I can't get approved for an auto loan, and I don't know why!

[zeusta20]

I have been doing a lot of research on car buying tips. I'm 20, (turning 21 in July), and I have been trying to get approved for an auto loan, but I keep getting denied. I've had credit for almost 3 years, and my credit score is above 720. I was trying to buy a car that was 24,000 AFTER taxes, licensing, all that stuff. I qualified for the special financing rate which was 2.9 for 60 months, and 3.9 for 72. But I STILL got denied. The salesman at the dealership told me that it wasn't my credit score, but because I only have 2 credit cards on my credit, and I have no previous credit history with an auto loan. He said i'd probably qualify if I had a cosigner, but unfortunately, I've got the best credit score, and financial standing than anyone else in my family. So quite frankly, I don't know what i'm supposed to do.

I understand that I have no history of financing an auto loan, but how can I even start if I can't get approved in the first place! Its like a catch 22. And I have no clue how i'm supposed to even start building my credit history with an auto loan if I can't get an auto loan in the first place.

[Anonymous]

I would recommend trying a local credit union. They may be willing to finance you, especially if they have a first time buyer program. Are you putting any money down? Most banks probably want to see like 20% down since you don't have autoloan history. 

[zeusta20]

I wasn't at first, because I thought I could get approved with no money down because of my credit score. So then since I found out I wasn't getting approved, I decided to try and put 2000 down to see if that was going to do anything (which it didn't). I actually bank with a credit union, but the dealership had already ran a credit app through them, and it still came back denied. I'm not sure if thats the same thing or not. But the salesman ran it by various credit unions. Still no luck...

[MarineVietVet]

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@zeusta20 wrote:

I wasn't at first, because I thought I could get approved with no money down because of my credit score. So then since I found out I wasn't getting approved, I decided to try and put 2000 down to see if that was going to do anything (which it didn't). I actually bank with a credit union, but the dealership had already ran a credit app through them, and it still came back denied. I'm not sure if thats the same thing or not. But the salesman ran it by various credit unions. Still no luck...

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Hi zeusta,

What reason(s) were you given for the denial? By law you have to be told the reason and also be told what CRA was used to make the decision to deny credit. This is supposed to be in the form of a letter.

Also you say you have a credit score of 720 but where did you get that score? Was it lender pulled or did you buy that yourself?

From a BK years ago to:
EX - 9/09 pulled by lender 802, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

[Anonymous]

Hi, I've had a similar situation. Given that you have limited history, no money down will not be an option. 100% financing is generally for those who have successfully closed an auto loan these days. You're likely trying to request too much or are not putting enough money down. It took me a while to figure that out.

Without history, I noticed that most places would only approve me for loans in the 10K - 16K range even though I had an income of over 100K. I ended up putting down a 4K down payment on a 12K car and was approved at a subprime rate.. But it was my foot in the door. I paid the car off in just over a year (~16 months) and was able to get another loan for the car I wanted. Hope this helps.

[zeusta20]

Well, when I bought my credit score from this site, it said my EQUIFAX was 700, Experian was 711, and Transunion was 751. When the dealership ran it, it said my Equifax was 721. So I assume thats what my real score was. And I never really received a specific reason in writing. It was just what the salesman at the dealership said.

[zeusta20]

Yea. I was thinking about doing something like that, but I didn't want to spend thousands of dollars on a car I didn't want. I understand where you're coming from though. That does make sense.

[MarineVietVet]

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@zeusta20 wrote:

Well, when I bought my credit score from this site, it said my EQUIFAX was 700, Experian was 711, and Transunion was 751. When the dealership ran it, it said my Equifax was 721. So I assume thats what my real score was. And I never really received a specific reason in writing. It was just what the salesman at the dealership said.

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When you say you got your scores "from this site" do you mean myFICO? I ask that because you can't buy Experian scores here. No one has been able to buy their own Experian FICO score since February of 2009. Creditors can pull Experian and also there is a CU (PSECU) in Pennsylvania that supplies that information to it's members only.

The score the dealer pulled is legitimate and could be a FICO Auto Enhanced Score.

Edited for a typo.

From a BK years ago to:
EX - 9/09 pulled by lender 802, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

[JonStur]

That's a tough one..you could always try Cars Direct.com or Up2Drive.com.. I'm sure they'll approve you, however you're not gonna get the rate you want..

[Anonymous]

I am sorry:

Scores alone are not the biggest driver for securing an auto loan.

With the vagaries of FICO- a trained chimp with a Chase Freedom card and a $300 limit would have a FICO of 735 after a few years. They still would not be credit worthy for a loan.

When trying to get your deal bought the other factors that weigh heavily on the loan are:

• length of credit history
• length of employment at current employer
• DTI
• income (if you are not pulling 16-18 hundred a month you are not getting bought by anyone)
• income vs expenses
• type of vehicle being bougth
• ltv of vehicle

But I digress.

I am surprised that your salesman was not more honest that you could have some challenges to get approved.

In all honesty you need  a co signer, or a Credit Union or other First time buyer friendly institution, assuming you have enough monthly income for a loan.

Also  huge red flag on a car loan is "living with parents" and paying no rent.  To the finance company that is  transitory situation that could change in a heartbeat with your parents employment, or just a fight.