Okay so my husband and I desperately need a vehicle but I'm terrified we won't be able to get approved for one. My husband lost his job last year and we survived on temp jobs here and there but his credit took a nosedive (mine was already terrible) because we got behind on our bills and had a credit card get charged off and 1 item went into collections (owed money to college).
Things have gotten better and my husband has a new job and we've been working to rebuild our credit but it's slow going. He's been at his new job since July but it was temp to hire and he was just officially hired in early November. Anyways, we really need to buy a car because we've been borrowing a vehicle from a family member for a year and they need the vehicle back.
Is there any chance of approval? Most recent FICO score was 554, income is approximately $26,200, we owe about $2000 in debt (including a student loan) and we have $500 set aside for a down payment. We're hoping to spend about $4000-6000 on a car. Any information you could give us would be great.
My husband was approved with a score around 500 a few years ago from a private car dealership. He still has terribly hopeless credit and is too lazy to rebuild. His income was about $45,000/year back then. From what the dealer said, they will approve just about anybody because the car is used as collateral, but the finance charge will be ridiculously high (his was 17.9%). But if you need a car, you need a car. I would try those small, privately-owned dealerships. I think rental car agencies that sell their cars may work the same way, but not sure. Good luck.
Check with your local credit union. There are also secondary car loan lots but he interest rate is higher. So you will have to do your homework. In the mean time you will need to immediately do something about the adverse (negative) information that is on your credit report. It's especially bad if you have a student loan in collections. Another thing that you can do is sit down with your spouse and go over a financial budget. Se what money is coming in & compared that to what your expenses are. You may have to make some sacrifices by cutting back on expenses and applying the extra money to the debts. You do not want any creditor(s) to start garnishing your employment wages.
Thanks for the tips. We are members of a credit union so we will give them a shot. I tried applying online but the last step/page is collateral and we don't have any. I'm going to email today to see how we can skip that step.
The student loan isn't in collections, we're paying as agreed. We were late on the payment twice before we got a forbearance approval when he lost his job but the forbearance is over and we're paying on time every month, only a few months left, in fact. The collections for money owed to the school was when he dropped a class and he had to repay federal financial aid. It was $485 or so and we thought we had plenty of time to pay it but they sent it to collections and it is showing as ~$600.
CreditUnions are much more forgiving when it comes to carloans than the big banks. If that doesn't work out go to a buy here pay here lot and they will work with you. At your current income don't let the dealer talk you in to something you can't afford, try to stay as close to 4k as possible.
I am trying to stick close to $4,000 and hopefully at most $5,000 but if we absolutely have to, we'll go up to $6,000. Our income seems really low but we live in a cheap apartment ($395/month) and our other expenses aren't too high. I've run the numbers and I know we can comfortably pay $200/month as well as put extra money towards a car payment. The $26,200/year income doesn't include any overtime or anything that I make on the side (I'm self-employed while attending school, I usually make $300-500/month but occasionally make a lot more).
Oh and I forgot to add that I asked around and a few friends and family members suggested that I go to a local franchise dealership that tries to work with people with bad credit. One of my family members got a car there almost immediately after a bankruptcy (which I know isn't unheard of since they can't get for one again for a long time). They are an auto group with branches that span all the major brands. I called them to ask about financing and they told me to apply on their website and they'd give me a call after they receive the application. I applied earlier and am now awating a call.
Well the dealership called us back today and set up an appointment tomorrow to look at cars. They didn't specifically say we were approved but that's a good sign, right?