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Auto Loan

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Anonymous
Not applicable

Auto Loan

I am new to this site, but appreciate the wealth of information I have found already.

 

Needing to buy a vehicle ASAP.  I am starting new job in the next two weeks and my current car is on its last leg.  I was ignorant and unprepared on my last auto purchase on my wife's car.  I bought it for a little for $13,000 over 2 yrs ago with a 18% 60 month term with $3,000 down (my individual annual income at the time was $28k).  At the time of this purchase I had 4 relatively small ($50-$150 each) unpaid collections with little other credit history.  This car will be paid off within the next 6 months.

 

Now these 4 collections are paid in full (3 are 3yrs old and 1 is 6yrs old).  The rest of my credit picture is faily good now.  I have the 2+yr old car loan, 1 student loan about 5 yrs old, another student loan about 2 yrs old, and a low limit credit card reporting 20% util that is about 6 yrs old (current balance is actually 5%, but will not show up on reports until next month) - all are in good standing and have never had a late payment.  My current annual income is a tad over $50k (new job should be $75+k).  My credit scores, as of last month, are in my signature.  I wish I could wait until next month for my credit report to show the credit card at the now 5% util that it is at currently and get some goodwill letters sent on the paid collections, but I have put off buying this car as long as possible.  My wife's credit is not to good (low 500's) and we are currently using her income to get it cleaned over this next year, so having her co-sign is not an option.

 

I have had a relationship with my current small local bank for 14yrs (since I was 16), so it would be nice to get the loan from my bank.  The vehicle I am buying is a 2012 Jetta with out the door price of $23k.  I can put up to $5000 down, will not be trading-in anything, and want a 60 month term.  What interest rate should I be shooting for from my local bank, credit union, or vw credit?

 

Thank you in advance for your advice and suggestions.

Message 1 of 4
3 REPLIES 3
Anonymous
Not applicable

Re: Auto Loan

I went ahead and applied today at my local bank.  I was approved for 5.25% for 60 months with $3000 down (didn't require anything down, but choose this amount to meet my budget for monthly payments).  Monthly payments will be $378.  In my humble opinion, I thought this was pretty good rate for a small town bank and my credit history/scores.  I asked the score they pulled and they said 686, but I forgot to ask which bureau they pulled from.  I am guessing they pulled experian since it doesn't match the TU or EQ I pulled from myFICO.  I think at this point I will go ahead and take the loan offer.  I want to continue building my relationship with this bank for my future loan needs.

 

Now I have to decide what to do on my other car loan.  Like I stated in my previous post, I plan pay this car off in the next 6 months (12 months max).  I could refinance and save a little money, but I don't what effect this will effect my credit.

Message 2 of 4
HoldingOntoHope
Valued Contributor

Re: Auto Loan

If you are truly paying off the other loan in the next 6-12 months I would personally not look at the refinance on that one. You will incur new inquiries and a new account which will affect your credit score. You already have a new account with the new car loan. I am assuming that with the short payoff time frame you have made substantial extra payments on the first car loan, and if so the reduced principal on the loan has helped to negate the high interest rate on the remaining balance.

 

I just finished paying off a bad car loan (%22), thankfully in 3 years instead of 5. I just look at it as the price I had to pay to rebuild my credit and a solid reminder of why I don't ever want to be in that position again.

Best financial advice I ever got: "Just imagine what an adult would do and do that."

Starting Score: 500's
Current Score: EQ 701 (FICO) TU 721 (FICO) EX 715 (Quizzle)
Goal Score: 760 ALL


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Message 3 of 4
Walt_K
Senior Contributor

Re: Auto Loan


@Anonymous wrote:

I went ahead and applied today at my local bank.  I was approved for 5.5% for 60 months with $3000 down (didn't require anything down, but choose this amount to meet my budget for monthly payments).  Monthly payments will be $378.  In my humble opinion, I thought this was pretty good rate for a small town bank and my credit history/scores.  I asked the score they pulled and they said 686, but I forgot to ask which bureau they pulled from.  I am guessing they pulled experian since it doesn't match the TU or EQ I pulled from myFICO.  I think at this point I will go ahead and take the loan offer.  I want to continue building my relationship with this bank for my future loan needs.

 

Now I have to decide what to do on my other car loan.  Like I stated in my previous post, I plan pay this car off in the next 6 months (12 months max).  I could refinance and save a little money, but I don't what effect this will effect my credit.



Difficult to say as there could be other reasons it doesn't match the score you pulled here.  For example, it could have been an Auto enhanced FICO and would not have necessarily matched the scores you got here.  Also, TU98 is what is offered here, whereas lots of lenders use TU04 (at least that is what I have read about mortgage lenders, not sure if the same is true for Auto lenders). 


Starting Score: ~500 (12/01/2008)
Current Score: EQ 681 (04/05/13); TU 98 728 (01/06/12), TU 08? 760 (provided by Barclay 1/2/14), TU 04 728 (lender pull 01/12/12); EX 742 (lender pull 01/12/12)
Goal Score: 720


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