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knightlynews
Posts: 81
Registered: ‎01-29-2013
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Chances of auto loan approval and possible loan amount?

[ Edited ]

I'm currently in serious need of a new (fairly used) auto for my family and myself. Our current car is on its last leg (225K+miles), so I've begun a search, not sure how much longer this car will last!!! I'm in the process of rebuilding my credit, and I'm concerned about being approved, and If I am, how much would the loan amount be. I'm in the market for something 2006 or better, $15-20K in price. As far as my finances, I'm assuming my debt to income ratio would hopefully be ok. I currently owe $4500 in old charge offs and medical bills that I have monthly payment arrangements set up (they all are 5 yrs and older), no new/recent negative credit. I have one secured Cap.One Mastercard, only 1 month old with a $200 limit at this time (planning to increase limit with deposits later this month!). No mortgage/car note, and I made $78K in 2012, been at the same job 5 years. My latest Experian score is 558. In recent months, Ive applied for a Macy's Card and was denied for not having enough credit. I'm wondering if this would happen while applying for a car loan. Any and all thoughts, tips and etc, are appreciated!


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Revelate
Posts: 9,751
Registered: ‎12-30-2011
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Re: Chances of auto loan approval and possible loan amount?

[ Edited ]

Welcome to the forums!

 

It's going to come down to what your income (and DTI calculation as a result is) and how much you have for a downpayment.  Figure with your report your price range is your downpayment * 5 conservatively, so likely you may need 4K in cash on hand to finance a 20K car.

 

That said, if you have a downpayment, an auto loan is substantially easier than any unsecured credit card to be approved for as it's secured by the vehicle.

 

Starting Score: EQ 561, TU 567, EX 599* (12/30/11, EX lender pull 12/29/11)
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knightlynews
Posts: 81
Registered: ‎01-29-2013
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Re: Chances of auto loan approval and possible loan amount?

Thanks for the welcome!  Are potential buyers able to figure out there DTI calculation, or just the lenders?  Also,I'm thinking because of my credit, 20-24% APRs may be my only option?


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Revelate
Posts: 9,751
Registered: ‎12-30-2011
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Re: Chances of auto loan approval and possible loan amount?


knightlynews wrote:

Thanks for the welcome!  Are potential buyers able to figure out there DTI calculation, or just the lenders?  Also,I'm thinking because of my credit, 20-24% APRs may be my only option?


DTI isn't a hard equation fortunately, there's a bunch of online calculators if you Google for it to give you a close (if not exact actually) approximation.

 

You may well get 20% or even higher to start; however, as you continue to build your positive history and score, you can refinance it down later.  I think you're reasonable in your expectations, and that's a straight plus for getting a car loan.  In my case I had a ugly file and a 551 Auto Enhanced score, I knew I was in the 20% range, and when the dealer came back (and tip-toed in, it was funny as they were expecting an ugly reaction apparently) and stated 19.35%, I just smiled, thanked them profusely and signed.

 

Do the math on what you can realistically afford, both the DTI calc which the lender will look at, and also you own personal free cash flow estimation.  If the numbers work, and you need the car, buy it and refinance later is a good option.  In my case 8 months later I got down to 5.99%, my credit issues aren't the same as yours (tax lien) but it can be done.  If you can't afford it initially, buy a cheaper car to keep for a bit, and when your situation improves from a credit and/or financial perspective, look at getting a better one is the other option.

 

Starting Score: EQ 561, TU 567, EX 599* (12/30/11, EX lender pull 12/29/11)
Current Score: EQ 04 673, EQ 8 707, TU 720, EX 702* (09/02/14, EX older)
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MovingForward_2012
Posts: 3,406
Registered: ‎12-19-2012
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Re: Chances of auto loan approval and possible loan amount?

It's doable. Call all your local major dealerships that have the car you are interested in and ask if they have a special financing department. If they do then they will be able to shop subprime lenders for the best rate possible. It will still be double digit interest but you may get 17% vs 21.99%. Leave RoadLoans and Santander for the very last hurrah but I don't think it will come down to them. Good Luck!
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! :smileyhappy: Last App: 4/5/13 Gardening until July 2014
New Contributor
knightlynews
Posts: 81
Registered: ‎01-29-2013
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Re: Chances of auto loan approval and possible loan amount?

Thanks for your help!


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