Don’t Fall for Used Car Dealership Financing – Get a Credit Union Auto Loan Instead

In the previous post, I started sharing the story of how I looked for a car in Nashville, TN. It wasn’t an easy process and I had a one-week window because that’s how much I could afford to spend for a rental car.

The biggest problem I encountered in buying a car is on the financing side. Because I don’t have any kind of credit history in the United States, my options had been severely limited. That’s why used car dealerships tried getting me to sign into crazy financing options.

(Crazy!) Car Dealership financing options

I spent a crazy three hours at the first dealership I ever went to. That included the test drive, the small talk, and the financing process, and the used car salesman’s back and forth talking with their finance office. I wanted so much to give him my business. But for one, the car I took for a ride was a 2013 Ford Focus, and he was signing me up for a 2013 Kia Forte. And then, when we talked about the financing part, he wanted me to pay a $4000 downpayment, and then I will pay $375 per month for 72 months! That was crazy and I am glad that I walked away from that deal.

For almost all dealerships offered me almost the same amount of down and monthly payment, which made me realize that dealerships may not be the best option for people like me who don’t have a credit history.


Dealerships will only tell you the monthly payment. Sometimes, they won’t even tell you the total amount you’ll be borrowing. But at the dealership where I got my Kia Forte, I got as high as 23% interest rate, which is CRAZY!!!

Part of me understands that these dealerships are businesses–they need to make money, and what are their guarantees that somebody like me, a non-resident alien who just got employed in the USA could have the ability to pay for a nice car? One salesman told me that the way it works is that they will help me get into a bank to give me a car loan, and then after several months of paying such an expensive monthly payment, I could apply for refinancing.

I might have bitten the bullet and went with one of those crazy deals if I didn’t have a backup plan. Thankfully, I have already spoken with the Credit Union that works with our organization, and they have approved me for a car loan.

Credit Unions are Your Friend!

If you’re like me, who needs credit and doesn’t know where to get it, talk to a credit union in your area. Some of these credit unions can only accept employees of certain organizations, or that they should belong to a particular group of people in the society. But generally, there should be a credit union in your are that could help you out.

Become a member, explore your options, and talk to them about giving you a loan. Just don’t go crazy and borrow a huge amount of money that you cannot pay.

In my case, the credit union gave me a rate of 8%, I paid $2,000 down, and I’m going to pay significantly less than $375 a month. Plus I got a 0.5% discount on the rate because they will setup an autodebit from my payroll account.

After signing the paperworks at the Kia dealership, they let me drive the car off their lot. Then I went to the credit union, signed more paper work, and got my check within 30 minutes! That’s how quick it was. I drove back to the dealership, endorsed the check, and voila, I had a car that I can use to move around!

While I am generally happy with the 2012 Kia Forte I bought, I made two big mistakes that I wish I didn’t: buy an Extended Service Warranty, and the car I bought smelled heavily of smoke! But these mistakes deserve their own blog posts. So I will write all about them separately soon.

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