When I was negotiating a deal on a new 2007 Ford Focus from the dealership last September, I told the pressuring salesman exactly what I could comfortably afford for a monthly car payment: $150. I had a sizable cash down payment to work with, 50% of the negotiated car price, but if he couldn't figure out how to keep that financed monthly payment within my own budgeting comfort zone, then no deal. Due to filing bankruptcy back in 1991 and getting burned for a long time afterwards with low paying jobs, I'm extremely cautious when it comes to taking on personal debt. And my monthly budget comfort zone is whatever I can squeeze into the monthly income from a full-time job at McDonald's, my minimum wage employer of last resort, but an income level that I know I can count on in the worst of times.
In about 20 minutes, the salesman had checked my credit history and worked up his presentation. He came back with several different financing options through Ford Credit, and the exact numbers of how much the monthly payment would be for each of them so I could decide what was best for me: 1.9% for 36 months, 2.9% for 48 months, 3.9% for 60 months, and 4.9% for 72 months. I had always gotten my car loans through local banks at a much higher interest rate, anywhere from 8% to 13%. I had never heard of Ford Credit before, although I was aware of the new car financing offers that I'd seen on the television commercials. The 3.9% interest rate for 60 months worked out to $167.51 per month, a little higher than my desired car payment, but I didn't like the idea of having a six year car loan at a higher interest rate to bring that payment down to $148 a month. Assuming I don't pay the loan off early, I will have paid $932 in finance charges for a $9, 118 loan over 60 months. And I can pay this Ford Credit loan off early with no pre-payment penalty, and save a little bit on my overall finance charges that way.
There are several different ways that I can make my monthly payment to Ford Credit. I could pay my bill by telephone to have it credited to my account within one business day, but there's a $5 surcharge for that service that I absolutely refuse to pay. I could pay my bill through Auto Debit, which automatically transfers payments from my checking or savings account each month at no extra charge. I selected Auto Debit for myself because I'm terrible about remembering what day of the month it is or what is due when, and unexpected late payment fees are killers on my monthly budget and credit record. I could have chosen to pay by E-bill, a purely electronic bill receipt and payment option, but that required that I read my own e-mail once in awhile, and that's not something I actually do very often. Or I could mail my payment 5 to 7 days before the due date to allow enough time for processing, but that's not a good idea for me to do on a windy day because I have lost mail that way before.
I have had such a good experience with the local Ford dealership, Ford Credit and my new Ford Focus that I highly recommend talking to a Ford sales rep when you're ready for a new car to find out what Ford can do for you. A brand new car may be a lot more affordable for you than you initially thought it would be.