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Denied for auto refinance at a credit union ... next step

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Anonymous
Not applicable

Denied for auto refinance at a credit union ... next step

I'm currently paying my auto loan through Capital One: 13.220% APR for 72 months, about 20k remaining. I bought the car in May 2014. It's my first car, a 2011 model and I could have done better price-wise. I recently checked the value and I'm upside down by about 4k Smiley Mad ... On top of that about 50% of the money I've put towards my car has gone to interest, and I can't see myself sustaining that trend for 5 1/2 years!
 
I did some research and decided, with my score and history, a credit union would be my best bet for refinancing … I waited 6 months, applied to LA Financial Credit Union a day ago and was almost instantly (within a day) denied. My credit is borderline fair, they pulled my score from Experian and its 684 but I do have a bankruptcy (2011) on my credit report.
 
Bankruptcy aside I have no open collections or delinquencies, I always pay my balances in full and ontime, and my utlilization is under 11% at its max. I have 2 currently open lines of credit, 1 small retail account, and my car loan. Oldest account 5 years, average account age 1 year 1 month. 7 inquiries in the last 12 months (from car shopping, apartment rental application, 2 of my credit cards, and the refinance application)
 
When I got the denial from my credit union, it listed these as key factors:
 
-serious deliquency/public record or collection filed
-length of time installment loans have been established
-number of accouts with deliquency
-length of time accounts have been established
-too many inquiries in the last 12 months
 
I double checked my report and sure enough for some reason a collections account that was discharged through my bankruptcy in 2011 is now randomly reporting as "OPEN" on my report with a $0 balance. I disputed it, and I hope they'll at least update the status to closed. The dispute will take 30 days to be resolved. Other than that I have no idea what to do.
 
Should I go for a reconsideration? Can you even ask for a reconsideration with auto-loans? Recently, I've been getting tons of pre-screen refinance offers, the rates are not as good as at my credit union but they'll lower my interest by at least 2.9%. I'm wary of going with some no-name company, but I really need to refinance at a lower interest rate and for a shorter term now, or else I'll lose a hefty chunk of change as my car value drops and interest piles up. Suggestions? Ideas why I might have been denied?
 
Message 1 of 16
15 REPLIES 15
dabrian
Frequent Contributor

Re: Denied for auto refinance at a credit union ... next step

You'll probably need to pay at least 3k toward the principal to refi. And when you do give dcu a call.
NFCU Sig Cash-20k/ Amex BCP-19.4k/ Amex Costco-1.2k/Chase Marriott-12k/CSP-13.4k/ Freedom-5.5k/ Discover IT-14k/NCSECU-5k/Walmart-10k/Lowes-25k
Message 2 of 16
Anonymous
Not applicable

Re: Denied for auto refinance at a credit union ... next step

as the other poster stated you will to bring money into any refinancing.  You're asking a bank to refinance a four year old car for six years.  To be honest I'd be surprised if you're only four thousand upside down unless you put a lot of money down initially.  This should be a warning to others.  Please don't finance used cars for 72 months.  It's bad enough on new cars but when you do it on a used one you're setting yourself up for financial 'disappointment'.  If you can come up with quite a few thousand dollars to pay down your current loan I think you are going to be u successful.  Good luck

Message 3 of 16
StartingOver10
Moderator Emerita

Re: Denied for auto refinance at a credit union ... next step

From your post it sounds like the collection has reported after your discharge but it is reporting a debt that was discharged in your Bk in 2011.  If that is true, then the collector is violating the bk discharge injunction.

 

You don't want to just dispute this - you want to get in touch with the CA and tell them they are violating the discharge injuction and if it isn't removed immediately, then you will take it to court. They will have to pay for your attorney plus pay you $1000 for the violation.  If they don't remove it or if they give you a hard time, go to a consumer attorney that handles these types of violations immediately. One letter to the CA from the attorney and you will be golden.

 

A collections account after a Bk is a credit killer. This is probably the main reason the CU turned you down. There could be other reasons we don't know about - like your income. But I suspect this is the main reason.

Message 4 of 16
Creditaddict
Legendary Contributor

Re: Denied for auto refinance at a credit union ... next step

look into burbank city credit union... that's who I just refinanced with and they use TU and they will take 125% LTV of the car if you want.

Message 5 of 16
Anonymous
Not applicable

Re: Denied for auto refinance at a credit union ... next step


@StartingOver10 wrote:

From your post it sounds like the collection has reported after your discharge but it is reporting a debt that was discharged in your Bk in 2011.  If that is true, then the collector is violating the bk discharge injunction.

 

You don't want to just dispute this - you want to get in touch with the CA and tell them they are violating the discharge injuction and if it isn't removed immediately, then you will take it to court. They will have to pay for your attorney plus pay you $1000 for the violation.  If they don't remove it or if they give you a hard time, go to a consumer attorney that handles these types of violations immediately. One letter to the CA from the attorney and you will be golden.

 

A collections account after a Bk is a credit killer. This is probably the main reason the CU turned you down. There could be other reasons we don't know about - like your income. But I suspect this is the main reason.


Thanks for tha advice StartingOver! So in your opinion the dispute itself won't resolve the issue? I have such awful memories of dealing with CA's so if I can get it removed without contacting them I would love to do so, if not I will just deal with it and contact them.

 

My income is a little over 20k right now, which is a drop from where my CU had my income last year, but it's still more than enough to cover my car payment and current monthly expenses that I listed on my application. I'm not sure if that would be considered a low enough income to be a factor in a denial? In the event that the $0 open collections is the reason, I wonder if I should ask for a reconsideration since it's inaccurate information ...

Message 6 of 16
Anonymous
Not applicable

Re: Denied for auto refinance at a credit union ... next step


@Anonymous wrote:

as the other poster stated you will to bring money into any refinancing.  You're asking a bank to refinance a four year old car for six years.  To be honest I'd be surprised if you're only four thousand upside down unless you put a lot of money down initially.  This should be a warning to others.  Please don't finance used cars for 72 months.  It's bad enough on new cars but when you do it on a used one you're setting yourself up for financial 'disappointment'.  If you can come up with quite a few thousand dollars to pay down your current loan I think you are going to be u successful.  Good luck


Thanks Irish80, unfortunately my hours at work just got cut and I can't dip into my savings right now to pay that much towards my car without sacrificing the safety net I have in place to pay my living expenses while work is slow. I'd be willing to put down about 1k but that's the best I can do. Also I'm currently financed for 72 months but as I said in my OP, my goal is to shorten the term of my loan and lower the interest I am paying. I'm not sure there are many people who would willingly finance a used car for 72 months if they had other better or more fiscally sound options. In my case in order to buy my car with my credit score, a manageable down payment and no guarantor, I needed to agree to those terms.

Message 7 of 16
Anonymous
Not applicable

Re: Denied for auto refinance at a credit union ... next step


@Creditaddict wrote:

look into burbank city credit union... that's who I just refinanced with and they use TU and they will take 125% LTV of the car if you want.


Hey Creditaddict! If you don't mind me asking ... what is your new loan term, amount, interest rate, and income (another poster mentioned my income might have been a factor)? Also how old is your car? I have a 684 with Experian right now (need to check my TU score) and I'm expecting that to drop a bit due to this latest inquiry Smiley Sad. Since LA financial credit union already noted 6 inquiries (now 7) as a key factor in their denial I don't want to keep adding applications to that tally if I'm not likely to be approved.

Message 8 of 16
Creditaddict
Legendary Contributor

Re: Denied for auto refinance at a credit union ... next step

I had a 672 at time of refi so that got me 4.49% and I did 59 months.
680_720 is a 2.49%.
I have a 2011 prius
Message 9 of 16
Anonymous
Not applicable

Re: Denied for auto refinance at a credit union ... next step


@Anonymous wrote:

@Anonymous wrote:

as the other poster stated you will to bring money into any refinancing.  You're asking a bank to refinance a four year old car for six years.  To be honest I'd be surprised if you're only four thousand upside down unless you put a lot of money down initially.  This should be a warning to others.  Please don't finance used cars for 72 months.  It's bad enough on new cars but when you do it on a used one you're setting yourself up for financial 'disappointment'.  If you can come up with quite a few thousand dollars to pay down your current loan I think you are going to be u successful.  Good luck


Thanks Irish80, unfortunately my hours at work just got cut and I can't dip into my savings right now to pay that much towards my car without sacrificing the safety net I have in place to pay my living expenses while work is slow. I'd be willing to put down about 1k but that's the best I can do. Also I'm currently financed for 72 months but as I said in my OP, my goal is to shorten the term of my loan and lower the interest I am paying. I'm not sure there are many people who would willingly finance a used car for 72 months if they had other better or more fiscally sound options. In my case in order to buy my car with my credit score, a manageable down payment and no guarantor, I needed to agree to those terms.


Understandable.  I hope you find a way to refi.  It certainly will help your overall situation.

Message 10 of 16
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