Auto Loan Approval Chances?

[jcsmomma]

My husband and I are going to need to buy a new car soon. We are having our 4th child and need more space ASAP. Our auto enhanced scores (dealer pull - I don't know what  bureau they use) are 650 and 600 respectively. We weren't quite ready to buy because we were just about to pay off our credit card debt and a small personal loan. We let the dealer talk us into running our credit, even though I knew we wouldn't be happy with the interest rate as we were at close to 100% util.  They offered us 9.89%. We didn't have a good experience with the other aspects of the deal, they were very vague on price, etc and we walked. 

On Friday I paid all of our cc debt. I realize it'll take a month or so for them all to show up on our credit reports depending on their reporting dates, but my questions this - we paid all of them through our credit union bank account which we switched all of our banking to a couple months ago. We will have about $40k combined in there once those payments clear. If the bank can see that we've paid all the balances on our credit cards through our account activity, do you think they'd consider us for a loan prior to our credit reports updating? I can wait a month if I have to, but I do have a great price offer on a minivan we really would like to get. Not at the expense of a double digit interest rate... But our CU rates start at 1.49. Any shot at a decent rate?

Oh - important info. We have a Ch 7 bankruptcy discharged 2.5 years ago. We included our two vehicles at the time. Very long story, but we were trying to keep our home in the recession. My husband is in the construction industry and our income was greatly reduced.  We recently moved for a promotion my husband got, hence the maxed out cc's. We were waiting for a large bonus to pay them (the $40k in the bank is what's left). We both have several cards, no lates. I had my first auto loan about six months out of bankruptcy, then traded that vehicle for what I'm driving now. My husband is on that loan and had a loan for his car only in his name. None have ever been late. We have no collection accounts, lates, anything. The BK, which I know is big, is the only negative. 

Sorry, this is much longer than I'd planned. What do you think our chances of getting a decent rate will be? We are trading two vehicles (my husband now has a company car) with not much, if any equity. We will put a decent down payment, probably 20%.  We are going from two cars with loan balances of about $38k, to one vehicle financing about $40k. Our base salary is $85k. Our only other assets besides the money in the bank is $70k in retirement. Should we go talk to the CU as soon as the payments clear our account and try to take advantage of the excellent price I'm being offered on the car we want? Or wait until our credit reports are updated and probably have to renegotiate the car (incentives expire soon)? Any advice welcome, but be gentle please! I'm a newbie and trying to get us on the right path :-)

[SamsungHDTV]

It really depends if the credit union will consider the fact that you've paid your debts through the account there. Some may, others may not. The credit union approved me even though I had a lot of bad marks because they see that i've financed a car with no lates and my recent credit history is spotless. All of the bad marks were in the past so they were able to look past it. My scores were about 650 fico and auto enhanced.

I think the credit union is worth a shot. Let them know you've been approved and just rate shopping.

[jcsmomma]

Thanks for your replalb several of our accounts have statement dates coming this week, so hopefully buy the time we get into the CU at least some of the accounts will be updated. And hopefully they'll take into consideration the rest of the payments that have cleared. 

I also read your other post regarding car buying - very informative! Thanks for that too :-)

[dabrian]

If I'm reading right your putting roughly 10k down on a 50k car with an 85k income.   Unless you have low housing cost that is a ton of car for your income and credit history.  Is it out of the realm of possibility to put 10k down on a 25k car and save yourself a ton of dough not to mention a better chance of getting a good rate. 

[jcsmomma]

Actually, we live in a HCOL area. The 85k is my husband's base. He also earns commission, which is about $1k a month more. It just hasn't been paid yet this year as it's quarterly.  Depending on when we go to buy, it could show on his YTD. We also just got a large payment from his old company that was bought out, with another coming next year (that one will be about $70k). It is sitting in an escrow account and we have paperwork so it's a definite amount.  We have a little more than $40k in the bank after paying off bills, so our emergency fund, etc. is fine. I will be going back to work in about 18 months as well, so we won't be a single income family anymore. Our payments now for the two cars we have (which were bought closer to our BK and a higher interest rate than what we should get now) are more combined than what the new payment will be. So yes, I am quite confident that we can afford the new car & payment. We plan to keep it long term, 10+ years so I want an extended warranty and peace of mind from a new car.  We've had too many problems with used cars. Interest rate on a new car will be better as well. And unfortunately, most new vehicles built for a family of 6+ (we have a large dog) aren't in the $25k range.