I Want the 2012 VW Beetle, Turbo—Can I Qualify

[Anonymous]

So I've been in college for the past several years and ended up racking up some bad credit along the way. All of the negative stuff comes from charged off credit cards from 2006, which puts my FICO score in the upper 500s. I do have a capital one credit card that I'm now relentlessly on top of, so I hope to crack into the 600s soon. 

I graduate this year in May with a PhD and I'm starting a new job as a faculty member at a university with a starting salary of 51000.  I want to buy the car in October, which from the VW website retails between 28-30k no tax. Do I stand any chance of being approved, do you think? Will my salary offset the subprime credit score? Do you think I could qualify under a "first time buyer" and "college grad" program? From reading the forums, it looks like Capital One is the biggest subprime lender?

Any advice will help!

[boomhower]

You may be able to qualify but I wouldn't do it.  With those scores the interest rate is going to be very high.  Is the car worth paying 15%+ interest on a $30k loan to you?

[Anonymous]

ugh, i know. i was thinking exactly that. but isn't it true that i would have a high interest rate no matter what kind of car i got? so i was thinking, maybe i could just suck up the highest interest for 6 months and then refinance when my score is better? 

[pizzadude]

I agree that you don't want to get stuck with bad interest rate on a new car like this.    There are two things that you could possibly do to lower it, either finance with a large downpayment ( like 50% ) or get a co~signer with good credit.

In terms of doing a refi in 6 months it is theoreticaly possible but unless your credit picture significantly improves your rate might not improve much.

I would recommend getting a much cheaper, pre~owned bug ( if you are really set on this car ), then after some good payment history you might be able to get a reasonable loan for a new one.

[FrugalRican]

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@pizzadude wrote:

I would recommend getting a much cheaper, pre~owned bug ( if you are really set on this car ), then after some good payment history you might be able to get a reasonable loan for a new one.

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This, by far, reads to me as the best option. This car would end up costing you about 2/3 of your yearly salary, if not more.

[squirrely2005]

A co-signer would be the best. My gfs credit isn't all that good. I'd say low 600's and her mom co-signed with her on a car and the interest rate was 3.8%

[squirrely2005]

Oh and I meant to say congrats on graduating. What're you getting your degree in doctor?

[Anonymous]

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@Anonymous wrote:

ugh, i know. i was thinking exactly that. but isn't it true that i would have a high interest rate no matter what kind of car i got? so i was thinking, maybe i could just suck up the highest interest for 6 months and then refinance when my score is better? 

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You will have a higher interest rate on any car.  But 20% interest on a $10,000 loan is a lot less than 20% interest on a $30,000 loan.  I agree with others.  Finance a used car (or much cheaper new car) and minimize the damage for your first loan.  While paying that off, work on your credit using the advice here and get a much better rate on your next new car of whatever you want.

[StartingOver10]

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@Anonymous wrote:

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@Anonymous wrote:

ugh, i know. i was thinking exactly that. but isn't it true that i would have a high interest rate no matter what kind of car i got? so i was thinking, maybe i could just suck up the highest interest for 6 months and then refinance when my score is better? 

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You will have a higher interest rate on any car.  But 20% interest on a $10,000 loan is a lot less than 20% interest on a $30,000 loan.  I agree with others.  Finance a used car (or much cheaper new car) and minimize the damage for your first loan.  While paying that off, work on your credit using the advice here and get a much better rate on your next new car of whatever you want.

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+1

Getting a co-signer is not a good idea. Straighten out your credit file and do as suggested above (much cheaper car) in the meantime.

Once you get your credit worked out, you will be able to show ontime payments for an installment auto loan and use that to get your next car. Use baby steps...

[trumpet-205]

Another benefit from buying used car is cheaper insurance and taxes. Have you considered how much it would cost annually on your insurance and taxes (new vs old)?

To be honest given your credit history even a cosigner would not help much. Unless you have the means to put down large down payment I would not even consider a loan. Just buy a cheap $5000 car for it right now, then save the money for future auto shopping. By then your credit report should improve signaficantly and allows you to secure a fair loan.