First time car buyer with low income

[Anonymous]

Hi guys, I've been considering purchasing a car next month, and was looking for some advise before I decide what to do.

Credit Score: EX (728), EQ (680), TU (737) [Completely unsure why EQ is so much lower, all the accounts are identical in reporting except INQ. 4 on EX, 5 on EQ, 2 on TU]

AAoA: 1 year 10 months (Oldest Tradeline 7 years 9 months)

# of positive trade lines: 4 (All Unsecured credit cards)

# of negative trade lines: 1 (Credit card with a single 30 day late 2 years ago.  All other payments are on time.  No Collections, etc.)

Income: $26,000 a year

Length of Employment: 1 year

Previous Loan Experience: None, first time buyer

Debt-to-Income (DTI): 0% (Currently live at home rent/bill free, other than 401k contributions and health insurance all my income is discretionary.)

Year of Car: Currently looking at either a new 2016 Mazda3, or a used one after 2014

Miles: Generally between 0-30k miles

Purchase/Refinance: Purchase

Requested loan term (XX Months):60 months

Down payment amount: $6,000

Co-borrower/Co-Signer: Potentially possible, please see below.

My questions are as follows:

1) Is it realistic to expect an interest rate below ~2.5%, or even better, below 2%?  I know being a first time buyer might hurt my chances at this.

2) Would it help to add my parents as a co-signer considering my income is low?  The only issue with this is that my parents credit score is significantly worse then mine (~575).

3) I currently have a Citi DC with 0% APR.  If I used the card to contribute to the down (3k total limit) how likely would AA be?  If I use the full amount, my total UTL will be around 14%, but I'd be kind of worried about the near 100% usage on the card.  I'd expect to be able to pay the amount off in the next few months, and it would lower my required monthly. (Even though I plan to make 2x payments most months since I have no debts.  Never know when something might happen though and I'd need to pay less.)

4) I've been considering buying at Carmax, is it still better to obtain my own financing prior to walking in?

Thanks for all your help!  This forum has been a godsend in teaching me about credit cards (620 FICO to most scores in the 700s in the 10 months I've been lurking), time to learn about my auto options! 

[elim]

probably 5%+ unless you buy new.   expect payments of $325 per month for 6 years on 20k (can you afford this?).   cap1 has a soft pull pre-qual for auto loans,   try that to get a bench mark.

[Anonymous]

Hey! I was in a similar situation as you. Thin file, almost exact credit scores, a bit less income ($22k.) I'd never financed a car before, had no cosigner (dad has horrible credit and was advised to apply alone.) Even Roadloans declined my application... yipes! I was attempting to finance $16k.

I actually got approved through Up2Drive for $12k. I didn't try to contest it because I found a great used vehicle with everything I wanted for that price. I found them by appying with LendingTree. My interest rate is only 4.2% for a 4-year term, which I'm more than happy with as a first-time buyer. They pulled Transunion, and didn't even ask for proof of income, which was GREAT as I'm a waitress. The customer service was beyond excellent, and the website is very easy to use. The whole process was very smooth and I would highly recommend it. They shipped out a loan packet in 2 days which had everything I needed, and was very easy to follow. The dealer was unfamiliar with the lender, but everything worked out great.

The only stipulations are the vehicle must be 2008 or newer, less than 100k miles, must not be a Suzuki (lol,) and you must purchase from a franchise dealership (any dealership with a car company in its name) besides a BMW or Mini dealership. So another huge plus is the flexibility. You don't need to limit yourself to a dealer "network" like with Cap1 or other lenders, so you can do a lot more shopping around for the perfect car.

DCU approved me as well at a similar rate, so that's another place to try. I didn't even become a member first. But Up2Drive's interest rate was lower and the process was a lot easier to follow.

I'd be lying if I said everything didn't seem too good to be true, but here I am in my new vehicle, and I've made the first payment on it. My experience with Up2Drive was really that great.

I got a 2011 Mazda3 s Grand Touring. The newer generation is even better, and I think you'll love your new vehicle. Good luck!!

[StartingOver10]

Definitely apply with a credit union before you go car shopping.  It is a much better car buying experience for you when you have your financing in hand (from an outside source) rather than relying on the F&I guy at the dealership.  

Please research on how to buy a vehicle.  There are some pretty standard tricks many (but not all) sales reps and F&I people use to get you to pay more.  One of the most common is to speak to you in terms of monthly payment rather than car purchase price. You don't want to do that because it is one way to get you to pay more for the car. Negotiate price and add on's, if any, first.  Add on's are things like gap and warranty.  I don't pay for gap at a dealership - ever. And I don't get the warranty's at a dealership. But many here like to do that so research first so you understand what you are buying.  Research the car's value before you step foot in any dealership. Bring your info. Use your own carfax account, don't buy what the dealer shows you. If you go in prepared, including outside financing, you end up with a much, much better deal.  If you don't prepare yourself, you will end up paying top dollar (most likely). We see it a lot here. 

Note:  for an interesting take on what to expect look at youtube video's that train car salesman!  You will be stunned at what they are taught to do to us as consumers. Here is one, but there are hundreds more: https://www.youtube.com/watch?v=1B2Qm2_zMow

This way you get to see inside of what many sales reps and F&I guys are trained to say to you - do this so you can overcome the pressure to pay more.  

Personally I think it is best to not even have the F&I guy run your credit - but to use the outside financing and to know all about the vehicle you are purchasing (price, options). As others before me have said:  Knowledge is power. You can make it a pleasant experience. Just don't let them into your pocket too much.  

[Anonymous]

Elim: Yeah, I should be able to just fine. I've been trying to save around 1/2 my income every month. And it's not really that hard. (Thank god for my parents as auth users helping me meet spend haha). I'll prob try the Cap one next week when some of my ultilization falls out.

Thrashette: That's good to know. I'll def keep that in mind when I'm looking at lenders.

StartingOver: Thanks for the advise haha. I work in timeshares however, so most of the sales reps have been helping me with what to look for. It also helps that I work with them daily so I can see some of the stuff they pull; you're right it's quite shocking haha.

[Anonymous]

Go to Mazda and check out car.. Test drive it.. Work out a price.. Go into finance department.. Do application and see if u can get financed.. Don't let them know u can do the 6000 down payment.. With ur score u should get best rate for loan they have to offer.. With ur score dealership won't actually check ur income too