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Credit Score: 544 TU, 519 Equifax (via Credit Karma)
AAoA: 2 years
# of positive trade lines: 3 (including current auto loan, Shopping Cart CC)
# of negative trade lines: 7 (2 charged off accts, student loans deferred, charged off auto loan)
Income: $48000
Length of Employment: 1.5
Previous Loan Experience: Charged off auto, Predatory Buy Here/Pay Here
Debt-to-Income (DTI): 28%
Year of Car: hoping for 2015-2016 Jeep Patriot, Chevy Cruze, Buick Verano
Miles: xxxxxx
Purchase/Refinance: Purchase
Requested loan term (XX Months): Pref 48-60
Down payment amount: $2000
Co-borrower/Co-Signer: n/a
Other:
Hey myFico Family,
First off, I want to start off by saying I read the forums a lot and they definitely help me become more financially aware! Thank goodness for all of you!
Next, my situation!
I'm 22 and I'm currently in the market for a NEW or used car. I'm financing an early 2000s model Mitsubishi Eclipse that is incredibly upside down. Over a year ago, my credit was terrible, and no one would finance me. I didn't have a job, and I needed a car to travel 22 miles outside the City of Chicago to go to a job interview, which now is my current job. My credit score dropped significantly about 2 years ago when I had to voluntarily give up a car that I purchased at 18 due to me losing my job. Since then, that still appears on my credit, but I have increased my income.
Credit wise: I do have some dings that I'm working to fix. Here's my damage:
I do have open accounts that are currently in good standing.
While I'm very aware that I have more debt than open accounts, I am working to pay them off and I did receive an approval from Ally about 3 months ago. The approval was only for $13k, and that was with $2000 down for a brand new Chrysler 200, which was priced at $16k. I'd received a couple of rebates for non-prime credit, and also a rebate for my early 2000s upside down car. What screwed me over was my principal balance for my current car, which is close to giving out. Essentially, I didn't get the car because the lender was unable to get me approved for more, but I wasn't upset given my credit history.
Now, I'm shooting for a new Jeep Patriot, which in surrounding Chicago areas are priced at $13-$14k for base model vehicles with incentives/rebates added. As an added plus, my job does also give a credit for Chrysler Affliliate vehicles as well as GM. I'm also very interested in a Chevy Cruze or a used Buick Verano.
Currently, I'm making $48k (including OT) and I've been at my job for 1 year and 5 months so far. In 2017, I will receive a bonus and a raise, so my income could take a significant increase from where I am now.
I am looking to purchase for sure, and the terms offered on my previous Ally approval was for 60 months at a very high interest rate. I think the rate was anywhere from 19%-23% considering they wanted a $600/month car payment.
The biggest thing is that I don't want a co-applicant. Based on my income, I'm quite sure I can afford to pay for a car on my own.
Please help me decide what I should do! Should I wait and payoff half my debts then try to get a vehicle, or just settle for what I can get?
It's going to be tough and IF you do get an approval it will be a high interest rate.
I'd agree with prior posters - wait at least 6 months, and in the meantime pay down some debt/get some collections paid off, since you won't have a new car payment yet.
You might also try to sink some cash into your current loan to reduce your principal balance and improve the level to which you are underwater on that one.
First thing that needs to be done is you need to get your real FICO scores and reports, and see where you actually stand.
Credit Karma is a great place to watch your reports for inquiries and collection accounts, and to get a general overview of where you are with your reports, but their scores are useless. They do not reflect actual FICO scores about 99.9% of the time.
With a very recent (in the last 5 years) chargeoff/repo, and being underwater on your current loan, your auto debt history is not good. This is likely a large part of why you are being offered such dismal deals. While it is mostly true that basically any credit profile can get an auto loan - with terms depending on the actual profile, worse files get worse terms - it is not necessarily a good idea to take the offers before putting some effort into rebuilding. Your file is thin, since you are so young, and yet overwhelmingly not good in terms of debts/collections. You only have two tradelines in your own name - one store card and your current auto loan - and one of those isn't reporting, so there is very littls for a lender to go on when they are considering you. Being an authorized user on another card is a positive thing, but it seems to be a small-limit card, so you may be needing to watch the utilization on it carefully to be sure you aren't actually being dinged for that.
I think the best plan would be to set a plan to save up another $2-3K in the next six months - and use your current earmarked down payment to immediately pay off at least a couple of those collections. You are about 100 FICO points away from single-digit interest rates, so getting some of your collections closed and maintaining another 6-12 months of on-time payments on your current accounts will help you move toward that point. Until your scores and file improve, you are going to get double-digit interest rates from everyone who is willing to buy your deal, so in that light your Ally offer wasn't off mark at all, even though you rightly realized that it was a very expensive way to buy a base-model vehicle.