s a lot of them out there.
Austin
Yeah, big time, and to add, touch on the point that we were making earlier, I think some of the most reliable vehicles out there on the roads are the ones that other people pay to fix, that service contract companies pay to fix. Even if a vehicle has, it’s coming up on the 100,000 mile mark, maybe it’s less than that. Maybe it’s just barely out of manufacturer’s warranty and it’s 60,000. Having a service contract on a car, a lot of times, … overall. If you’ve got your maintenance taken care of and you’re coming back to the dealership to hopefully prevent problems from happening and you have a service contract to cover it if everything does go wrong, then you’re just that lucky person. It still is going to alleviate that stress, and you’re not going to come out of pocket for large expenses and you’re going to guarantee go back to a certified shop and a certified center to get those repairs done, maybe not sacrifice the budget repair on some of these backyard that might only last a few months.
Armando
All right. I’m going to go on, with that, to our next question. Is there an age limit on what I’m able to refinance? My car was older when I got it a couple years ago, and I had a hard time finding finances. How about older cars and refinancing, gentlemen?
Austin
That’s a fun one. Every, in my experience, every bank is going to be a little bit different with that. First and foremost, it’s how old is old, and how many miles do you have on that car as well? I’ve seen cars that were only a handful of years old that had over 200,000 miles on them. It’s going to be hard to refinance, no matter what you do. If you do have a good relationship with your lender, I think that’s the very first place to start. If you maybe don’t have a relationship with them or maybe have never had, but just made payments with them, visit the dealership that you purchased it from or somebody else that you feel comfortable going to. Dealers do have refinance programs and they do push more volume than you do, guaranteed. They process more auto loans every single week than you’ve probably had in a lifetime, so we are able to leverage that, and a lot of other auto groups are able to leverage that in order to get better terms for their clients and pass along another good relationship, piggyback off of that relationship.
Specific answers, bank programs go back as far as 2003. On my side, I have some lenders who don’t even specify on year. They look at things as a case by case scenario as well, so a handful of different ways to do it, but formally going direct to get that information rather than speculation.
Armando
Just so I can say that again, basically you said some will, some lenders will go case by case, even if it’s older, but you definitely have a 17-year-old vehicle that you could get refinanced. Is that what I heard you say, Austin?Austin
On my side, on my side, I’m going to be limited all the way to 2010 for a refinance through the dealership, but individuals out there can go into certain credit unions and … that will finance all the way and refinance all the way back to 2003, yes.
Armando
Okay. I guess this might actually be a little bit of prognostication, and I don’t know if you want to do that or not, but obviously, this is a live stream on May the 5th, 2020. In the state of Idaho, we’re just starting to open up some businesses again after a lockdown, and there’s a lot of people already saying that we’re coming into a recession. Do you think we’re going to see an increased tightness, if you will, in the auto loan market? Is it a good time now to, if you need to trade down, if you need to refinance it, do that in anticipation of maybe a little bit tightening of market or do you not see that as being an issue or concern, either one of you?
Shawn
I’ll say this, just real quick. I can’t speak to the, for the auto industry, but I can say in, I’ve got a good source that in home loans, there’s definitely some tightening down on cash out refis and things of that nature, so I wouldn’t be surprised if it trickled over into auto, but I don’t know if Austin’s seen that or if it’s something that he has any insight on at all.
Austin
Sure. I think in times of plenty, everybody’s a little bit more relaxed, and in times that are tighter, people typically get more frugal, and banks are not an exception to that. Dealers may not be an exception to that. Here’s what I can say we do see. First and foremost, vehicles out there that are sitting on dealerships’ lots, they own those cars. They pay for those vehicles, and it’s guaranteed they do not want to have them there. They’d rather you have them at your home, so that’s going to be a huge motivating factor right now, to yes, absolutely pull the plug on something or make a move on something before we ever get there. I think it’s difficult to predict what the market’s going to do in three, six and nine weeks down the road, let alone three, six and nine months down the road, but what we do know is auto loans are pretty well the most flexible and the best interest rates that you’re going to get.
Vehicles sitting on dealership lots are incredibly aggressively priced, and there’s a surplus of vehicles that are going through auction and they keep getting rented over and over and over again without having purchases on them. That’s because dealerships or individuals who own them want to get this price for them and they’re only being bidded up to this amount. That means that potentially, the market’s going to be even going up from here, so yeah. Absolutely a good time to at least look into it and looking at what options you have and decide if it makes sense for you to pull the trigger on something right now.
Closing
Armando
Awesome. Once again, I do want to thank you for joining us for this presentation, those of you watching. I mentioned at the beginning of this, this is our first attempt at a how-to presentation and our first attempt at live streaming, so I hope it was helpful to you and valuable to you. Please let us know if you liked this presentation. If you happen to be watching on YouTube, subscribe. Leave a comment. Anywhere you watch it, if you wouldn’t mind, send a text message to this number and tell us how we did. You could start it off by saying, “Presentation,” and then let us have it. Were we terrible? Were we good? What else would you like to see as we do future presentations? We’re going to try to do these on a regular basis, so thank you to everyone who has been watching. Shawn and Austin, thank you for participating in this. This is new for you, I know, and really enjoyed having you guys on.
Shawn
Thank you, Armando, very much. It was awesome.
Ausin
Likewise. I really appreciate you guys.
Armando
All right. Well, everyone, thanks again. Have a very good night.
About This Presentation
Maverick Car Company is a used car dealer in Boise, Idaho. As a service to everyone in Idaho and on the interest, we created this presentation to try to offer some help. If you enjoyed this presentation, please look for more on the Maverick Car Company YouTube Channel.