How to Proceed Concerning Auto Loan

[John060675]

I am looking to buy a new vehicle, which will run around $28,000.  My credit scores are 600 EQ and 605 TU, and I have one collection and one charged off account with a large balance ($15,000).  I currently have $8,500 saved up.

Question, should I try to get a vehicle now with an $8,500 deposit (30%)?  Or should I try to settle the accounts with the $8,500 and hope for a bump in credit score?  According the the simulator on myfico, my score would jump up to between 650 and 680 the balances are brought to $0. 

I am afraid that if I try to get a loan now, then they will charge me 20% on a loan, even with the 30% deposit.  This is assuming that I would be approved.

I appreciate your thoughts.

[Anonymous]

I can't tell you much about how to proceed but I can tell you to request a POF when paying your chargeoff and collection otherwise they will remain on your credit report. Additionally, contact a few credit unions and present your situation. They would be able to provide for you a what if situarion, provided you run into someone who is helpful.

[MarineVietVet]

---

@Anonymous wrote:
I can't tell you much about how to proceed but I can tell you to request a POF when paying your chargeoff and collection otherwise they will remain on your credit report. Additionally, contact a few credit unions and present your situation. They would be able to provide for you a what if situarion, provided you run into someone who is helpful.

---

I'm not familiar with that acronym.

[pizzadude]

Perhaps KMichelle was referring to a PFD ?   That would make sense I think....

OP, before you decide what to do you should look to see if your CO account is within SOL, the period of time in which the creditor/CA can sue you for unpaid debt. ~ check into this for your state of residence to know where you stand before you contact anyone.

[John060675]

Yes, it is past SOL.

[pizzadude]

Ok, so do you have any previous auto loan history, and if so are the accounts reporting positively or negatively ?  

Also if you have a large downpayment it can usually offset lower scores to get you approved without having to take a crazy interest rate.

[Creditaddict]

---

@John060675 wrote:

I am looking to buy a new vehicle, which will run around $28,000.  My credit scores are 600 EQ and 605 TU, and I have one collection and one charged off account with a large balance ($15,000).  I currently have $8,500 saved up.

Question, should I try to get a vehicle now with an $8,500 deposit (30%)?  Or should I try to settle the accounts with the $8,500 and hope for a bump in credit score?  According the the simulator on myfico, my score would jump up to between 650 and 680 the balances are brought to $0. 

I am afraid that if I try to get a loan now, then they will charge me 20% on a loan, even with the 30% deposit.  This is assuming that I would be approved.

I appreciate your thoughts.

---

What kind of account is this $15k? (credit, Auto?) You say it's past the time for them to collect? If that is the case I would HIGHLY Doubt you would actually gain almost any points for setteling it. It's one of those things, I finally just did it and settled a Capital One Account and a Satander Auto account because with balances showing on old accounts new banks didn't really want to lend. As soon as they updated settled $0 balance I gained less then 5 points I think but I was able to turn around and get Capital One again and many others.

But if this account has anything to do with a car, you might have more issues.

Where is this $28k car? (private sale, dealership, what kind of dealership) used or new?

any bk? or just thses 2 baddies?

[John060675]

The $15k is a credit card account (Pen Fed).  They turned it over to an internal collection agency at their company, so they still are reporting the balance and it is directly hitting my credit utilization %.  That is why it is showing a bump in score on the simulator. 

Concerning past car loans, I had a 5 year loan on a Honda which was paid perfect.  It is still showing up on my credit report.  That should help on my auto enhanced score, I would assume.  Having said this, I did have a very old car loan from 15 years ago that I was late on 2 times.  It has not shown up on my credit report for over 8 years, so I assume that would not be causing any problems still.

This is a new car from a dealership.  No BK's

[John060675]

For what it is worth, here is my latest scores (as of 5/2)

EQ 596 (went down 4 points, very old collection just appeared out of nowhere with $0 balance)

TU 622 (up 18 points or so)

No quite what I was hoping on the EQ report.  Sure this probably changes my scenario some for the worse.

[HoldingOntoHope]

I would hold onto your cash as a DP for the car loan instead of negotiating a pay off on a very old charge off. Despite what the simulator may tell you I know my experience was that my score actually went down slightly when I paid off an old debt. The payoff update made it appear as recent activity. It was a much smaller amount (about $400) and i had to pay it as part of a mortgage loan. And as always your mileage may vary. But you have enough challenge with your scores already that the cash in hand for a DP may just sway the deal or lower the interest you need to pay.

The previous good car loan SHOULD factor into an auto enhanced score and POSSIBLY give you slightly better numbers, but since none of us are insiders and know the FICO scoring formula algorithms it is difficult to say what point value you would gain. Just find the car you want. Let the dealer offer the best deal he can. You can always walk away and come back later if you don't like the terms.