Auto loan with horrible scores?

[Anonymous]

Furkidz3,In response to what saladin was saying about the upside down loan, it's true. the longer you make payments the deeper in debt you get. I had a $20,000 loan at 21% for 6 years for a Buick Rendevous, which over the term of the loan would equal double the original amt. Various components started tearing up,and I got scared.Car note plus mechanic was not a possibility.I got rid of it 6 months later, and had to tack an extra $7,000 onto a new car loan, after a seperate $1,500 trade in and a $2,000 rebate, AND an extra $1,000 courtesy from the loan officer at Chevrolet. The '07 impala was financed at 15%. All my scores were around 650. My payment is $606.

The schedule referred to is an amortization schedule. And I don't think that lenders include THAT in your package. If they did, people would be sick at first sight because lenders pockets expand exponentially while the loanee's shrinks exponentially-Atleast that's the schedule of a person with a bad score.

[Anonymous]

hi fukize

what is the name of the financial institution/bank that approved your loan? Did the ford manifacturer had any additional incentives that was used to increase your downpayment?

Thank you

[furkidz3]

The financial institution that approved the loan is called Regional Acceptance Corporation out of Greenville, NC.  I looked them up on the web and they have offices in many states. I am in Texas. I hope to receive my info and payment pkg sometime soon. My first payment is due on 12/08/07.

I am putting together my budget to include extra payment toward the principal right from the "get go" ( I think that is a southern term). I want to set up an automatic withdrawal schedule of my payments, either through BOA (my bank) or the Corp, whatever guarantees my payments get there ON TIME!!

I take everyone's forwarning SERIOUSLY about not getting upside down on this loan. I am scared into full attention to this matter. I know that I cannot predict what can happen in the future to my health, my finances, or my ability to pay, but I am going to do my best with the information you guys have so generously given to me.

BTW, where can I find that amortization schedule? Is there info on this website? I will try to google it and see what I get.

Message Edited by furkidz3 on 10-28-2007 02:08 PM

[stpn2me]

Gosh,

Alot has happened since you started this!!! I would say, you are just going to have to get caught up on being upside down. It will be painful, but the sooner you do it, the better. I am glad things are working out for you and now you dont have to WALK!Good luck and pay down that debt!!!

Stpn2me

[Anonymous]

If you know someone that has an Excel program on their computer they can run you an amorization statement in about one minute. They will need to know amount of loan,start date, intrest rate, and if you want to pay a set amount of extra payments. If you know how dowload a copy of Microsoft office. That program has excel in it with the loan amorization template.

Message Edited by wileygo on 11-02-2007 09:30 PM

[Anonymous]

You can find an amortization calculator online by just typing in "loan amortization" into google. 

I've used this one before for estimates:

http://ray.met.fsu.edu/~bret/amortize.html

www.dinkytown.net has a gazillion financial calculators.

Although, there was something I read once upon a time either on here or on www.bankrate.com about weird clauses that can be put into high interest loans (pre-payment penalty fees, etc).  Someone else might know what I'm talking about, but you need to read through your loan contract very carefully.

On another note, a few posts back you asked about which to pay off first... the car loan vs. credit card debts....  Here's my (entirely unprofessional) financial advice based on getting out of debt faster (which is not necessarily in concert with raising your credit scores):

1.  Make regular payments on everything, don't ever ever ever be late on anything. 

2.  Make a spending budget where you're spending less than you're taking in.  Stick to it.  Make sure you're at the very least making the minimum payments on all your accounts.  Ideally you'll have leftover money for debt-paydown.

3.  Eliminate any unnecessary "garbage" from your spending.  This can include those "credit protection" charges ($25/month on 3-4 cards adds up to a whole lot!) to that Netflix service you're not really using.  Or through your budget planning maybe you'll find out you're spending $2000 a year at Starbucks and decide to start brewing from home. 

4.  Make a debt-payoff schedule starting with the highest interest rate loans first. 

5.  Work towards rehabilitating your credit score by starting with the collections accounts.  Check out the information in the Credit 101 re: PFDs & GW letters.

5.   Did I mention to make sure that you're not ever ever late?

After you've rehabbed your scores a bit and gotten out of debt, you should be able to refinance that car loan and get a much lower interest rate.

As far as the car itself... I just want to lend you a little perspective on the vehicle you've just purchased.  This isn't meant to be snarky at all but I wanted to point out some facts to you.  This is completely independent of the finance rate. 

You've just purchased a used 2006 Ford Focus for 16K.  If you look up the going rates for a brand new 2007 SE (not sure what you got), invoice is listing them at ~14.9K.  There's also a 2500 rebate being offered through Ford.  So that would put the price at ~12.4 for a brand new vehicle if you're able to negotiate the price at invoice (and believe me, some people can).  To further complicate matters, Fords have pretty crappy resale values because their long-term reliability (in so many words) sucks.  Your 16K purchase wasn't worth 16K brand spanking new with 0 miles on it. 

So, with all that being said... between the dollar amount you purchased the car for, and the high interest rate that you're paying, you're going to find yourself completely upside down in a year or two when you go to try to re-finance that vehicle (e.g. you will owe alot more than the vehicle is worth).  A reputable auto finance company will not finance a vehicle for anything significantly more than that vehicle is worth. 

If I had to guess, I'd say that your "friend" made the dealer at least 3-4K off of you, with close to 1K of it going into his own pocket.

Next time you purchase a car, do your homework at Kelly Blue Book, Edmunds, www.fueleconomy.gov, etc to find out assessments of reliability, resale value, what the car is actually worth, comparisons, etc.

On a more positive note, if you aggressively pay down your debt, you should be able to do so pretty quickly making 100K a year.  I helped my friend rehab his financial situation and making 75K a year he's paid down more than 15K in debt in less than 4 months.

Good luck.

[Anonymous]

Furkidz3,

Any update?

saladdin

[tlavery]

There is a LOT of good information here. I had one thing to add......I have read here that having your UTL% under 10% on your CC can help increase credit scores. So if I were in your situation I might take the amount that I could afford for debt pay down and share it between the CC and the auto loan. A loan officer told me once that the fastest way to pay down your credit card debt is to pay down the credit card with the highest payment factor first and them move on to the CC with the next highest payment factor. That way you get the fastest balance reduction. The only thing is that the CC with the highest payment factor may not be the one with the highest interest rate. BUT if your goal is getting your scores up and your CC have a higher than 10% UTL it might be in your best interest to focus on paying off the CC with the highest payment factor to get your UTL in line and get your scores to come up. Then once you have all the CC under 10% UTL you can focus on the CC that is at the highest interest rate.....OR better yet take the money that you were using to pay down the CC and put it back on the auto loan.

GOOD LUCK to you! I am sure that with your income and your determination you will be in a LOT better situation real soon!

P.S. to calculate the payment factor take the payment amount off your latest statement and divide it by the balance owing.

[Anonymous]

I had those same terrible scores and the same dilemma go to the toyota dealer I paid

no money down. nada. drove off the lot in a brand new 2006 Toyota Corolla 5 grand kids later

I had to tade my car again no money down when you go on the lot i.e. dealership it is almost

like they do not want you to drive away empy handed. watch those inquirys to obtain the car those are hard hits and can affect your score. good luck oh by the way the interest rate I got was 13.9

then I went and bought a house with my bad fico scores.

[Anonymous]

Well...

First, the importance is to get the loan, not the car, the car will come afterwards. I would suggest you go to a Credit Union. The interest will be harsh but you may get lucky and have the money to buy a car. I had score of 53* something and they lend me the money. for 4years old Chevy Prizm (Toyota Corola under the hood)

Second comes the car. look for something reliable and 2-4 years old, Toyota Echo, Corola, Honda Civic... in good condition. I would try to avoid dealers, they are not your friends. No one will give you money for a brand new Lexus or a 10+ years BMW 535.

soo... 3 steps. 1, Find a reliable car in a range of 4-8k with good consumer reports. 2, secure a loan with the Credit Union expect 16 - 20% APR. 3, Get yourself insurance before to pay the car. Enjoy driving.

Good luck.