My credit is horrible due to a divorce and the pending foreclosure it caused (long story). I have moved to a new residence, but because the foreclosure has not gone through - my credit is still taking a monthly hit for "late payments." I have two credit cards in good standing (never a late payment - one secured, one unsecured), an auto loan that is in good standing (amount owed = trade-in value), two student loans in good standing, and my monthly expenses at the moment equate to less than 1.5 weeks pay. I also have several collection accounts on my credit report from when I was married.
I have requested a Consumer Statement be added to the mortgage tradeline - of course the tradeline will still be there, but perhaps it will help to explain why it is there. I am working on GW and PFD letters to the few collection accounts that are currently on my report.
I applied for an auto loan in April, and while one lender would approve me - it was at 18% and I could not get the vehicle I wanted. My car is a 2008 with 70,000 miles on it, so I decided to wait and try to build up my credit and a significant downpayment. I will be trading my car in and putting a minimum of $5,000 down when I purchase a new vehicle - will this improve my chances at getting approved for the vehicle I want AND should this improve my credit enough that I get a better interest rate?
Starting Score: 577 EX 9/9/2015
My car is a small 2-door vehicle, and it just isn't exactly practical for me now. Add in all the miles I put in for work/family commitments, and I'm going to not just want, but need a new vehicle in the next 6-12 months.
It's not an issue of being able to afford a new vehicle so much as my credit having taken such a hit during the divorce that I'm having trouble getting financed.
It's not an issue of being able to afford a new vehicle so much as my credit having taken such a hit during the divorce that I'm having trouble getting financed.
What would be the suggestion for folks in similar situations - bad credit - rebuilding?
I know alot of factors go into approvals, but I see approvals here w/scores similar / close to mine (I've even seen lower) but income much less. And I see 1, 2+ repos, BK's, etc. I do commercial insurance for a living so I completely understand the concept of risk and for better or worse (for the time being) I am deemed a high risk. However, isn't ability to pay (income) any factor in getting approved? My reports show aged information.. Only recent is medical accounts by CA's. There is 1 CO for my current vehicle (but that issue is debatable and I am exploring legal action against the finance co).
Through the help of the members here I am working to resolve those. In the meantime, I am wondering what an actual option would be if I (or anyone else in a similar situation) needed to finance another vehicle?
For the record, I'd prefer to save cash for a new vehicle - but time and necessity doesn't permit waiting. In light of that -my focus is intensely on rebuilding and re-establishing credit. I know interest and monthly payment will be high, but the goal is to be diligent & wise and sell or re-fi as soon as possible then get into a better interest rate as soon as I can. But I can't seem to get a foot in the door.
All the talk about Capital One - but what are there requirements? I applied for Capital One Auto finance and was denied. 
Starting Score: EQ 522, TU 482 June 2012
TLDR: Downpayment is king, income (DTI calc) is second. Everything else is negotiable based on those two factors. If you have a downpayment you can get a loan, if you don't, and you have no free cash reserve, it's a challenge.
Haven't really been frequenting this but I'll try to give a generalized answer musicdiva:
Downpayment is king for any secured type loan, car, mortgage, other. The larger the downpayment, the less other requirements you need to qualify for a secured loan. While it doesn't negate the past sins of one's credit life, a sufficient downpayment can buy all sorts of absolution.
The quick mechanics basically look like this: say you have a car worth 10K. If you put down 20%, then the loan is only for 8K. If you flake, even before the first payment is due, the bank repossesses your car, and sells it off for more than 8K. Bank doesn't lose any money, loan to anyone. The case gets extended further, as not only the car depreciating but you're making payments on the loan... at some point in the future, the value of the car may drop below outstanding loan amount, and there is where the bank can get hosed if the borrower flakes and maybe lose money; however, at 20% or more down, that's pretty far into a 5 year loan, so it's not a huge concern for a lender.
Ability to pay comes in (standard DTI calculation really), but the issue here is if you're ugly like me FICO-wise, and the bank lends you 10K to buy a car, you put zero down, drive it off the lot, never make a payment... the bank loses money. That's why downpayments are pretty much mandatory, new car since it drops in value pretty much driving off the lot, and used cars for some complicated borrower psychology... banks want to see you have skin in the game on a used car because statistically people are more likely to just walk away from a used one than a new one. Also if you do have a reasonable income, it's a fair question for a lender to ask you if you don't have a cash reserve for a downpayment, well, why not? Ergo, if you can't save cash now, how can you pay the loan anyway?
Everything else is just the rate. Capital One is nowhere close to the lender of last resort when it comes to auto loans that actually report (if it doesn't report, walk away is my opinion, just throwing money away when it comes to rebuilding and makes it much harder to refinance later). Capital one specifically just appears to be kinda wonky, I think they really want prior auto-loan history or maybe a consumer loan product through them for approval... I was denied as well (multiple times the way my auto loan pursuit worked); however, there were other lenders willing to take my business - Wells Fargo, Chase, etc.
If your file is ugly like mine, expect a non-trivial double-digit rate. Dealer financing can be gotten for just about anyone, and as long as you're with a branded dealer, usually you're pretty assured that the lenders involved will report. Not a serious problem as you just go and refinance after six months to a year anyway anyway. Yeah you lose some money in the short run compared to waiting till you can clean up the report, but if you need a car you need a car. If you're a member of a Credit Union, they might be able to give you a decent rate as well, but not always.
The tricky part comes when you have 1) ugly file, and 2) no free cash. It's a tradeoff as mentioned earlier between downpayment and everything else, and everyone is just flat out unlikely to get a zero down loan unless they have a very pretty report. That's just not where I and others live, so cash (proverbially) is king in this scenario, find some, ideally that doesn't show up on your credit report (though if you have no choice do that), and then go buy the car. There's a few buy here / pay here type places that can play with low money down and ugly scores; however, a lot of those don't report and that's a pretty critical factor for climbing out of the pit that I at least mired myself in.
So for any ugly file situation, the question comes down to what Pizzadude said, how much cash do you have to throw in the circle for a downpayment?
@CreditGuy03 wrote:Have you tried roadloans?
No, not directly. Tried my CU, CapOne, and various lenders through a dealer who honestly probably was not interested in actually assisting.