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Can I get approved for an auto loan with terrible credit & almost 20% down!

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Anonymous
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Can I get approved for an auto loan with terrible credit & almost 20% down!

I have a bit of an unusual situation. My credit score is around 572- 595 and I have a repossession on my report from about 4-5 years ago. I'm now making around $10,500 monthly residual income and am on track for 6 figures monthly by this time next year. Even if my residual income didn't grow every month like it does, my current income would put me at $126k a year. My company is paying $1500 down and $750 a month for any white Cadillac of my choice as long as it's no older than 5 years and in like new condition. I've applied through a credit union for $13k down on a $68k brand new car including taxes & fees. So I'd be borrowing $55k. The dealer was sure he could get me financed with $8k down but that was a fail so he suggested a credit union. And I upped my down payment to $13k which is almost 20%. My cosigner banks at this credit union and has never missed a payment on anything ever. Their score is 817. Even without my company paying a chunk of the car, I could still afford it. I'm planning on paying $2k more a month on top of the $750 they're giving me so I'm not worried about interest. Everything has to be in my name and they'll just put the money in my account for me to pay for it. So on paper it just looks like I'm paying for the whole thing. How likely am I to get approved? Will they take into consideration that my company is paying a chunk of it and I now make more than enough?
8 REPLIES 8
pipeguy
Senior Contributor

Re: Can I get approved for an auto loan with terrible credit & almost 20% down!

Those are pretty low scores for a $68k car especially when new caddy's lose value quickly - check out Carmax prices on 1-2-3 year old caddy's - 30-40-50 percent depreciation and many of those are coming off lease meaning they are low miles and very good condition. Keep that in mind when you think of your lender giving you a loan for a $68k car that even with $20k down will be worth no more than maybe $45k at best in a year.  SUV's and V-sports hold their value better, but cost dearly. 

 

Given that your company is offering $1500 down and $750 a month, depending on how much you drive, you might look into a lease (hard to qualify with low scores, but extra down can fix that) - you walk away from a lease with nothing upside down or equity. 

 

I'd probably look at Carmax or the local Caddy dealer for a 2-3 year old certified model (GM includes an extended warranty to $100k miles on certified Caddy's) which you can get for much much less. ATS, CTS and XPS have not really changed in style over the last 2-3 years (I think the ATS and CTS were updated in 2015 model year, XTS looks the same since 2013 I think).   

 

Carmax gets full retail price for their used cars, even if you don't buy there you can get a good idea of full dealer used car retail and with 20% down someone will probably finance you but at what rate? Not a good one...

Message 2 of 9
Anonymous
Not applicable

Re: Can I get approved for an auto loan with terrible credit & almost 20% down!

Welcome to Myfico, this is a great place to get solid information about credit and how to get the best rates etc.  With your scores so low there has to be more going on than a repossession from 4-5 years ago.  Regardless of what you decide to do and when I would get a full copy of every credit report (you get a free annual report) and post the details in the rebuilding credit section to work on getting those scores up.  You will be surprised at how much progress you can make with a fairly small amount of effort.  It really sucks to have high income and bad credit, I have been there and it wasn't until I stumbled on Myfico that I learned that you can turn things around and change your life with not a ton of effort.  Specific to your car loan if you have a co-signer with 800 scores you can get prime credit so it won't be a problem getting a loan.  I am a big proponent of going the credit union route and would get prequalified with Penfed or DCU if I were you and then let the dealer try and beat the preapproved rate.  I suspect Cadillac will have promotional rates you can take advantage of with that co-signer's scores in your corner.   In response to the last question you ask the income is not going to be your issue it is your credit, pretty much no amount of income will overcome crappy FICO scores we had $185,000 in income and struggled to get a 25k loan 3 years ago after years of neglect of our credit.  In just 6 months I was able to refinance that car from 12.57% to 4.29% and now we have a car loan at 3% and plenty of other great credit products.  If you can wait you should spend a little time rebuilding commit to that for now on and you will never have to worry about being qualified for a car loan, credit card or mortgage again.  Go for it.

Message 3 of 9
Anonymous
Not applicable

Re: Can I get approved for an auto loan with terrible credit & almost 20% down!

Well I mean I'm at the point where I can afford the car and pay off all debt in full at the same time. I looked at my report and there's 5 things on it that I have no idea what they are. A couple $298, 1 that's $450, and I can't remember the rest. It would be about $2k to settle it I'm thinking. I have no idea what any of it would be though as the only thing I have is a student loan that's being paid on time and the repo. I didn't have any credit when I bought the previous car.
Message 4 of 9
Anonymous
Not applicable

Re: Can I get approved for an auto loan with terrible credit & almost 20% down!

see if carvana.com can you help you. Some members have had luck there. 

Message 5 of 9
Anonymous
Not applicable

Re: Can I get approved for an auto loan with terrible credit & almost 20% down!


@Anonymous wrote:
Well I mean I'm at the point where I can afford the car and pay off all debt in full at the same time. I looked at my report and there's 5 things on it that I have no idea what they are. A couple $298, 1 that's $450, and I can't remember the rest. It would be about $2k to settle it I'm thinking. I have no idea what any of it would be though as the only thing I have is a student loan that's being paid on time and the repo. I didn't have any credit when I bought the previous car.

Sounds like one of the issues you have is a lack of credit history.  I would establish a couple of credit cards, use them and pay them in full each month for a few months and you will likely get some significant improvement in scores.  Lenders know you can afford to pay them based on your income and debt but the only way they know that you are going to actually pay them on time and not default is based on a overall credit history.  Sounds like you don't have much reporting except for negatives so having a few postitive reporting accounts will do you a ton of good.  I would spend the time to research, dispute or pay those collections because that will improve your credit profile overall and increase your chances of getting an approval and a decent rate.  For an expensive car like a Cadillac the difference between a subprime and prime loan on that car can be 10-15k over the life or even more, in my case I saved over 7k in interest over the life of the loan by doing a few months of rebuilding on my credit and refinancing.  

Message 6 of 9
Anonymous
Not applicable

Re: Can I get approved for an auto loan with terrible credit & almost 20% down!


@Anonymous wrote:
I have a bit of an unusual situation. My credit score is around 572- 595 and I have a repossession on my report from about 4-5 years ago. I'm now making around $10,500 monthly residual income and am on track for 6 figures monthly by this time next year. Even if my residual income didn't grow every month like it does, my current income would put me at $126k a year. My company is paying $1500 down and $750 a month for any white Cadillac of my choice as long as it's no older than 5 years and in like new condition. I've applied through a credit union for $13k down on a $68k brand new car including taxes & fees. So I'd be borrowing $55k. The dealer was sure he could get me financed with $8k down but that was a fail so he suggested a credit union. And I upped my down payment to $13k which is almost 20%. My cosigner banks at this credit union and has never missed a payment on anything ever. Their score is 817. Even without my company paying a chunk of the car, I could still afford it. I'm planning on paying $2k more a month on top of the $750 they're giving me so I'm not worried about interest. Everything has to be in my name and they'll just put the money in my account for me to pay for it. So on paper it just looks like I'm paying for the whole thing. How likely am I to get approved? Will they take into consideration that my company is paying a chunk of it and I now make more than enough?

Seems that if buying new is proving to be this difficult, that you should work on the edge of your company's paramaters and get something that is almost 5 years old.

 

This is also a smart move in the event that you lose this deal with the company paying for your car since it's your name/credit on the line for it. (i.e. you wouldn't be finding yourself with an underwater $55k loan you'd have no way of getting out of)

 

You can do this without going $68k in, IMO.

Message 7 of 9
Anonymous
Not applicable

Re: Can I get approved for an auto loan with terrible credit & almost 20% down!

Good Lord! what company sent from the heavens do you work for. Im going to apply immediately!Smiley Surprised

Message 8 of 9
Anonymous
Not applicable

Re: Can I get approved for an auto loan with terrible credit & almost 20% down!

See a Caddy dealership that offers CPO with captive lending.  At 20% down they may approve you for a CPO with remaining warranty and maybe some CPO extended warranty included in their price.  Tell them you want an LTV of 80% for pricing and see where it takes you.

 

 

Message 9 of 9
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