Best way to finance auto loan?

[thegrapelady]

In the past I always went to the dealer and got financing. Is it better to obtain financing ahead of time? If yes, any recommendations on companies to finance with? Or who to avoid? My credit scores are currently 690, 670, and 648. Nothing negative, just high balances on some cards. I own my car out right, no damage, kbb trade in value is 11k, expecting maybe 10k. The vehicle I am hoping to purchase is 32k-34k, so approx 22-24k loan. I can put some money down as well. My income is very stable and a little over 100k. Any advice would be highly appreciated. Thanks!

[Appleman]

Welcome grapelady!

If your payment history is unblemished, you should go to SoFi.com and see if you qualify for a personal loan. They like high income (check), unblemished payment history (???) and don't shy away from high utilization. You can see if they will give you a pre-approval (only a SP (soft pull)) of your credit.  The benefit of a personal loan is that you will pay down the higher interest debt and your scores will climb. FICO scores treat a personal loan better than having credit card balances.

If you qualify, I highly recommend you go that first. The big WARNING is to not run up the credit card balances again and get on a budget.

However, I would recommend that you apply to PenFed Credit Union. It will be one Equifax Hard Pull and that will get you into the credit union, apply for a car loan, a credit card and line of credit if you so desire. They use your one credit pull for 90 days and don't pull for each product. It will only take a small (tax deductible) donation to join, think I donated $25.

As far as your tade in, if you live near a car max take your current car in for a FREE buy offer. They are one of the largest buyers of cars and this will give you a starting number of what your car is really worth. In most states when you trade in your car you only pay the difference between what the new car costs minus the trade in value. In my state with 9% + interest, your trade in of $10,000 would save around $900 in interest.

Good luck and if you have any questions fire away....

[thegrapelady]

This is so helpful! The only less than perfect payment I have is about 6 years ago an automatic payment for some reason didn't go through and I wasn't notified until 30 days. I paid it immediately. Everything else has been fine. The reason for higher balances on CCs is I put my kids childcare cost (unfortunately I live in an expensive area), they equal twice my mortgage. I have stock vest twice per year and pay down those costs twice per year, if that makes sense. I'll check out sofi and penfed credit union. Thank you!

[thegrapelady]

Okay, this is probably a silly question, but do I need to have the car already picked out and go to the dealer before getting pre-approved? Or can I get pre-approved then shop for the car? I know what kind of car I want to purchase, just not certain if I want new or slightly used. I know the type of loan will matter, so not sure what to do.
I set up an account with Penfed. I'll apply for the loan next.

[Gmood1]

Apply for the most you plan to spend. Doesn't mean you have to spend that amount. Once approved , you can find the car and haggle the price until your comfortable with it. From there call Penfed and give them the exact amount and vehicle information. They'll cut a check to the dealership and you, it will then be sent to you to sign and give to finance manager.

Penfed may asked what vehicle you intend to buy before hand along with the VIN number. Either way, the process is fairly simple.

[thegrapelady]

I was denied the Penfed loan! It said too many accounts open. I don't have that many, so I called to ask. I made the mistake of being a co-signer which they are counting against me. The loans I co-signed for are all in a good state and always have been.

[Gmood1]

Oh sorry to hear that. Those loans must be affecting your DTI? 

[thegrapelady]

Unfortunately yes! They are student loans. Oh well. My current car is paid off and works fine. I just didn't want to put a lot money into it knowing I would likely need a new car within the next few years.

[Appleman]

Sorry to hear about not being approved, and yes co-signed loan will count against your DTI.

Did you try SoFi.com with the soft pull pre-approval?

[thegrapelady]

I am really confused! I got an email back from penfed which included my credit score. They claim my score is 574???!!! I have credit monitoring through my bank and a credit card, plus myfico. My score on all was in the upper 600's as of this morning. They are claiming it is over 100 points lower than what I see. I know auto lending uses a different scoring system, but that doesn't seem correct at all. No, now I am scared to apply for anything!