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07-02-2014 04:41 PM
Here's another what-kind-of-loan-can-I-get question.
My credit is "good," except for the age of my credit card accounts. Fifteen years ago I thought that the best way to stay out of debt was to get rid of my credit cards, so I did. Stupid move. Now my Experian score is 635 and my TU score is 665.
I don't have any black marks on my reports. I have 2 credit cards: A $300 secured Visa (got it 17 months ago to get my score up, and it worked) and a $1500 Citi Visa (got it in October 2013 to help cover moving expenses). The balance on the first card is $0 (paid it off last month). The balance on the Citi is $900, but I'm paying it down every two weeks. So, with $1800 in credit, my utilization is 50%.
I have no other loans or debts. My income is $52,000/year. Mortgage (I'm not on the loan) is $750. Been at my job for 6 years. My employer is a university and is not likely to go out of business. ;-)
So, Credit Karma tells me that Capital One is offering me a 60 month loan with a 4.59% APR. Credit Karma also says: *Click here to take offer.* I haven't clicked. I'm not sure whether I should -- whether the offer is real, what I'm agreeing to if I click on "take offer," etc.
1) Is it a legit offer?
2) My credit union actually has a pretty poor reputation for auto loans, so I've ruled them out.
3) Given my income and length of current employment, should I maybe try a dealership instead?
I'm looking at a Mazda 3 (or similar). MSRP is ~19,000, but I negotiate well. Mazda's finance calculator tells me that a $19,000 loan over 60 months at 4.59% comes out to about $355/month, which I can afford.
My credit is on the rise -- which is great -- and I finally feel like I'm at the point where I can start shopping. But, I know that if I wait, I'd get a better deal and would have more to put towar a down payment. BUT BUT -- and this is the biggie -- the woman I currently carpool with has just started smoking in her car. I have asthma. I figure that the $50/month I give her for gas plus the money I'd be spending on asthma treatment and drugs is a good motivator to buy now.
Any thoughts or advice? Any idea what kind of loan I could get?
Sorry if this is scattered -- trying to get all the relevant info in. Thanks!
07-02-2014 06:55 PM
Quick correction to the above -- it's my Equifax score that's 635, not Experian. Don't know if it makes a difference.
07-02-2014 07:02 PM - edited 07-02-2014 07:03 PM
I'm guessing the CK/COAF offer isn't a guarantee. In other words, you are likely to be approved, but it could be at a different rate. But I will say that it is right around the rate I'd expect given your credit profile.
Let me start with the fact that yes, if you have medical issues and the carpool thing isn't working, trust me, it's worth it to buy now. Worst case you can refi in a few months once your score hits the 700s.
How long have you been with your current employer (6 years or less than that)? And where are those credit scores from (this site, Credit Karma, etc...)? Also what kind of down payment do you have right now?
To begin, you can try Cap One. If they give you a high rate (as in greater than 5.5%), try DCU. DCU pulls EQ FICO and if they pull a EQ FICO of around 650 (pull your own EQ FICO from here to get an approximation of what it is in my opinion), they will give you a rate of ~4%. A dealer should be able to get you financed at 6% or less in my opinion...don't accept a higher rate from the dealer. Also I wouldn't do the apps simultaneously: apply to one (for example Cap One), wait for them to approve and then if the APR is too high, apply to the second lender and so forth.
If you have been with your current employer for 6 years and have a 15% down payment available, Hughes FCU's first time buyer program would make a lot of sense in the situation. Their APR is like 4.75% I think.
Finally once you get your util down to 0%, your FICO should jump if you have no other black marks. To optimize FICO, keep one card at zero balance and the other at a balance of less than 10% of it's limit. This doesn't mean you can't use one/need to limit use of the other. Just pay them off (or down to 10% util for the 10% card) BEFORE the statement cuts so that your statement balance is 0 and <10% of limit.
EDIT: 635 for EQ FICO might yield like 7% at DCU. Are you sure the 635 is from this website and is a FICO score?
07-02-2014 07:20 PM
I appreciate the info about the CapOne offer. Do you see any drawback in applying?
Yes, the EQ score is from MyFico (and is actualy 636, not 635). My most recent cc payment hasn't hit them yet, so I suspect it will go up a few points soon. It has every time I've made a payment.
I probably won't be able to put anywhere near 15% down. I'm still saving for the down payment -- and I wouldn't be jumping so fast if it weren't for the asthma issue.
Confirming that I have been with my current employer for 6 years.
Going for it now and then refinancing a bit down the road is what makes the most sense to me now. Thanks for the feedback.
07-03-2014 08:02 AM
I personally wouldn't apply for Capital One especially through a CreditKarma pop up... I would go straight for Mazda Financing since you are buying new and they have special APR's for the new card.... Look up the truecar price for your area and hopefully the dealership you had in mind is certified true car price already and you will get an exact haggle free price sent to email in minutes!!!
07-03-2014 08:20 PM - edited 07-03-2014 08:25 PM
I mean he could go straight to the dealer, but that's setting oneself up to be rate jacked. I guess if you do, just be mindful to not accept any rate > 7% ish. Also straight to dealer will result in dozens of inquiries anyways. Not sure why applying/trying by yourself isn't a better idea before going to the dealer.
As far as applying, I do not see a downside other than the inquiries. Obviously though once you go to the dealer, you'll have a dozen anyways so I don't see much harm. Plus if it's within like 14 or 30 days and coded properly as auto, then it'll count as one inquiry for FICO scoring purposes.
07-05-2014 12:12 PM
I also have two offers from capital one but it is not always accurate as when I did apply finally I was denied.
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