topic Re: Almost ready for a new auto loan? in Auto Loans

Almost ready for a new auto loan?

michintom — Fri, 11 Jan 2013 18:07:13 GMT

Hello,

Just joinied the forums but have been lurking around for some time.

I'm ready to purchase a new car in a few months (30k) car and need some advice :)

Currently, I'm using Equifax Complete Premier Plan.

My credit score as of 1/11/2013 is 667. Over the last few weeks, my revolving account's debt to credit ratio has been lowered from 88% to 62%. Hopefully I should be able to lower it down to 0% once my cards have been paid off.

I only have a two credit cards so far. Capital one with 300 limit and Amazon Store Card with 2000.

My Installment has a balance of $62,809 and credit limit of $60,409. (Student Loan, payments start in June)

Revolving account balance of $2,019 and limit of $2,300.

Thanks in advance! :smileyhappy:

Re: Almost ready for a new auto loan?

Epcot — Fri, 11 Jan 2013 20:33:16 GMT

Welcome to the forums! Getting your util down will definitely help. Are you a member of a local Credit Union?

Re: Almost ready for a new auto loan?

michintom — Fri, 11 Jan 2013 20:55:04 GMT

Thank you! I'm not a member of any credit unions. Does credit unions help with auto loans?

I forgot to add that I have a trade-in vehicle and plan on having $2,000 down payment before purchase.

Re: Almost ready for a new auto loan?

pizzadude — Fri, 11 Jan 2013 21:11:46 GMT

michintom wrote:
Thank you! I'm not a member of any credit unions. Does credit unions help with auto loans?
I forgot to add that I have a trade-in vehicle and plan on having $2,000 down payment before purchase.

Some CUs have more lenient underwriting standards, or may offer better rates. YMMV.

I agree that lowering your utilization will help boost your FICO score. Have you pulled a FICO score to know where you stand ?

Re: Almost ready for a new auto loan?

michintom — Fri, 11 Jan 2013 21:14:38 GMT

pizzadude wrote:
michintom wrote:
Thank you! I'm not a member of any credit unions. Does credit unions help with auto loans?
I forgot to add that I have a trade-in vehicle and plan on having $2,000 down payment before purchase.
Some CUs have more lenient underwriting standards, or may offer better rates. YMMV.

I agree that lowering your utilization will help boost your FICO score. Have you pulled a FICO score to know where you stand ?

Thank you for the reply. I'm pulling the regular credit scores and not the fico scores from Equifax. My scores are 667 as of today 1/11/2013.

Re: Almost ready for a new auto loan?

pizzadude — Fri, 11 Jan 2013 21:30:56 GMT

michintom wrote:

Thank you for the reply. I'm pulling the regular credit scores and not the fico scores from Equifax. My scores are 667 as of today 1/11/2013.

I'd recommend checking a FICO score to know where you stand ~ the Equifax credit score is not used by lenders and can't be correlated to a FICO score.

Re: Almost ready for a new auto loan?

michintom — Fri, 11 Jan 2013 22:08:00 GMT

pizzadude wrote:
michintom wrote:

Thank you for the reply. I'm pulling the regular credit scores and not the fico scores from Equifax. My scores are 667 as of today 1/11/2013.

I'd recommend checking a FICO score to know where you stand ~ the Equifax credit score is not used by lenders and can't be correlated to a FICO score.

Just pulled Equaifax FICO score from the Score Watch here. It's currently at 660. :smileyhappy:

Re: Almost ready for a new auto loan?

MovingForward_2012 — Sun, 13 Jan 2013 17:31:21 GMT

What is your income? You need a decent income for a $30K car.

Re: Almost ready for a new auto loan?

michintom — Sun, 13 Jan 2013 18:54:48 GMT

MovingForward_2012 wrote:
What is your income? You need a decent income for a $30K car.

My income is only 30k a year.

Re: Almost ready for a new auto loan?

MovingForward_2012 — Mon, 14 Jan 2013 00:58:30 GMT

That's going to be a hard sell. I wish I had better news for you. Probably not impossible as it is slightly better than a $16K car making $16K. But typically you don't want to purchase a vehicle that cost the same as your salary. Can you afford a $550 car payment?

Re: Almost ready for a new auto loan?

michintom — Mon, 14 Jan 2013 01:00:49 GMT

MovingForward_2012 wrote:
That's going to be a hard sell. I wish I had better news for you. Probably not impossible as it is slightly better than a $16K car making $16K. But typically you don't want to purchase a vehicle that cost the same as your salary. Can you afford a $550 car payment?

I sure can. I only pay my cell phone payment, gas, and food. I probably spend less than 10% of my monthly salary :)

Re: Almost ready for a new auto loan?

MovingForward_2012 — Mon, 14 Jan 2013 01:01:15 GMT

I guess I should add, get your debt to income ratio as low as you possibly can before applying. If you get your scores to 700, they may let you lease the base model with no upgrades.

Re: Almost ready for a new auto loan?

MovingForward_2012 — Mon, 14 Jan 2013 01:02:11 GMT

No rent? Is that solid for the next 5 years?

Re: Almost ready for a new auto loan?

michintom — Mon, 14 Jan 2013 01:02:23 GMT

MovingForward_2012 wrote:
I guess I should add, get your debt to income ratio as low as you possibly can before applying. If you get your scores to 700, they may let you lease the base model with no upgrades.

My debt to income ratio should be 0% by end of this month. Also, would it be wiser to go with a certified used vehicle?

Re: Almost ready for a new auto loan?

michintom — Mon, 14 Jan 2013 01:02:57 GMT

MovingForward_2012 wrote:
No rent? Is that solid for the next 5 years?

Yup. No rent for the next 5 years and nothing would probably change in the next 5 years :)

Re: Almost ready for a new auto loan?

MovingForward_2012 — Mon, 14 Jan 2013 01:08:41 GMT

It would, if you can get the same model you want for less, yes. Leasing can be an option too if you bump your scores just a little bit more as your lease payment would be $150 per month cheaper. I lease a $35K car as I didn't want to pay $661 per month. I make $96K a year and still didn't want to pay almost a $700 per month payment. If you have no rent for the foreseeable future and can shrink your debt as low as it will go, they might just do it for you.

Re: Almost ready for a new auto loan?

MovingForward_2012 — Mon, 14 Jan 2013 01:11:12 GMT

As without debt you appear to make $60K a year with debt. Hopefully that makes sense.

Re: Almost ready for a new auto loan?

MovingForward_2012 — Mon, 14 Jan 2013 01:14:50 GMT

Lastly, if you don't mind the higher payment with financing, you could give it a try now after you minimize your debt. Later on, you could always refinance the lower principal in 3 years if you happen to need some of your money back for an apartment, condo, whatever.

Re: Almost ready for a new auto loan?

michintom — Mon, 14 Jan 2013 01:49:33 GMT

MovingForward_2012 wrote:
Lastly, if you don't mind the higher payment with financing, you could give it a try now after you minimize your debt. Later on, you could always refinance the lower principal in 3 years if you happen to need some of your money back for an apartment, condo, whatever.

Thank you for all the replies. I'll try next month after I check my scores. I tried the FICO score simulator and the simulator showed I should be anywhere from 680~720. I don't know how accurate the simulator is but once my FICO score is updated next month, I'll give it a shot. :smileyhappy:

Re: Almost ready for a new auto loan?

MovingForward_2012 — Mon, 14 Jan 2013 02:18:54 GMT

Sounds good. Best of luck to you! :D

I just started using score watch so I'm not sure how accurate it is either but I do know lower utility usually means higher score!