Debt to Income

[sherizel73]

I have a 749 credit score and have never had a late car payment but my DTI is 44% due to school loans.  Am I going to have a hard time getting a luxury lease like Lexus or BMW?  

[Gidgetmom]

My guess is....that will depend on your bank/finance company.  My husband and I just purchased a new truck and were told that we just squeaked in for an approval at 42% DTI.  YMMV. Does the 44% include the amount you want to finance for the car, or just the student loans?

[sherizel73]

The 44% includes the auto loan payment.

[Gidgetmom]

Gonna be close!  Our CU told me that 42% DTI was her cutoff.  So, I guess that would depend on the bank/CU/finance company and their DTI cut off guidelines.  Good luck!  I hope you get your dream car!

[StartingOver10]

To reduce your debt to income all you have to do is put down more money or borrow less or increase your income.

[Anonymous]

Might want to consider changing your student loan payments to income based, that is very advantageous to those who have high student loan debt, low income or both.  

[Anonymous]

Weigh all the good and bad when you decide to change your student loan repayment plan.  If you go IBR, income based repayment, your payments will be lower but then less is going to the your principle.  Just keep in mind, no matter what, interest gets paid first then principle. 

But it is helpful when you are facing tough times to lower or defer your payments.  It is the freaking interest that interfers with paying down your loan faster.

If in doubt, contact the Department of Education or your lender, if it is a good one, to find out your options at this time. 

I am not sure if student loans factor to heavily with auto loans, I know with mortgages they do.

[Anonymous]

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@Anonymous wrote:

Weigh all the good and bad when you decide to change your student loan repayment plan.  If you go IBR, income based repayment, your payments will be lower but then less is going to the your principle.  Just keep in mind, no matter what, interest gets paid first then principle. 

But it is helpful when you are facing tough times to lower or defer your payments.  It is the freaking interest that interfers with paying down your loan faster.

If in doubt, contact the Department of Education or your lender, if it is a good one, to find out your options at this time. 

I am not sure if student loans factor to heavily with auto loans, I know with mortgages they do.

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Actually the new IBR plans are structured so you pay 20 years based on income and the remainder is forgiven.  It's a crazy house of cards for the feds but its a good deal for those with high student loan debt and lower income. Those who work in non-profit or for government only have to pay 10 years and the rest is forgiven.   In these new plans most will never pay their interest and many won't pay all of their principle.  

[Anonymous]

Yes it is correct with Public Service Loan Forgiveness program, your loans are forgiven after 120 on time payments, don't have to be concurrent.  And there are other loan forgiveness programs too.  Just be aware, with some loan forgiveness programs, the Dept. of Ed. may report the amount forgiven to the IRS as income and then you have to pay taxes on that "income".  I know with PSLF you don't have to worry about that but with other loan forgiveness programs, the IRS may come into play.