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Member
thebosh
Posts: 6
Registered: ‎04-14-2013
0

First Time Auto Loan

Hi All - Hoping to get some advice from folks.  I want to apply for my first auto loan this year however, I'm hesitant about getting approved.  I've had credit issues in the past and have spent the last two years cleaning up negative accounts.  In total, I had 9 negative accounts - mostly collections for for less than $300 average.  The bulk was my student loan which I defaulted on.  However, that has been finally paid in full as of May 2012.  I currently have a secured credit card and was just recently approved for an unsecured credit card with the same bank.  However, I don't have any other loans since I used cash for 99% of my purchases for the last two years.

 

My question is:

 

1) How likely do you think I would be approved for an auto loan on a new car?  Loan amount would be about $20,000

2) Would it better to go through a dealership or bank / credit union?  Which would give me a better rate?

 

My current FICO score is 642 (Equifax) and 666 (Transunion).  I have a car that would be used for trading in (clear title and worth about $8,000) along with $5,000 down.  My monthly income is $9,100 / month.

 

Reason I'm hesitant to apply is that I tried to get a secured loan 6 months ago for $5,000 from my bank.  They denied me even though i had the car (fully paid) as collateral along with $3,000 1 yr CD.  Reason i was doing this was to rebuild my credit and have positive items.  The secured credit card was not bulding my credit history as fast as I hoped it would...no missed payments for 2+ years now!


Starting Score: 625
Current Score: 679
Goal Score: 700


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Valued Contributor
Dustink
Posts: 2,980
Registered: ‎10-02-2012
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Re: First Time Auto Loan

I think the dealer can take care of you. Dont settle for a high rate since you are putting so much down.

Too many INQs & low AAoA so I'm off to tend the Garden.     Age:21    


     $14k          $8.5K          $7.5k          $7.5k         $6.5k             $6k             $5k            $5k             $5k              $5k           NPSL       @ 0%
New Contributor
Project17
Posts: 137
Registered: ‎11-21-2012
0

Re: First Time Auto Loan

Even with that much money down the OP will probably still get a high rate..first time buyer and the negatives on his reports were small amounts which looks really bad to lenders.
Valued Contributor
Dustink
Posts: 2,980
Registered: ‎10-02-2012
0

Re: First Time Auto Loan

[ Edited ]

Project17 wrote:
Even with that much money down the OP will probably still get a high rate..first time buyer and the negatives on his reports were small amounts which looks really bad to lenders.

$13k down can work wonders as long as you negotiate.

Too many INQs & low AAoA so I'm off to tend the Garden.     Age:21    


     $14k          $8.5K          $7.5k          $7.5k         $6.5k             $6k             $5k            $5k             $5k              $5k           NPSL       @ 0%
Regular Contributor
staifokuzed
Posts: 180
Registered: ‎12-19-2012
0

Re: First Time Auto Loan

If i am reading correctly you want 30k car and have 13k down. You will most likely get a loan and rate a dealership might be the best route. You will have to negotiate as stated above. I recently purchased a vehicle with dealer financing and they started with the payment trick first. Saying IM not sure what your rate is. If I had signed would of be 16-19%. Just make sure before you go you know what the payments should be for each rate for amount you want to finance. There are free calculators and just a search away. From the advice on here and having that knowledge going in gave me the upperhand. I got 8.83% not the best but better than where they started.
AMEX B SKY-1K AMEX PRG- NPSL USAA PLTM -6K
DISCOVER IT- 5.2K BARCLAY REWARD- 3.2K
PAYPAL REWARDS -6K VICTORIA SECRETS -1750
USAA AMEX-5.5K CITI TY PREFR 3.1K(NPSL) CHASE FREEDOM -1K
SPORTSMAN VISA- 8K AMEX ED PRFD- 8.5
Member
thebosh
Posts: 6
Registered: ‎04-14-2013
0

Re: First Time Auto Loan

Thanks all!  Lots of good info.  Correct - I'm trying to get a $30K car with $13K down.  Glad to know that you were able to get 8% interest.  I had a firm goal of getting 10% or less, if approved.  If more than 10% interest, I'm going to walk away from the deal.  This car is more of a want and not need - which definitely takes some of the pressure off.


Starting Score: 625
Current Score: 679
Goal Score: 700


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Regular Contributor
staifokuzed
Posts: 180
Registered: ‎12-19-2012
0

Re: First Time Auto Loan

10% was my goal as well. I told the dealer that it was a want and I don't have to buy the car. That was after they gave me the first rate and that i was not paying more than 8%. It is also wise to go when the banks are open. M-F 8-4 good times to go. So you can get a 100% answer. I have heard of dealers doing shady deals and rate jacking after you leave. Best of luck to you. You are the one in control of your financials not the dealer. Also to let you know i did walk away 6 months prior. I just continued to build. And it was the best decision. Sometimes time is all you need
AMEX B SKY-1K AMEX PRG- NPSL USAA PLTM -6K
DISCOVER IT- 5.2K BARCLAY REWARD- 3.2K
PAYPAL REWARDS -6K VICTORIA SECRETS -1750
USAA AMEX-5.5K CITI TY PREFR 3.1K(NPSL) CHASE FREEDOM -1K
SPORTSMAN VISA- 8K AMEX ED PRFD- 8.5
Valued Contributor
Dustink
Posts: 2,980
Registered: ‎10-02-2012
0

Re: First Time Auto Loan

Try to go in with some kind of pre-approval. Talk to local credit union. Be sure to tell them about the large down payment.

 

An APR of 10% is rediculous.

 

If a dealer want's to make a deal they will hook you up in terms of financing. 

 

You don't even have to tell the dealer how much you have to put down. Maybe state something like "I would like an APR around 3%, what kind of a down payment do you need to make that happen."  They may say you need to put $20k down, then you can counter with $10k ect. 

 

The first thing though, is to settle on the price. Don't let them talk in terms of payment. Look at the price of the vehicle, the term, and the APR. Also, don't buy anything F & I tries to sell you. You will not need gap, and if you want a warranty. You can find one cheaper online than at the dealer. Negotiating should take awhile. If you scored a deal an hour after walking into the dealer, you probably didn't score a deal.

Too many INQs & low AAoA so I'm off to tend the Garden.     Age:21    


     $14k          $8.5K          $7.5k          $7.5k         $6.5k             $6k             $5k            $5k             $5k              $5k           NPSL       @ 0%
Valued Contributor
Dustink
Posts: 2,980
Registered: ‎10-02-2012
0

Re: First Time Auto Loan

[ Edited ]

My scores are similiar to yours. I also traded in a vehicle worth $8k. I have less than two years of credit history and have never had an auto loan in the past. I was given 0% on the purchase of a car with an MSRP around $26k.

 

I do not have the past baddies that you have. You can explain that to the bank/dealer "I was a student in college trying to pay high tuition loans. I have since been employed and have paid off those debts."

Too many INQs & low AAoA so I'm off to tend the Garden.     Age:21    


     $14k          $8.5K          $7.5k          $7.5k         $6.5k             $6k             $5k            $5k             $5k              $5k           NPSL       @ 0%
Valued Contributor
p-
Posts: 2,633
Registered: ‎06-05-2008
0

Re: First Time Auto Loan


Dustink wrote:

Try to go in with some kind of pre-approval. Talk to local credit union. Be sure to tell them about the large down payment.

An APR of 10% is rediculous.

If a dealer want's to make a deal they will hook you up in terms of financing. 


+1

 

I've had great luck with getting my financing approved ahead of time.  Companies like USAA, Penfed, or even Capital One will give you a prior approval up to a certain amount financed, and a voucher you give to the dealer at time of purchase.  If you use an amortization calculator you can decide what your top dollar financed amount is and know it before you walk in.  There will be no discussion about payment amount, it will all come down to price.

 

I have purchased two vehicles this way and will never go back.  On one of them I used USAA's car buying service.  I took the USAA price, and emailed dealers in a 100 mile radius the color, style, and option package I wanted.  I was able to negotiate the price from my desk on breaks over a couple of days, and then drove an hour to pick up the car.

 

On the second deal, I let the dealer run my credit to see if they could beat USAA, and they did with the manufacturers financing, so I took that deal.  But all of that was after I had already negotiated the price.

 

If you use penfed's car buying service, they are offering rates as low as .5 or .74. 

 

I won't buy a car based on the payment amount ever again.

  8-12-14: FICO EXP: 797 - EQU: 734 - TRAN: 739 - AVG: 757 - +207 points from JUN 2008 - MY CREDIT JOURNAL


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