topic Re: Advice Please! in Auto Loans

Advice Please!

joeyd — Sun, 23 Dec 2012 01:36:31 GMT

I am in need of better transportation. Bankruptcy was discharged in August of this year. Only have one Cap. One card with $300.00 limit with 4 months paying off in full each month. Bought a 16 year old volvo with 245K last December. Now has 265K and blew a head. Been shopping for a car this week approved with a buy here pay here on a 2006 with 80K miles for 15K but will end up paying 22K over 4 years!

Joined here and my EQ score is 572. I found a 2012 used camry with 23K for 16k. Filled out a credit app online with the local Toyota dealership they said my score was more like 531, but they could get a deal done? Putting 2K down. What are my chances of getting approved? If I am going to have to pay crazy interest rates I much rather it be on a certified preowned toyota. 1 year with current employer. 45K income. Any advice would be appreciated!!

Re: Advice Please!

MovingForward_2012 — Sun, 23 Dec 2012 02:14:35 GMT

Wow! A 2012 Camry with only 23K miles!!! That is fantastic!!! What chapter did you file and when?

I have went through special financing with major dealerships 3 times. And when they said they could get a deal done, they got a deal done. I have never had a deal reversed. Four years ago I financed a 2006 Altima with about 23K miles on it for 16K through a great subprime lender. Ask them about Prestige Financial. They have a great rate reduction program.

Camry's typically hold their value well so I am a little skeptical about a 2012 Camry with 23K for only 16K. Check the CarFax report and make sure it wasn't totaled and ask them how they got the price so low so you understand. It could just be a dealer incentive but make sure you are not buying a totaled car as if you get in an accident, that car could easily take your life as they don't rebuild them right.

I have been through a Ch 7 & 13 two years apart from each other and my score is now a 724 and I received tier 1 lease financing through Acura Financial last month. Since the BKs I financed 3 cars with subprime lenders. Right after BK my score was 550 so I know how you feel. Just realize that I recovered and you will too!

Toyotas are very reliable. If the car wasn't totaled, I would say the deal is good and to go for it. Dealerships rarely go back on their word when they say they can get you done. Just do you part on the down payment and you will be good to go!

Sign up for credit monitoring and when your score hits 650 or so, consider refinancing for a lower rate. Congrats!!!

Re: Advice Please!

joeyd — Sun, 23 Dec 2012 02:24:41 GMT

My Chapter 7 was discharged in August 2012. I did check the carfax report and it is clean. The only thing that scares me is it was a fleet car most likely a rental car. Only in service for 10 months but no accidents. I was thinking of getting a car for 2K, but this last year was kinda rough driving a 1K cash car for last twelve months with no air in the Atlanta summer months.

I really appreciate your response and it is very encouraging to see how you have recovered from the same thing!

Re: Advice Please!

MovingForward_2012 — Sun, 23 Dec 2012 02:51:32 GMT

You're welcome. If it was just a fleet car with no accidents, then I think it is a good deal especially since it is still under warranty. I would suggest taking it to an independent dealer for inspection before purchasing. If there is something wrong with it, have the dealer fix it first. Have the inspector make sure the parts are still genuine Toyota parts. Especially the body parts of the car. This will confirm that the car was definitely not totaled. Just tell them you would like to test drive it for a day and get the inspection.

Since you filed a 7, I think the deal is solidified. Congrats!!! You will get there. You are on the track. :)

Re: Advice Please!

joeyd — Sat, 29 Dec 2012 17:43:42 GMT

I was able to get it!! Thanks again!!

Re: Advice Please!

tooleman694 — Sat, 29 Dec 2012 17:50:45 GMT

Congrats!!!!!!!!

Re: Advice Please!

MovingForward_2012 — Sat, 29 Dec 2012 18:32:36 GMT

Congrats!!!!! :) so happy for you!

Re: Advice Please!

CruzImperial — Tue, 01 Jan 2013 11:16:02 GMT

Congrats!!! :D

btw, what was your interest rate?

Re: Advice Please!

maiden_girl — Wed, 02 Jan 2013 03:49:38 GMT

An older car isn't always bad if you are looking to save money. I wouldn't go any older than 5 years from current year with limited miles and one owner.

A 2012 Camry for only 16k sounds too good to be true. Have it checked by your mechanic!

Re: Advice Please!

webhopper — Thu, 03 Jan 2013 07:07:16 GMT

That is a great deal Congrats!

Re: Advice Please!

joeyd — Thu, 24 Jan 2013 00:24:12 GMT

Just wanted to give a update: Love the Camry! Car loan hit credit file the score did dip from 572 to 570. Paid off balance on credit card with Capitol One and got new score alert of 607! I will be gettting quarterly bonus in February somewhere between 10-13K. Should I pay a large portion on car loan balance then try to refinance at lower rate?

Re: Advice Please!

QueenofReinvention — Thu, 24 Jan 2013 19:29:09 GMT

JoeyD, if you got the car for 16k and put down 2k, then that means you financed 14k correct? I just want to ensure I have the numbers correct. I don't know exactly when you purchased your car (date), nor do I know what your other credit cards look like, but first, if I were getting 10-13k in a bonus, I would make sure my credit card utilization was my first priority, as well as saving a little bit. So, for example, if I received 12k bonus and had recently gotten the car and owed 14k, but had 6k in credit card debt, I would pay the credit card debt off first; save about 3k, and then that remaining 3k, I would pay towards prinicipal on my car loan, and look to refinance as soon as feasibly possible.

Someone else can confirm this, but it was my understanding that auto loans are not a high FICO mix, and that credit card utlization is, and that's why it's important to keep that < 9% of utilization. Now, if you have no credit card debt, then, using my 12k bonus scenario amount from above, I would save 5-6k, and the remainder I would pay towards the principal on the auto loan. Hope all of this makes sense!

Good luck, and it's always nice to get a bonus or unexpected windfall to help with paying of debts!

Re: Advice Please!

MovingForward_2012 — Sat, 26 Jan 2013 23:27:31 GMT

If you pay the auto loan off quicker, this will not help your score as much because of the shorter payment history. Ideally, you want to pay your regular monthly payment over time to see a larger increase in scores, lenders like to see a long payment history with pays as agreed status.

Re: Advice Please!

Revelate — Sun, 27 Jan 2013 02:43:35 GMT

MovingForward_2012 wrote:
If you pay the auto loan off quicker, this will not help your score as much because of the shorter payment history. Ideally, you want to pay your regular monthly payment over time to see a larger increase in scores, lenders like to see a long payment history with pays as agreed status.

While paying longer is preferable from a pure FICO perspective, FICO <<< personal finances in my opinion.

That said, if you make extra payments to an auto loan, it doesn't necessarily shorten the tradeline by that much. When I was with Wells Fargo Dealer Services with my subprime loan, extra payments made actually pushed my next due date out by a corresponding amount. Had I known I was going to stumble into a well paying second job, I would've kept that ugly 19.35% interest rate, made a bunch of extra payments to principle, and then let the tradeline idle for two years, making a $1 payment or whatever each month just to keep it from being flagged as inactive... probably could've gotten 3.5-4 years out of my 5 year original term with not much in the way of interest paid.