Help me Understand

Anonymous · ‎07-01-2011

I cant seem to get a respectable auto loan (4%-12%) with a decent salary and perfect auto loan payment history at 24% interest of 2 years . Now granted, my credit card payment history is lousy but still...

Could it be due to my age (24)? or Limited Credit history years)? Can any former loan officers on this site tell me the relevance of credit card payment history? Thats like an IT Employee asking a potential candidate his grades in Health class. I understand that Credit Card Payment history reflect responsibility but clearly my Auto Loan history should be weighted more and taken into more consideration especially since I never missed or been late on a payment at an outragous interest rate. I just dont understand the Risk.

Can someone shed light on this issue...be nice, im new.

Current credit score is 580

I dont know my Fico score

p- · ‎07-01-2011

@Anonymous wrote:
I cant seem to get a respectable auto loan (4%-12%) with a decent salary and perfect auto loan payment history at 24% interest of 2 years . Now granted, my credit card payment history is lousy but still...

Could it be due to my age (24)? or Limited Credit history years)? Can any former loan officers on this site tell me the relevance of credit card payment history? Thats like an IT Employee asking a potential candidate his grades in Health class. I understand that Credit Card Payment history reflect responsibility but clearly my Auto Loan history should be weighted more and taken into more consideration especially since I never missed or been late on a payment at an outragous interest rate. I just dont understand the Risk.

Can someone shed light on this issue...be nice, im new.

Current credit score is 580
I dont know my Fico score

If you're trying to finance through a dealership, stop it! Stop! Just stop it! lol....

Look, unless you qualify for the special brand new car deals where the auto maker's bank gives you 0%, you're likely getting screwed. Car dealers train their sales people to get you to focus on the monthly payment and down payment, and not look at the overall price and interest rate. It's called a foursquare, and it's classic. They want to make money off the points on your loan. But they didn't anticipate your fico-fu would be so strong.

If you can't get the 0% promo, or you're buying used (always smart) then you are better off getting pre-approved financing through your credit union (or bank). Then you can negotiate price only at the dealer. Make sure you comparison shop using costco car buying, USAA, or your bank's service if they have one. Sometimes you can get a pre-negotiated lower price.

Also never buy a car at a dealer the first time you see it. Write down the year, make, model, mileage, and options, then put all the info into carmax. See what they charge you for the same car. And be careful about add-ons like warranties. I recommend only getting warranty extensions offered by the auto maker themselves. Third party ones are expensive, and full of coverage gaps.

Less than stellar credit tells the loan company that you aren't that good at paying your bills. If you have a good car loan history, they will likely still loan to you, but since a higher percentage of people with credit like yours default, the ones that don't have to pay more to cover the risk. Make the best of your situation, and use the tools here to make yourself a better qualified borrower.

Good luck!

Anonymous · ‎07-03-2011

@p- wrote:
@Anonymous wrote:
I cant seem to get a respectable auto loan (4%-12%) with a decent salary and perfect auto loan payment history at 24% interest of 2 years . Now granted, my credit card payment history is lousy but still...

Could it be due to my age (24)? or Limited Credit history years)? Can any former loan officers on this site tell me the relevance of credit card payment history? Thats like an IT Employee asking a potential candidate his grades in Health class. I understand that Credit Card Payment history reflect responsibility but clearly my Auto Loan history should be weighted more and taken into more consideration especially since I never missed or been late on a payment at an outragous interest rate. I just dont understand the Risk.

Can someone shed light on this issue...be nice, im new.

Current credit score is 580
I dont know my Fico score
If you're trying to finance through a dealership, stop it! Stop! Just stop it! lol.... I disagree completely with any blanket statements said and done that way. You are doing nothing but fear mongering the sales process.

Look, unless you qualify for the special brand new car deals where the auto maker's bank gives you 0%, you're likely getting screwed. Car dealers train their sales people to get you to focus on the monthly payment and down payment, and not look at the overall price and interest rate. It's called a foursquare, and it's classic. They want to make money off the points on your loan. But they didn't anticipate your fico-fu would be so strong. Dealerships and all businesses have the right to make a profit. The "wholesale" rates a dealership gets you done at yes, are smaller, they are then able to add points/mark up and profit off it. Much like when you go to a restaurant and buy a steak for 19.99- it believe it or not really did not cost the restaurant $19.99 in product on the plate. Which is also why your $3.19 bottle of Budweiser only costs the bar $0.66 or your french fries where the paper box costs more then the physical cost of the fires inside. In my state, point spread is capped, I think in many states it is. Again, no conventional dealership can get you bought at .99 and actually has added 12 to it to charge a customer 12.99.- since that would give you a payment that amy make you actually default on the loan- which is not what the fiannce company wants.

Dealerships do access banks that may or may not have lower rates then some banks and credit unions they do not do buisiness with, which is why anyone bringing their own fianncing may be able to negotiate a better rate, or just simply get a better rate.

If you can't get the 0% promo, or you're buying used (always smart) then you are better off getting pre-approved financing through your credit union (or bank). Then you can negotiate price only at the dealer. Make sure you comparison shop using costco car buying, USAA, or your bank's service if they have one. Sometimes you can get a pre-negotiated lower price. Your personal feelings are well noted yet also pushing toward incorrect. 0% is only a good promo if the amount financed benefits from 0%. 0% on a 19,000 car where you lose 3,000 in rebates and were already planning on putting down $5,000 on a 36 month term is a dumb idea. 0% when you are rolling 5,000 in negative equity and only putting $2000 down may easily make it more worth while. There are many caveats on purchasing used that may or may not make it a smart transaction.

Also never buy a car at a dealer the first time you see it. Write down the year, make, model, mileage, and options, then put all the info into carmax. See what they charge you for the same car. And be careful about add-ons like warranties. I recommend only getting warranty extensions offered by the auto maker themselves. Third party ones are expensive, and full of coverage gaps. I agree

Less than stellar credit tells the loan company that you aren't that good at paying your bills. If you have a good car loan history, they will likely still loan to you, but since a higher percentage of people with credit like yours default, the ones that don't have to pay more to cover the risk. Make the best of your situation, and use the tools here to make yourself a better qualified borrower.

Good luck!

If you have a history of lates on your credit report, coupled without a previous car loan, or other big loan, yes you are going to have trouble securing financing at reasonable rates if at all.

larger downpayments, financing through local less conservative banks or credit unions are some of the only ways around that.

Anonymous · ‎07-03-2011

@Anonymous wrote:
I cant seem to get a respectable auto loan (4%-12%) with a decent salary and perfect auto loan payment history at 24% interest of 2 years . Now granted, my credit card payment history is lousy but still...

Could it be due to my age (24)? technically NO, under Federal law or Limited Credit history years yes that can completely influence it)? Can any former loan officers on this site tell me the relevance of credit card payment history? if over multiple cards and multiple times you are not paying them, past 30+ days to show a 30 day late, you are either stupid, broke, living beyond your means, already having money problems, being careless in a way that may mean you do not have job/life stability. Its like asking you to handle a child if all the puppies, cats and kittens you have owned keep dieing within a year. Thats like an IT Employee asking a potential candidate his grades in Health class. I understand that Credit Card Payment history reflect responsibility but clearly my Auto Loan history should be weighted more and taken into more consideration especially since I never missed or been late on a payment at an outragous interest rate. I just dont understand the Risk. A credit card loan is an unsecured loan, other then late fees and a threat of lawsuit there is nothing stopping you from paying them or simply not paying them. Miss a few car payments and they take the car. Most people will miss a credit card payment over a car payment if they are having money problems. Its a definite sign you are having potential issues. Now if you have a good excuse (Like last year I was unemployed for 6 weeks due to a car accident) it may or may not mitigate the lates.

No, I am sorry you have no right to expect an awesome rate when you have a "lousy" credit card history on your bureau. The real question is: why do you have that history?

Can someone shed light on this issue...be nice, im new.

Current credit score is 580
I dont know my Fico score

p- · ‎07-05-2011

@Anonymous wrote:
@p- wrote:
If you're trying to finance through a dealership, stop it! Stop! Just stop it! lol.... I disagree completely with any blanket statements said and done that way. You are doing nothing but fear mongering the sales process. A car sale is a negotiation, and being already funded through a bank or credit union when you sit down to negotiate puts one at a stronger position. There's no reason to be afraid.

Look, unless you qualify for the special brand new car deals where the auto maker's bank gives you 0%, you're likely getting screwed. Car dealers train their sales people to get you to focus on the monthly payment and down payment, and not look at the overall price and interest rate. It's called a foursquare, and it's classic. They want to make money off the points on your loan. But they didn't anticipate your fico-fu would be so strong. Dealerships and all businesses have the right to make a profit. The "wholesale" rates a dealership gets you done at yes, are smaller, they are then able to add points/mark up and profit off it. Much like when you go to a restaurant and buy a steak for 19.99- it believe it or not really did not cost the restaurant $19.99 in product on the plate. Which is also why your $3.19 bottle of Budweiser only costs the bar $0.66 or your french fries where the paper box costs more then the physical cost of the fires inside. In my state, point spread is capped, I think in many states it is. Again, no conventional dealership can get you bought at .99 and actually has added 12 to it to charge a customer 12.99.- since that would give you a payment that amy make you actually default on the loan- which is not what the fiannce company wants. Sure, of course they have a right to make money, just like the buyer has a right to try to get the best price possible. But when you buy a car and borrow money at the same negotiating table, the lines can become a little blurred, especially for a not-so-savvy buyer.

Dealerships do access banks that may or may not have lower rates then some banks and credit unions they do not do buisiness with, which is why anyone bringing their own fianncing may be able to negotiate a better rate, or just simply get a better rate. Agreed. If a dealer can beat the rate and terms of the credit union by "wholesaleing" and still profit, they will get my business. But showing up without financing and expecting the lowest possible rate from a dealer is a bit naive.

~~If you can't get the 0% promo, or you're buying used (always smart) then~~ you are better off getting pre-approved financing through your credit union (or bank). Then you can negotiate price only at the dealer. Make sure you comparison shop using costco car buying, USAA, or your bank's service if they have one. Sometimes you can get a pre-negotiated lower price. Your personal feelings are well noted yet also pushing toward incorrect. 0% is only a good promo if the amount financed benefits from 0%. 0% on a 19,000 car where you lose 3,000 in rebates and were already planning on putting down $5,000 on a 36 month term is a dumb idea. 0% when you are rolling 5,000 in negative equity and only putting $2000 down may easily make it more worth while. There are many caveats on purchasing used that may or may not make it a smart transaction. Good point - I should have said "unless the 0% promo makes sense for your situation". With financing in hand a buyer could get the rebates you mentioned. You're right that 0% only makes sense in certain situations. It's just like mortgage financing in that all of those decisions should be made after reviewing the true cost in an amortized comparison. As far as purchasing used; it works great for my situation. I try to buy cars that still have manufacturer's warranties and low mileage, and make them last.

Also never buy a car at a dealer the first time you see it. Write down the year, make, model, mileage, and options, then put all the info into carmax. See what they charge you for the same car. And be careful about add-ons like warranties. I recommend only getting warranty extensions offered by the auto maker themselves. Third party ones are expensive, and full of coverage gaps. I agree

Less than stellar credit tells the loan company that you aren't that good at paying your bills. If you have a good car loan history, they will likely still loan to you, but since a higher percentage of people with credit like yours default, the ones that don't have to pay more to cover the risk. Make the best of your situation, and use the tools here to make yourself a better qualified borrower.

Good luck!

If you have a history of lates on your credit report, coupled without a previous car loan, or other big loan, yes you are going to have trouble securing financing at reasonable rates if at all.

larger downpayments, financing through local less conservative banks or credit unions are some of the only ways around that. Agreed.

Anonymous · ‎07-06-2011

thank you all for responding