I'm 31 and am going to be purchasing my first car.
45-50k a year depending on overtime. I have been employed at the same employer for 7 years.
Excellent credit history. Credit score in the 740+ range. I have 7-8 years of flawless payment history on my credit cards. Credit utilization is 5-7%.
I'm curious about what exactly I'll be able to get qualified for as a first time buyer. I didn't realize there was a stigma behind it. I was looking for a car in the 28-29k range, with 10-15% down.
Is this a naive expectation?
Another question(s)...
So I called a couple CU's yesterday, and the one I am a member of didn't have any first time car buyer restrictions (example: 20% down, 50% of Annual Income, etc.).
I asked what the credit score required to get the best rate was and was told 740, which I should have (2.5% APR). I asked how they determine loan approval amounts, and was advised it's mostly based on credit score and DTI. That being said, I've doing research and it's standard that below 36% DTI is solid.
1) Can I expect to get a loan up to 36% DTI? I'm currently at about 17% DTI, so I have 19% to play with. The car I would want would put me at around 32-33% DTI.
2) Right now my total credit limits combined on all cards is $14,600. I have a balance on one card that is $3400. I'll have $2200 in my bank account tomorrow. I'm debating whether to apply this to my credit card, to bring my ulitization down, or to save it to apply towards a down payment. Which option would look better to the lender?
I was hoping to shoot for the 66 Month loan (which they offer) @ 2.5% APR, which should help mitigate any possible DTI issues. Car I was looking at I'd be looking at 30-31k loan. $2250 in rebates and 1500 down. I plan on making additional larger block payments on the principal when my overtime ramps up in the fall, so I get out of an upside down position on the loan.
What is your current DTI? That usually determines how much you can handle, loan amount and length.
My current situation...
45k Annual (per my W2 last year, it will be higher this year).
Minimum payment is probably $25 on a 1k out of 7400 credit card balance, 14600 total credit on all cards.
My rent is $680 a month. This is half of my apartment with my fiance' paying the other half. I don't need to include the entire rent payment in my calculation do I, because this would result in my never getting a car.
Assuming $680 in rent (which is what it's been for the past 5 years), my DTI is 18%. Leaving another 18% open to the 36% point at which (I believe) lenders want you to be at.
I think you are fine, have you applied yet?
Nope I have not applied yet. I'm waiting for clarification on whether or not I need to include my entire lease in the DTI, or just the portion I'm responsible for, ie. half the rent.
I'm also waiting for my credit card to report to the credit bureaus. My statement closed out on the 12th, and it's still yet to post to MyFICO ScoreWatch or CreditKarma. The ScoreWatch credit simulator is saying my credit score should be 740-780 after the payment hits, so I'm hoping it will be over the 740 mark to get the 2.5% APR. I've spoken with the CU and they use EQ FICO for their scoring system, no auto enhanced.
So watching my Scorewatch and waiting. I might idle until next month to have additional downpayment, but apply for the loan the end of June due to the APR offer not being offered after the end of June.
I'd really like to know if my DTI is calculated with just MY portion of the rent, or the entire full rental lease, which I only pay half of. If the later, I'm in trouble!
So an update...
Because both of our names are on the lease, I'm only obligated to put half on. Looks like I should be in decent shape when my FICO score updates. I'll post if any more questions and when I apply for my loan with the results.