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Posts: 1
Registered: ‎01-22-2013
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High Loan to Value Companies

My wife and I filed a Chapter 7 BK in January of 2011.  Six months after the BK, we were financed through Cap1 for 20k @ 22.8% leaving us paying 565+ a month.  We have religiously paid on this note as well as acquired other forms of credit.  We have reached a point where we would like to purchase a house, but this car note is killing our DTI.  We would like to refinance but currently the LTV is 120%.  We tried the local CU but they declined us due to having too high a DTI due to our current rent and student loans(supposed to be deferred as we are in school, yet they are reporting a repayment date of this year).  We just recently paid off most our credit cards, leaving a small balance (less than 10%) on one to reap the benefits of low usage. 


We are feeling stuck in a rut because we have worked our tails off to raise our scores but can't seem to get out from underneath this car loan.


Is there any company that could help us by refinancing this loan?  According to the CU, I had a 642 and the wife had a 619. 


We also tried the dealers without pulling credit, but all they seem to want is cash to settle the LTV.  I have heard that some companies will allow you to roll the balance over to the new loan, but who are they for our range of scores?


Retail price we are 3k above what the car is worth.  Trade-in wise we are 6k.


Any suggestions or recommendations would definitely be appreciated.  Thanks. 

Posts: 10,804
Registered: ‎03-06-2010
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Re: High Loan to Value Companies

I found that there was a big difference if you are two years out from Bk and you are almost there (2 yrs from discharge). If you filed in Jan 2011 than did you get your discharge in April 2011?


I was 2 yrs out when I financed my used vehicle and got a Chase auto loan for 7.14% for a used vehicle (2009 Venza purchased in 2011)

Try Chase. In the meantime, see if you can't put together enough cash to bring to the deal. It wouldn't hurt to make a few phone calls to selected CU's that are encouraging auto loans now. Specifically ask them about the 2 yr period as more than one of the CU's I spoke with wouldn't finance me until 2 yrs from discharge.

Valued Contributor
Posts: 1,531
Registered: ‎09-14-2012
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Re: High Loan to Value Companies

I don't see how you can refinance the car without paying the principal down.  Why would a bank want to be undercollateralized from the very start when they don't need to be?

Starting a whole new chapter
Posts: 17,534
Registered: ‎12-30-2011
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Re: High Loan to Value Companies

sccredit wrote:

I don't see how you can refinance the car without paying the principal down.  Why would a bank want to be undercollateralized from the very start when they don't need to be?

I'm not sure either from a straight financial perspective (though relationship building is certainly a factor); however, anecdotally some lenders (DCU, Penfed from the advertisements I've gotten) will do this, mainly to work with customers who are underwater on a current loan I suspect.


As an example from the DCU page


Qualified borrowers can finance up to 120% of retail book value or 120% of the purchase price, whichever is less


That said, with the BK on the books, it's hard to say if this meets "qualified" or not, but it's worth asking.

Starting Score: EQ 5 561, TU 98 567, EX 2 599 (12/30/11)
Current Score: EQ 5 771, TU 4 758, EX 2 758, EQ 8 795, TU 8 762, EX 8 786 (7/28/17)
Goal Score:    EQ 5 750, TU 4 750, EX 2 750, EQ 8 800, TU 8 Blah, EX 8 800 (01/01/18)

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