Can Down payment override low income and credit score

[Anonymous]

I am wondering if it is possible for a person to put down a big enough down payment so that a lender would look pass how low their income is. I looking at purchasing a new Toyota Camry priced around $20,000 and i was wondering is there a certain percentage I could put down that would guarantee approval even though my credit score is 520 (transunion) and my income is roughly $1,000 a month gross.  I was thinking of maybe a $6,000 down payment which would be 30% but  I could do more if i needed to, The toyota dealership that i was looking at has a pre approval application on their websiste but it does not ask if you have a down payment or not.

[Ragelog]

I am sure to a degree but they also need to see enough income to pay the remaining balance. What would the monthly payment be? At 1k per month income what are your living expenses?

[Anonymous]

My rent is $260 and i also have 3 credit cards with payments aroudn $30 a month each. I will have money in the bank/savings account as I just settled a personal injury claim for an accident i was in last year and should have the money by the end of this week. I was thinking of waiting until the end of the month to start looking for a car hoping there will be bigger discounts since it will be the end of the month..

[Ragelog]

So $290 for rent and credit cards. What about water, power, cell phone, internet etc? Car Insurance? Food? Even if you put down 6k on a 20k car (assuming this included tax, title etc) You will owe 14k which if you get 72 months at 1.99% APR will cost you $206.44 plus full coverage insurance.

In my research a base Camry without taxes will be 20k+ and can get as high as just over 30k. So not sure your numbers will match the above.

My hunch is it may be tough to get an approval. 

Personally if my income was at that level the last thing I would do is get a car payment. Especially for that much of my income for that long of a term.

I would take as much cash as I could come up with and find something close to that price.

If you are absolutely set on a newer car then at least go the gently used route. Find something cheaper and almost new this way.

[StartingOver10]

^^^Ragelog is dead on....don't risk your financial health with any vehicle payment at this time. Concentrate on boosting your income before you take on debt. Otherwise you are literally setting yourself up for failure. There are too many things likely to happen along the way that would make any payment you pick up as a hardship. If you want a newer vehicle, then save up for it. If you have difficulty saving to pay cash, imagine how difficult it would be with a monthly payment and full coverage insurance.

[Anonymous]

In a few weeks when I decide to go buy a car I will have enough money in my savings account to pay cash for it as I mentioned in my second post I will be recieving a settlement check for $45,000 for a personal injury claim,  I decided that I didn't want to take half of it and pay cash for a car I would rather put down a good down payment and finance the rest. FOr the past 9 years I have been using public transportation since my last car died on me. In my life time I have had 3 vehicles all of which were cash cars and i grew frustated with them breaking down and mechanics over charging me for repairs so when my last car died I decided I would not get another car until i could get a decent one. If I was not getting this check I wouldn't consider getting a car with my income where it is now. Over the past few months while I have been waiting on my case to be settled i thought about over again whether or not to pay cash for a car or finance it and i just decided that I would be more comfortable financing it than pay cash for it. I did not grow up rich and have never had a lot of money so I do not want to come in to some moeny and spen d it all in one day.  I been reading on this board for the past few months and I have seen people with six figure incomes who finance their cars  instead of paying cash for them, which doesn't make sense but they do it.  As for the price i put for the car I got it off the website of a toyota dealership in town , i think the regular price was around $22,000 with $3,000 dealer discount and the website then said the true price would be around $19,000. I would put 50% down if I had to I just came on here to see if anyone knew if there was a certain percentage you could put down on a car that would cause the lender not ot verify income or approve me inspite of my income and low credit score.

[Anonymous]

You have no business taking out a loan.  Take half of that down paymet and buy a beater.  Drive the beater until you raise your credit score and income.  Most of us are on this site now because we made decisions similar to the one you're about to make.  Don't do it.

[StartingOver10]

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@Anonymous wrote:

In a few weeks when I decide to go buy a car I will have enough money in my savings account to pay cash for it as I mentioned in my second post I will be recieving a settlement check for $45,000 for a personal injury claim,  I decided that I didn't want to take half of it and pay cash for a car I would rather put down a good down payment and finance the rest. FOr the past 9 years I have been using public transportation since my last car died on me. In my life time I have had 3 vehicles all of which were cash cars and i grew frustated with them breaking down and mechanics over charging me for repairs so when my last car died I decided I would not get another car until i could get a decent one. If I was not getting this check I wouldn't consider getting a car with my income where it is now. Over the past few months while I have been waiting on my case to be settled i thought about over again whether or not to pay cash for a car or finance it and i just decided that I would be more comfortable financing it than pay cash for it. I did not grow up rich and have never had a lot of money so I do not want to come in to some moeny and spen d it all in one day.  I been reading on this board for the past few months and I have seen people with six figure incomes who finance their cars  instead of paying cash for them, which doesn't make sense but they do it.  As for the price i put for the car I got it off the website of a toyota dealership in town , i think the regular price was around $22,000 with $3,000 dealer discount and the website then said the true price would be around $19,000. I would put 50% down if I had to I just came on here to see if anyone knew if there was a certain percentage you could put down on a car that would cause the lender not ot verify income or approve me inspite of my income and low credit score.

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Those are called 'teaser ads'.  They are put on the website to get you to call in or email in so you become a lead.  The odds of the dealership having the vehicle are slim (they have to have had one vehicle at that price, but there are conditions to getting that price and the vehicle is usually sold by the time you get there). Really, with the settlement you are getting, spending half on a 'new' vehicle makes no financial sense. A vehicle is a depreciating asset and you take a huge hit the minute you drive it off the lot. You are far better off getting a gently used vehicle (1 to 3 years old) rather than new. You spend much, much less on the acquisition.

Before you rush out to buy something, get with a financial planner that can help you with this lump sum so it isn't gone before you know it.

As to people with six figure incomes financing a vehicle - yes. They have the income to pay for it and if there is a dip in their income for a month or two, then they have savings to recover (some do/some don't).

When you have $1000 coming in a month you aren't in a position to finance anything for the long term. Any bump in the road will create issues - including normal maintenance on the vehicle. There just isn't enough income to support that type of loan. Most lenders have a min income requirement anyway to prevent you from getting into foreseeable difficulty. And having both low income and low credit scores is a problem. You are likely to get hit with very, very high rates if you get financed at all. That would be self-defeating in the extreme. It is most likely that you would end up in a situation where the only people that will finance you are subprime lenders with a terrible loan and the propensity to repossess at the drop of a hat. I see these posts all the time.  It is heartbreaking.  You would then lose your down payment and the vehicle and would be stuck paying the balance!  Don't take the risk.

Use your settlement wisely to build assets rather than accrue debt. You will be much happier in the long run and have something to show for it.

[Ragelog]

I will help you and play devil's advocate.

What are your credit scores like? Trying to get an idea of what kind of rates you would possibly get approved for.

Will your income eventually go up?

I can understand wanting reliable transportation I have driven as cheap as a $600 car to my G37x I recently purchased. I have purchased 2 cars and have learned you always get more for less buying used even if gently used.

If your income will go up in the not too distant future and you can qualify for 0-2% interest I can see being ok buying something I would still advise something gently used. 

What is sales tax in your state? Property tax? Have you received full coverage insurance quotes?

Are their other cars you like you say you would be willing to put down 50% so around 10k when you can pay it all. How about find a used Toyota I was looking at Carmax saw a 2011 Camry 30k Miles 13998. Yaris's and Corollas were cheaper with less miles. If you were willing to really search educate yourself on a certain car and you can likely get an even better deal by purchasing via private party.

The cheaper the vehicle the cheaper everything else will be from sales tax, property tax, insurance even to a degree. A toyota with 30k miles is basically brand new and depending how you drive could easily last a decade if well maintained.

I know it looks like it's only 6k but 6k plus sales tax on it, interest from the loan, higher property taxes for years. Will add up to much more.

Good luck with your decision. Also if your credit is in a spot where you can't get the best rates then don't get a loan interest doesn't make any sense to pay when you have the cash with a restricted income like you have currently.

If you can't resist going new buy the cheapest new car you can a yaris, honda fit, ford fiesta. You will likely get less options then the used vehicle I suggest but it would be new like you seem to want.

[SamsungHDTV]

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@Anonymous wrote:

I am wondering if it is possible for a person to put down a big enough down payment so that a lender would look pass how low their income is. I looking at purchasing a new Toyota Camry priced around $20,000 and i was wondering is there a certain percentage I could put down that would guarantee approval even though my credit score is 520 (transunion) and my income is roughly $1,000 a month gross.  I was thinking of maybe a $6,000 down payment which would be 30% but  I could do more if i needed to, The toyota dealership that i was looking at has a pre approval application on their websiste but it does not ask if you have a down payment or not.

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To answer your question directly - No. There is no certain percentage you or anyone could put down that would guarantee approval regardless of any credit score. 

For more details - Most lenders have a minimum income requirement well above $12K / year gross. You will likely get automatically declined based on income alone. Its possible some lenders don't verify income, but that's almost always if you have excellent credit. Even if you had a chance with a 520 score, I think I can safely assume all lenders will verify your income. I highly doubt a lender will approve you based on the very limited information I have on your profile. Even if they did, it would be an outragous 20%+ rate. 

With the goal is to eventually be able to finance a car - you will need a higher score and higher income. You will likely have to buy with cash. I'm not sure if this is what you wanted to hear but I hope it helps.