2nd auto issue

[bournesto33]

All my fakos are avg 654, credit karma has me at a 623.  I have 2k down and looking at a 28k car.   RIght now I have zero balances on my 4 credit cards, student loans in deferral, and live with mom.  So far my DTI was about 11% with my car payment of 355.00.  My income is 38600 a year, so I called the dealer thinking the process would be easiler but it isnt...

My question is what exactly do you need to get another car?  I have a paid off 18k toyota from 09 and a current santander mazda with a 14k balance....thats it other than that I dont pay anything so I dont know why it is so hard....any advice will be great

[DaveSignal]

You could find a less expensive car or increase your downpayment and might have better chances.  I recently got a great offer on a new car through the dealer, but was also approved with two credit unions before I took the dealer offer.

The amount that I financed was 22% of my annual income, making my payments ( over 5 years) easy.  I would say that what you need is:

1) a finance amount that the bank will determine is affordable for you

2) a FICO score that the bank determines is acceptable.

Either of these is negotiable by significantly increasing the downpayment amount.

[Remember0]

Yeah, lenders don't like doing two simultaneous loans in the subprime world. Really even when above 720, they itch for an answer, but IME won't push too hard if the loan amounts aren't huge.

I hate to ask, but why exactly DO you need a second car? You'll have to paint a convincing story for the lender for them to give it to you esp. with that kind of fico. If the car is for your mom or something, her cosigning will convince them, so I'm trying to see alternatives here. But it all depends, as the dealer is saying, on why you need the car.

[bournesto33]

Expanding family won't fit in the mazda3 we have my tc and it is beat up and won't fit a family of 5 basically it, I have a 3 point plan to pay off the mazda3 by beginning of next year

[Remember0]

That helps! So thinking about it, do you have anyone who can cosign (a spouse, partner, or even mom maybe)? That would solve the two car issue entirely, unless they had much worse credit than you which would be a secondary issue. Or can you trade/sell (maybe to carmax if they offer more) and payoff the car that currently has a loan? That would also entirely solve the problem.

And finally, if in theory you could wait till next year or whenever the mazda is paid off, again this won't be a problem. I do however think your current explanation isn't bad, if you could reasonably explain why you need to keep the mazda, I can see a dealer being able to push through the loan.

The other issue beyond solving the why a second car part is DTI. I know what you're saying. What's this guy saying, my freaking DTI is at 11. But I'm assuming on your application you put down 0 rent and check live w/ parent(s). However, lenders don't like this so far as they are afraid you might have to move out on your own. So to be safe, they impute a rent typically between $500-$1000 (I usually see the lower side $500-$700).

Your DTI with a 700 imputed rent and I'll assume a 26k loan @ 5% for 6 yrs (kind of low if you have a sub 650 fico, but since you have good car loans, I'll say auto enhanced is 650+, which it prolly is):

(355+418(new car loan)+700(imputed rent))/(38600/12)=46%

That's pretty outside the comfort range for most lenders ESPECIALLY on a second auto loan. Bringing a bigger dp, getting a cheaper car, paying off the current car (paying down doesn't help DTI) or having a cosigner with income (and a decent DTI) can help with this DTI situation.

But IMO, you aren't going to get a <700 FICO, 26k second car loan with >46% DTI financed...lenders see these factors as pretty high risk. They'd be very willing to do it if one of them was present, but not all.

[bournesto33]

Makes a lot more sense when you put it like that trust me I don't want to tackle another payment I'd rather just pay off my Mazda but there is no way I can fit my family in there....or the scion if I get a deal I'll just sell my scion and put more down on the Mazda we will see ty for all the advice 

[Remember0]

Small heads up, if you want the new car and want to keep your mazda and don't want a cosigner, might make more sense to save the proceeds from the sale of the scion and use it towards the new car. Reason is because a bigger downpayment helps calm lenders. Plus that helps lower your DTI. Yes, if the mazda loan goes away, it'll solve the whole issue. But until it entirely goes away, you're stuck w/o a cosignor. However if you can increase your dp on the new car, I think you'll find some bank willing to finance you even given the 2 car situation.