Auto Loans

[1grnturtle]

Thanks to anyone that responds to this post.  Here is my situation:

Seeking a car around $60000 (may be too ambitious with credit situation). 

TU:641

Equifax: 568 - a lot of car loans are pulled from here

experian: 598

You ask why is my credit so horrible?  made some bad choices in 2010.  I have paid off all debt however have one current CC with less than 20% balance on it.  Have a Charge Off card that had a balance of 6000 now only 500.  in 2010 had a few late payments on car loan.  2011 perfect payment history.  Car is currently paid off (Feb 2012). 

Tried to get a lease.  Was denied.  based on my review of the postings, leases are harder than purchasing.  I want to improve credit score.  Applied for a personal loan for $15000.00 was approved with using my car as collateral.  I want to show positive credit history and ability to get larger credit limits.  I will keep the personal loan for 6 months and pay the amount off. 

I am hoping that this will improve score to allow approval for car loan since lease seem impossible without a score of 800 and above.  Do you think 6 months is enough time for me to get improved score or should I keep the loan for longer?  I hope this enough time to get me approved for a car loan, or do I need a cosigner?

[Revelate]

Depends on your downpayment.  High downpayment and reasonable income overcome pretty much anything on an auto loan (arguably the easiest of all loans to get).

Your current loan, you're going to have to give it up when you trade in or sell that car anyway (assuming that you do), that said: don't wait.  It's probably simple interest, check your loan agreements and see about paying it down quickly (don't specify principal only), thereby pushing your payment due date out by months or even years.

Once you have the balance down to something that is small, and the payment due date is way out in the future, just let it idle and occasionally pay small amounts (interest + one buck or even nothing arguably), and just take the tradeline history for no real interest accrual.  Six months is a minimum in my opinion, 12 better, 24, 36+ better than that... but your timetables might not allow for that length of time.  I'd keep it as long as possible though.

[1grnturtle]

Thanks Revelate for the information. 

[cassembler]

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1grnturtle wrote:

Seeking a car around $60000 (may be too ambitious with credit situation). 

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I'll just throw this out there: what about a $20-30k car instead, and save the non-debt of $30k for investments or savings? I understand having a nice car and all, but unless it's a classic, I doubt this is the best use of the money... Again, just sayin'.

EDIT: Consider in 2014 if you'll also be saying, "I made a lot of bad choices in 2010, and in 2012."

[FrugalRican]

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1grnturtle wrote:

Thanks to anyone that responds to this post.  Here is my situation:

Seeking a car around $60000 (may be too ambitious with credit situation). 

You ask why is my credit so horrible?  made some bad choices in 2010. 

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You MIGHT be setting yourself up for another bad choice in 2012.

Is this a car you can afford NOW (car and insurance)? Is this a car you can afford if you lose your job (I have no idea what your annual income is)?

Does this car have a cheaper option that won't ring you up in debt this much?

And I'd say, don't get a co-signer. You already had some credit troubles, I wouldn't get them involved into a possible problem along the way as well.