Chances for Approval on New Acura . . .

[ManOfTheLaw]

Relevant info as follows:

Car: 2014 Acura RDX

Price: ~$33,225

Current Credit Scores (Non-Auto Enhanced): 657 TU, 654 EQ, 653 EX

The Good:

Income: $110K

DTI (before possible auto loan): 22%

DTI (after possible auto loan): 28.5%

LTV: ~86-90%

Down Payment: Up to $8,000

One Credit Card opened Nov. 2012 ($500 limit/~7% utilization/no lates)

Perfect Payment History on 14 revolving/installment accounts since July 2010

The Bad:

Two Collections (roughly $6K) dated to late 2009 (DoFD)/early 2010 (chargeoff date)

One previous car loan paid as agreed after several lates (six 30 days, two 60 days, three 90 days before early 2010)

Four other accounts charged off/settled for less than full balance pre-July 2010

Caveats

Long story short, in 2008 and during the recession, I was laid off nine months prior to starting graduate school.  Although I tried to find employment during that time, I was unable to do so and accumulated a number of late payments, resulting in the chargeoffs you see listed above.  While in school, I attempted to make payments on some of the accounts, but was unable to keep up with the due dates because I was employment-limited due to my studies.  Thus all of the accounts moved to chargeoff/collections status no later than June 2010.

Since the summer of 2010, I have perfect payment histories, including 14 installment accounts (all student loans) and the credit card listed above. AAoA is six years, and there is a very distinct line in my credit behavior prior to summer 2010 and after summer 2010.  Credit scores are improving slowly as the negative indicators age.  I have avoided getting any other credit cards in the short term, as obtaining a car loan is my primary concern and I didn't want the negative ding for additional inquiries.  I have money to settle the collections accounts and have spoken with the purported holders of the accounts, but I have not done so (a) because I have valid defenses, including SOL and chain-of-title/assignment issues; (b) my current job makes it unlikely that any creditor will pursue any sort of legal action against me; and (c) most importantly, the collection agencies have acted deplorably in their collection activities.  Nevertheless, if settling the accounts is a dealbreaker to obtaining a car loan, I am willing to settle them.

I'm not wedded to getting a car loan unless it's on stomachable terms (i.e. sub-10% APR).  Right now I plan on making a 23% down payment ($7500), which by my accounting brings the LTV to ~85%.  And to the extent a larger down payment will help with the interest rate and/or approval, I can make up to a 30% down payment in short order.  I am expecting a higher interest rate and will accordingly re-fi after a year or more of on-time payments.

My questions to you folks are: (1) what are the odds I get approved; (2) the approximate rate you would expect if approved; and (3) whether I could be approved with a smaller down payment.

[Remember0]

You'll get under 10% I'm almost sure. Have any local credit unions or banks you can try for a perapproval? DCU would do your credit profile @ ~3-5%, but I'm not sure if they'll approve you for 27k-ish. I see them easily doing 20k though.

If no local credit union, you could try BofA. Though there's a chance they'll deny due to the lates.

Ultimately, I think the dealer will get you in at under 10%. If the pre-approvals don't work, I'd go in there, negotiate price online first, lie that you have a preapproval @ 6% and see if he can beat it.

When applying online make sure to add in the price of sales tax and dmv taxes to the car's purchase price (In my state, sales tax is 6% and dmv fees are ~$200-300)

Are the collections accounts medical collections?

[ManOfTheLaw]

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@Remember0 wrote:

@Anonymous'll get under 10% I'm almost sure. Have any local credit unions or banks you can try for a perapproval? DCU would do your credit profile @ ~3-5%, but I'm not sure if they'll approve you for 27k-ish. I see them easily doing 20k though.

If no local credit union, you could try BofA. Though there's a chance they'll deny due to the lates.

@Ultimately, I think the dealer will get you in at under 10%. If the pre-approvals don't work, I'd go in there, negotiate price online first, lie that you have a preapproval @ 6% and see if he can beat it.

When applying online make sure to add in the price of sales tax and dmv taxes to the car's purchase price (In my state, sales tax is 6% and dmv fees are ~$200-300)

Are the collections accounts medical collections?

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I have local credit unions, so that should be no issue.  My concern was that I wouldn't qualify at all, thereby wasting the inquiry points on the credit score, or that I would qualify at a 15+% APR, which I will decline and forego the car purchase.  I'm good on the sales tax/dmv/etc., as I've already calculated that into my LTV figure above.  Unfortunately, the collections are non-medical and the result of a combination of poor judgment and bad timing with the workforce reduction and impending graduate school enrollment.

I see DCU referenced a lot on this website, but I was under the impression that they have membership criterion limited to folks in the general MA area.  I have no ties to that part of the country, nor do I qualify for any of the employers, areas, or organizations listed on their website.  Do they accept members even when they don't meet the technical requirements of their website application?

I'm interested to see how the scoring models work for me because, as I mentioned earlier, there is a distinct change in my credit profile from before 2010 to the current date.

[09Lexie]

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@ManOfTheLaw wrote:

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@Remember0 wrote:

@Anonymous'll get under 10% I'm almost sure. Have any local credit unions or banks you can try for a perapproval? DCU would do your credit profile @ ~3-5%, but I'm not sure if they'll approve you for 27k-ish. I see them easily doing 20k though.

If no local credit union, you could try BofA. Though there's a chance they'll deny due to the lates.

@Ultimately, I think the dealer will get you in at under 10%. If the pre-approvals don't work, I'd go in there, negotiate price online first, lie that you have a preapproval @ 6% and see if he can beat it.

When applying online make sure to add in the price of sales tax and dmv taxes to the car's purchase price (In my state, sales tax is 6% and dmv fees are ~$200-300)

Are the collections accounts medical collections?

---

I have local credit unions, so that should be no issue.  My concern was that I wouldn't qualify at all, thereby wasting the inquiry points on the credit score, or that I would qualify at a 15+% APR, which I will decline and forego the car purchase.  I'm good on the sales tax/dmv/etc., as I've already calculated that into my LTV figure above.  Unfortunately, the collections are non-medical and the result of a combination of poor judgment and bad timing with the workforce reduction and impending graduate school enrollment.

I see DCU referenced a lot on this website, but I was under the impression that they have membership criterion limited to folks in the general MA area.  I have no ties to that part of the country, nor do I qualify for any of the employers, areas, or organizations listed on their website.  Do they accept members even when they don't meet the technical requirements of their website application?

I'm interested to see how the scoring models work for me because, as I mentioned earlier, there is a distinct change in my credit profile from before 2010 to the current date.

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I'm in So Ca and a DCU member.  You can donate to an organization to qualify, can't recall the name but it's listed on their app.  It will require a hp for membership and a separate hp for credit products- both on EQ. 

[ManOfTheLaw]

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@Remember0 wrote:

@ DCU would do your credit profile @ ~3-5%, but I'm not sure if they'll approve you for 27k-ish. I see them easily doing 20k though.

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Update on this.  DCU pre-approved me, pending my membership application, for "up to 80% of the book value or purchase price not to exceed $30,000.00."  Those two things seems to be potentially  disparate numbers, as 80% of book value could be significantly lower than $30,000.

I may or may not have time to call them today to seek clarification of  those numbers, so I want your take on that phrase.  First, which "book" do they use to assess value?  MSRP is $35,415, invoice is roughly $33,625.  80% of the former puts the loan value at $28,832, with the latter at $26,900.

Second, the car is roughly $33K, so there is no way the "purchase" price will be under $30,000.  That said, if it were $30,000, I read the phrase to say they would approve me for the entire $30,000.  And that leads me to conclude that "purchase" price may, in actuality, be referring  to the total amount they will loan me.

[CAnNY]

I am interested in knowing the answer to this. To me it sounds like your max loan is 30k, however sounds like you have to put 20% down. I know my thinking can't possibly be correct. I will sit tight and see what the outcome is.

[Remember0]

Yeah, so they want you to put 20% down imo.

They are going to use MSRP on the new car as book value imo.

So on your 33k car, they want 20% down bringing the loan amount to 33k-33*.2=26.4k. You'll need a dp of 6.6k in this case. I'm pretty sure that 30k limit is to loan amount, not purchase price per se.

Call them and give them the figures: 33k car, 6.6k dp, and a 26.4k loan and ask them if you're good to be sure. I think my interpretation above is correct, but the only way to verify is to call them.

[kayvee_]

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@ManOfTheLaw wrote:

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@Remember0 wrote:

@ DCU would do your credit profile @ ~3-5%, but I'm not sure if they'll approve you for 27k-ish. I see them easily doing 20k though.

---

Update on this.  DCU pre-approved me, pending my membership application, for "up to 80% of the book value or purchase price not to exceed $30,000.00."  Those two things seems to be potentially  disparate numbers, as 80% of book value could be significantly lower than $30,000.

I may or may not have time to call them today to seek clarification of  those numbers, so I want your take on that phrase.  First, which "book" do they use to assess value?  MSRP is $35,415, invoice is roughly $33,625.  80% of the former puts the loan value at $28,832, with the latter at $26,900.

Second, the car is roughly $33K, so there is no way the "purchase" price will be under $30,000.  That said, if it were $30,000, I read the phrase to say they would approve me for the entire $30,000.  And that leads me to conclude that "purchase" price may, in actuality, be referring  to the total amount they will loan me.

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you need to look at the ENTIRE price, not just MSRP. You need to factor in licensing fees, dealer location fees, any additional charges, extras you might want on the vehicle, and especially SALES TAX. If i were you, I would go to a dealer and get the total price so you know what you need to cover. 

you dont want to get pre-approved for a loan for 30K, only to find out you need to cover an extra 3-4K...

[ManOfTheLaw]

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@kayvee_ wrote:

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@ManOfTheLaw wrote:

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@Remember0 wrote:

@ DCU would do your credit profile @ ~3-5%, but I'm not sure if they'll approve you for 27k-ish. I see them easily doing 20k though.

---

Update on this.  DCU pre-approved me, pending my membership application, for "up to 80% of the book value or purchase price not to exceed $30,000.00."  Those two things seems to be potentially  disparate numbers, as 80% of book value could be significantly lower than $30,000.

I may or may not have time to call them today to seek clarification of  those numbers, so I want your take on that phrase.  First, which "book" do they use to assess value?  MSRP is $35,415, invoice is roughly $33,625.  80% of the former puts the loan value at $28,322, with the latter at $26,900.

Second, the car is roughly $33K, so there is no way the "purchase" price will be under $30,000.  That said, if it were $30,000, I read the phrase to say they would approve me for the entire $30,000.  And that leads me to conclude that "purchase" price may, in actuality, be referring  to the total amount they will loan me.

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you need to look at the ENTIRE price, not just MSRP. You need to factor in licensing fees, dealer location fees, any additional charges, extras you might want on the vehicle, and especially SALES TAX. If i were you, I would go to a dealer and get the total price so you know what you need to cover. 

you dont want to get pre-approved for a loan for 30K, only to find out you need to cover an extra 3-4K...

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Thank you, but I actually already covered this above. I've already accounted for everything you mention. The only reason I care about the interpretation is because it influences my final down payment amount, which will be more than enough to cover either interpretation of DCU's email. 

[ManOfTheLaw]

To update, Capital One Auto has approved me for up to $36K at 2.43% on a 60-month loan.  Don't know the max LTV yet.  That was actually quite surprising.  I will see what the dealership offers, as well as a local credit union.