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Bad credit, new job, any chance of approval?

Regular Contributor

Re: Bad credit, new job, any chance of approval?

Hi, alot of dealerships specialy franchise dealerships can get you approve with no problem because they deal with hundreds of banks but the problem is that they want a huge interest rates as high as 29%. If you really need a carbad which it seems like you do, you can always buy the car at the best interest rate that your credit would let you and pay for about 12 to 18 months and you can refinance the loan to a much lower interest rate. I've been through alot of dealership experiences and my credit was very bad. I  bought a 14K car was approved but with $3500 down, so the rule of thumb is whatevr you buy, figure to get approved you would probly have to put down about 30% of the selling price of the car. When yoyu go to the dealership, make sure you tell them what you can afford to put down and that's it and see what they can do. Most likely they'll come back and say well your gonna need about $1500 down for a $5000 car. The reason for that is, the bank want you to make some kind of investment in the car and less risk for them, so if the car get repossed, they will have equity in the car and can resell it and still make money. Anther option is buy here pay here, this should be the last resort, usually buy here pay here wants you to put down a huge down payment and then want you to pay weekely, bi-weekly or monthly. The down payment that they want you to put down is really the price of the car they paid at auction so that means they got their money back for the whole car just by your down payment and the rest of the payment is really profit for them, that;s how they work. But I'm sure you'll do fine so good luck!!

Message 11 of 17
New Member

Re: Bad credit, new job, any chance of approval?

I meant to update but totally forgot. The dealership was a bust. The only car they would show us was WAYYYY outside our price range. It was a 2008 Dodge Avenger for $10,000. The salesman gave us some BS saying that the bank wouldn't finance anything cheaper. He said they *could* approve us but they'd need a $1400 downpayment and we only had $500 at the time. We declined and left. We have $650 in savings right now towards the car and are saving $85/week until we get approved somewhere. I really want to stay away from buy here pay here but at this point, it feels like the only thing we're gonna get. Smiley Sad

 

Any advice? We've tried Cap 1, Road Loans (they said they don't serve Indiana) and our credit union (couldn't finish the app because we don't have collateral).

Message 12 of 17
Valued Contributor

Re: Bad credit, new job, any chance of approval?

You only have $650 in savings and you are going to take almost all of it out for a car? That is not a good financial decision to make. You should at least have $1,000 in savings for emergencies at all times. Putting $500 down on a car would break your finances. I say save up to $1,500 in savings and then put $500 down. Savings is so very important to your well being and being able to afford maintenance and repairs on the car. When I put $1500 down on a lease in Nov, I had $4,500 in savings. Don't deplete your savings...you need to build on that $650 to have financial security.
Cards: Orchard Bank ($1100) | Cap1 Cash Rewards ($2500) | Chase Freedom ($1000) | Best Buy ($2500) | Discover It ($1000) | Barclay Rewards ($2500) | Current scores: EX FAKO: 684, CK TU: 649, FICO EQ: 680, FICO TU: 698, FICO EX: 658 Happy Homeowner Since 2/6/13! Smiley Happy Last App: 4/5/13 Gardening until July 2014
Message 13 of 17
Valued Contributor

Re: Bad credit, new job, any chance of approval?

The reason I said what I did because I know it is a bad thing to do. I have been there done that. Depleted my savings for a car 10 years and it is one of the most stupid financial decisions I ever made. To make a long story short it was a nightmare. Don't do it. You'll regret it.

Now back to the auto loan. Try Prestige Financial. They did a zero down loan for me when I had very bad credit (2 BKs were reporting). The price of the car was $16K.
Cards: Orchard Bank ($1100) | Cap1 Cash Rewards ($2500) | Chase Freedom ($1000) | Best Buy ($2500) | Discover It ($1000) | Barclay Rewards ($2500) | Current scores: EX FAKO: 684, CK TU: 649, FICO EQ: 680, FICO TU: 698, FICO EX: 658 Happy Homeowner Since 2/6/13! Smiley Happy Last App: 4/5/13 Gardening until July 2014
Message 14 of 17
New Member

Re: Bad credit, new job, any chance of approval?

The $650 savings is specifically for the car. We have other emergency savings. In fact, we put $300-500 in savings per month from my self-employment income. For reference, our monthly expenses (before we buy this car) are about $1100 and our monthly income is twice that. The only reason we don't have more towards the car is because we got way behind when my husband lost his job and we were playing catch up for awhile after he got this one. That's why we're playing it safe by trying to get a super affordable vehicle and putting tons of money in savings.

Message 15 of 17
Valued Contributor

Re: Bad credit, new job, any chance of approval?

Okay well if you have other reserves, it shouldn't be a problem. $1400 down really isn't that bad considering your credit scores. Do you know what interest rate they were going to give you?
Cards: Orchard Bank ($1100) | Cap1 Cash Rewards ($2500) | Chase Freedom ($1000) | Best Buy ($2500) | Discover It ($1000) | Barclay Rewards ($2500) | Current scores: EX FAKO: 684, CK TU: 649, FICO EQ: 680, FICO TU: 698, FICO EX: 658 Happy Homeowner Since 2/6/13! Smiley Happy Last App: 4/5/13 Gardening until July 2014
Message 16 of 17
Highlighted
Established Member

Re: Bad credit, new job, any chance of approval?

My very first car loan was through GMAC via a local Chevy dealership. At the time I was a kid with no credit history and no co-signor. Bad credit stinks but no credit isn't fun either. To top it off I was very stupid and hit dealership after dealership looking for cars and approvals.

This salesmen at the time (now owns his own local dealership) leveled with me and said he didn't know if he could get me approved but not to let anyone else pull my credit as I had over 30 inquiries and was making my situation worse. He said GMAC had a rep coming in for the weekend to offer some specials and he would talk with them to see what could be done.

I got a call a few day later with an approval. The rate was awful. Around 21%!!! I almost didn't sign and the salesmen advised I do it and refinance in a year. He explained it like some here have. Sometimes you take an available deal knowing its your only option and creating lemonade out of lemons at the first opportunity.

He was right. A year later I refinanced with a bank at then market low rates of 8%. Yes, it was a long time ago. However the experience has stuck.

There are some conditions though. If the high interest pushes your payment to where it is uncomfortable or you aren't really serious about using it as a building experience and paying early and/or over the minimum amount and you aren't sure you can do this at least 1-2 years then I would be patient and wait for a better deal.

While $1,500 won't buy you a new car you could probably find an acceptable "beater" to suffice for a couple years until you are in a better spot.
It is only the poor who pay cash, and that not from virtue, but because they are refused credit. - Anatole France

FICO Scores (1/6/13): EX 642 and TU 670
Message 17 of 17