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Advice for New or Used car loan...repo in history

New Member

Advice for New or Used car loan...repo in history

I am currently doing some research on the purchase of another vehicle.

 

I have been full-time at my current company since May 2016, and was recently promoted to salary ($42,686).

I took out a car loan through Lobel Financial May 2016 for a used 2010 Chevy Equinox. It was high interest, but I took it because I needed a vehicle at the time.

The loan was for 36 months, payments of $343. Current payoff as of 07/2017 is $5,800.

My DTI is about 38% at the moment, will lower once some credit cards are paid down.

I have a Discover IT, BoA, Chase Freedom, Care Credit, and WalMart charge - total credit is $18,400 - utilization is at 33% (working on bringing it down)

 

My TU and EQ have been steady between 690-712 for the past 5 months according to CK.

 

I have a repossession from VW Credit that was closed 07/2011. My uncle was the main, and I was secondary.

 

I am hoping to get another vehicle in the near future. My equinox was purchased with high mileage and it does not suit my needs anymore. My next purchase would either be a brand new vehicle, or a low mileage used vehicle with warranty.

 

Here are my questions:

1) How much would my repossession effect the purchase of a new car? used car?

2) Should I take out a personal loan to cover the remaining balance of the Equinox? Or trade it in? (Afraid of being upside down and it effecting the loan amount)

3) If I kept the current loan for the Equinox, would it effect my ability to be approved for another car loan?

4) I was looking into Kia, Honda, and Chevy for possible brand new vehicles. All under $30,000. Would I have a chance at a decent interest rate?

 

I apologize for the long post, but I really want to put myself in the best position before heading out to the car lot. I am in no rush to purchase a vehicle, so this is merely research so that I can be 100% ready when the time comes. Possibly looking into purchasing in the late fall of this year.

 

Thank you in advance for any and all advice. I am eager to hear what everyone has to say.

5 REPLIES
Valued Contributor

Re: Advice for New or Used car loan...repo in history

Welcome to myFICO.

 

Lots of questions but I will start off with a few suggestions to see where you stand.

 

1. Consider getting your 3B report here as it will give you all of the versions of your actual FICO scores including your Auto FICO. This will give you a realistic idea of what a lender will see.

2. (Option 2)Go to Credit Check total and sign up for the 7 day trial. This will give you your actual FICO 08 scores. Just cancel within the first 7 days to avoid paying more than the $1.

3. Go to a Carmax when you have some free time and see what their buy offer is for you car. They will give you a free quote to buy your car. This is the minimum value you should take at trade in if you go that route. My guess is you will be upside down by quite a bit.

 

Your DTI is getting close to max for lenders considering your scores and unfortunate auto repo on the books.

 

Looking in the Fall will be a great time to look for getting your new car. The dealers will start to get the 2018 models in and be looking to move the 2017's. Because you are open to multiple brands you may be able to roll in some negative equity if you can get a good discount on a new car (not recommended and get GAP insurance if you go this route)

 

Finally, getting your Utilization to below 10% would result in a boostr to your scores.

 

Others will likely chime in, but taking some of the above steps will improve your odds of getting a good deal for yourself.

Moderator

Re: Advice for New or Used car loan...repo in history


stitch1387 wrote:

I am currently doing some research on the purchase of another vehicle.

 

I have been full-time at my current company since May 2016, and was recently promoted to salary ($42,686).

I took out a car loan through Lobel Financial May 2016 for a used 2010 Chevy Equinox. It was high interest, but I took it because I needed a vehicle at the time.

The loan was for 36 months, payments of $343. Current payoff as of 07/2017 is $5,800.

My DTI is about 38% at the moment, will lower once some credit cards are paid down.

I have a Discover IT, BoA, Chase Freedom, Care Credit, and WalMart charge - total credit is $18,400 - utilization is at 33% (working on bringing it down)

 

My TU and EQ have been steady between 690-712 for the past 5 months according to CK. - Do not use Credit Karma for scores at all, they use a totally different algorium and it has no relationship to FICO scores. Their scores are Vantage scores and no lender uses Vantage scores to actually make the loan. Do as Appleman suggested - get your FICO scores here so you know where you are right now and then can make the appropriate moves to improve your scores (that lenders actually use).

 

I have a repossession from VW Credit that was closed 07/2011. My uncle was the main, and I was secondary. It doesn't matter who is main or secondary on the loan, a repo has the same impact on both borrowers. Your current loan, if paid on time every time and reported to the CRAs as such, should overcome this negative remark. 

 

I am hoping to get another vehicle in the near future. My equinox was purchased with high mileage and it does not suit my needs anymore. My next purchase would either be a brand new vehicle, or a low mileage used vehicle with warranty. Consider late model vehicles too - one or two years old. I say that because you will have tremendous savings on the purchase. IMO its best to let someone else take the hit with the rapid decline of value the minute you buy a new vehicle. Study the methods to vehicle buying so you don't get caught up in the gamesmanship at the dealers. In fact, one of the best things to do is get your financing from a CU before you ever step into a dealer showroom. 

 

Here are my questions:

1) How much would my repossession effect the purchase of a new car? used car?

2) Should I take out a personal loan to cover the remaining balance of the Equinox? Or trade it in? (Afraid of being upside down and it effecting the loan amount)

3) If I kept the current loan for the Equinox, would it effect my ability to be approved for another car loan?

4) I was looking into Kia, Honda, and Chevy for possible brand new vehicles. All under $30,000. Would I have a chance at a decent interest rate?

 

I apologize for the long post, but I really want to put myself in the best position before heading out to the car lot. I am in no rush to purchase a vehicle, so this is merely research so that I can be 100% ready when the time comes. Possibly looking into purchasing in the late fall of this year.

 

Thank you in advance for any and all advice. I am eager to hear what everyone has to say.


Appleman gave you great advice. I have a couple of other tips for you:

  1. Do NOT trade in your vehicle. Continue to make timely payments and sell it when you are ready. When you trade, you lose a big part of your negotiating position. The dealership then has the option to move figures around on you. Go in with the least complicated purchse - no trade, no financing, no junk added to the deal. Read the stickies at the top of this section on car buying. 
  2. Do you need to keep the car? It adds to your DTI. 
  3. As I mentioned before, go to a CU to get financed. We don't even know your FICO scores so its impossible to say or even guess what you would qualify for with CU financing. 
Valued Contributor

Re: Advice for New or Used car loan...repo in history

I don't think the repo will hurt you much because it is old but your debt to income ratio is a real issue.  I suggest focusing on bringing down your montly debts first, while doing so continue to make payments on the equinox and only when your DTI ratio is lowered and you have positive equity in the car make a change.  Trading in an old car with high miles is essentially giving it to them and then that negative equity rolls into the next auto loan so you are paying 5k more for that next car plus interest.  If the current car runs you should keep it until it is essentially paid off so you don't pay the dealer to take if off your hands.  I agree with those above to get actual fico scores as credit karma's scores are useless really, its a good service to monitor your overall credit but the scores are not the same as what is used by any lender.

 

Once your ready to buy I suggest going with one of the credit unions like DCU or Penfed, get a preapproval before you walk into a dealership and you will be in a much better position  to protect yourself against inflated interest rates and other games the dealers pull.

Gardening till 2018, Goal of 700's by the end of 2017
MyFico Scores Aug 2017: EQ 675 TU 695 EXP 698
New Member

Re: Advice for New or Used car loan...repo in history

Thank you for your advice. I went on CreditCheckTotal and got the following scores:

 

Exp - 687

TU - 699

EQ - 699

 

Income: $42,686

My DTI is actually at 26%

I did some more research on the topic and realized I was calculating it all wrong.

 

Utilization is still at 33%, but I have plenty of time to bring that down before I actually start shopping for a vehicle.

 

New scenario: I plan of paying off my current auto loan in the next month and bringing my utilization down to at least 15%. My Las Vegas vacation was fruitful, so I plan on using some winnings to put myself in a better position for a new/newer vehicle. Given the current scores and scenario, I assume most of my scores will rise to the low 700's. What would my chances be at financing through KIA, Honda, or Chevy for a brand new car (no more than $30,000)? What would be my chances at going to a local CU and getting financed for a used car loan at about $25,000 - $30,000?

 

I would be willing to leave anywhere from $1,000 to $2,500 down, if necessary.

 

Thank you for everyone's great advice so far! I know I still have much to learn, but I'm happy to be headed in the right direction thanks to this forum.

 

 

Valued Contributor

Re: Advice for New or Used car loan...repo in history

DTI is much better with your new calculation.

Utilization -  Keep paying those cards down. Are all cards below 33% utilization. Get below 10% for the best chance for a score increase.