Reply
New Member
800PlusScore
Posts: 11
Registered: ‎02-07-2012
0

Interesting situation about first car loan

Hello all!

 

I've been bouncing around the forum and finally decided to pose a question, but I'm in an interesting situation. Long story short, I ordered a brand new car thinking full and well I'd be able to afford it, but the more I check this forum, the more scared I get that I won't be approved for a loan.

 

Yearly income: 62K (started with a new company 6 months ago in the same field as my last job, needed to move but theres never been a gap in paychecks)

Rent: $760

Car: 40K

Debt to Income: 35% total. 1 revolving, 1 installment (student loan my mom set up in my name??)

Anticipated Downpayment: 3-4K

No late payments/negative marks on my report

 

FICO (FAKO??) scores pulled on 2/4/12 (used Equifax's site to pull these):

Equifax: 738

TransUnion: 736

Experian: 746

 

Here's the situation I've got. The car arrives in about a month, so I'm working all angles and numbers to see if I'll actually get approved but I think my situation is different than most. As you can see, I've got pretty decent credit scores, but those were all based off of my credit card I've had for about 5 years, but I've never had an auto loan. What are the odds I'll get approved? Will I get slapped with some outrageous percentage? I'm looking to do 60 months, but I should be able to have that paid off in the early 50 range.

 

*Side note: I just joined a CU when I started the new job, and tried a preapproval loan from them online, but got denied because of "lack of credit history". A lot has changed since then though: credit card debt went down, been employeed longer, and I actually have a down payment building up. I'd rather not have to have a cosigner if possible, but that's looking more likely each day... :smileysad:

Frequent Contributor
GrowingCredit
Posts: 315
Registered: ‎05-28-2011
0

Re: Interesting situation about first car loan


800PlusScore wrote:

Hello all!

 

I've been bouncing around the forum and finally decided to pose a question, but I'm in an interesting situation. Long story short, I ordered a brand new car thinking full and well I'd be able to afford it, but the more I check this forum, the more scared I get that I won't be approved for a loan.

 

Yearly income: 62K (started with a new company 6 months ago in the same field as my last job, needed to move but theres never been a gap in paychecks)

Rent: $760

Car: 40K

Debt to Income: 35% total. 1 revolving, 1 installment (student loan my mom set up in my name??)

Anticipated Downpayment: 3-4K

No late payments/negative marks on my report

 

FICO (FAKO??) scores pulled on 2/4/12 (used Equifax's site to pull these):

Equifax: 738

TransUnion: 736

Experian: 746

 

Here's the situation I've got. The car arrives in about a month, so I'm working all angles and numbers to see if I'll actually get approved but I think my situation is different than most. As you can see, I've got pretty decent credit scores, but those were all based off of my credit card I've had for about 5 years, but I've never had an auto loan. What are the odds I'll get approved? Will I get slapped with some outrageous percentage? I'm looking to do 60 months, but I should be able to have that paid off in the early 50 range.

 

*Side note: I just joined a CU when I started the new job, and tried a preapproval loan from them online, but got denied because of "lack of credit history". A lot has changed since then though: credit card debt went down, been employeed longer, and I actually have a down payment building up. I'd rather not have to have a cosigner if possible, but that's looking more likely each day... :smileysad:



Pull FICO scores from here and get an idea of where you stand. Get your CC util below 9%.

 

If possible arrange for 5 % - 10 % more down payment and you should be OK provided there is no other negative item on you CR.

TU Auto enhanced FICO (9/2012): 744
EX FICO (8/2012): 748
EX FICO (6/2010): 739
Established Contributor
Chris123nTx
Posts: 500
Registered: ‎05-11-2007
0

Re: Interesting situation about first car loan

How did they order a car for you with no financing lined up? Doesnt sound to me like you have a sales contract with them, but you would need to read all the papers you have real close.

I am 52, have 63000 of non taxable income, and would never ever think i could afford a 40k car. A lot of people do though. I just dont like living close to the edge financially since you never know what life will through at you from day to day.

I remember back in the mortgage heyday the banks telling me i could afford a 300000 house too. I just laughed at them. Several of my coworkers at that time were living the high life, refinancin all the time for cars, vacations etc...think you can guess the end of that story.

Good luck. What kind of car?
New Member
800PlusScore
Posts: 11
Registered: ‎02-07-2012
0

Re: Interesting situation about first car loan

I'm not normally one to spend money like this, but I usually work pretty hard, and I've had the same car for 7 years...sooo I thought I would splurge a little. I ordered a 2012 Evo. If that loan doesn't work out, I'll likely look into a Genesis coupe (what can I say, I'm still young so why not get my toys now). Only reason why I am spending this kind of money is because it's my dream car, and I plan to keep it for a VERY long time.

 

Once I get the loan and start paying for the car, I'm going to start saving for a house.

Moderator Emeritus
webhopper
Posts: 7,230
Registered: ‎09-16-2011
0

Re: Interesting situation about first car loan

@chris123nTx

+100

I make about 120k before taxes and I don't even feel as though I can "afford" that much car.

A thought for the original poster, have you looked at same car gently used? A car loses 40% of it's value when it leaves the lot and a good car depreciates very slowly after that. I would be looking at a luxury car in the 1-2 yr old age bracket with leas than 20k miles

Starting Score: 08/29/2011 TU 671 EQ 674
Current Score: TU 754 EQ 694 EX 697
Wallet: NFCU Visa Sig 25k, Amex Lowes 22k, NavCheck 15k, Amex PRG, Amex Zync, Discover It 13.5k, Amazon Visa 5k
Platinum Spade Garden Club Member: App Free since 1/1/13. No more apps til who knows when?
MyFICO Fitness Goal: 800s Club!



Take the myFICO Fitness Challenge
Moderator
Revelate
Posts: 9,477
Registered: ‎12-30-2011
0

Re: Interesting situation about first car loan

[ Edited ]

webhopper wrote:
@chris123nTx

+100

I make about 120k before taxes and I don't even feel as though I can "afford" that much car.

A thought for the original poster, have you looked at same car gently used? A car loses 40% of it's value when it leaves the lot and a good car depreciates very slowly after that. I would be looking at a luxury car in the 1-2 yr old age bracket with leas than 20k miles

That 40% loss is no longer applicable on most vehicles, but especially on many of the nicer, more reliable cars.

 

These days it's around losing 25% in two years, and 33% in three.  The 50% drop is now in the 5 year time with ~60k miles from the research I did on both Honda/Toyota and their upscale siblings assuming dealer pricing.  Of course these cars tend to hold their value better than many, but the trends were similar, just a year or so shorter in some cases.

 

I personally didn't buy new, but that was only because the dealer had sold the car I was interested in and made me a sweetheart deal on a 2 year old 33k miles car.  There is something to be said for buying new and controlling your own destiny when it comes to your car: virtually any car manufactured these days can get to 200k miles if well maintained.  There was one Acura customer semi-recently, that I heard about directly from a person who does CS for Honda/Acura, that reached half a million miles.  Though this was such an exceptional event (he'd also been servicing it at their dealerships the entire time, definition of customer loyalty) that they literally gave him a new car.

 

To the OP: someone will finance you, I wouldn't worry overly much about that.

Starting Score: EQ 561, TU 567, EX 599* (12/30/11, EX lender pull 12/29/11)
Current Score: EQ 04 673, EQ 8 707, TU 720, EX 702* (09/02/14, EX older)
Goal Score: 700 on EQ '04 (01/01/15)


Take the myFICO Fitness Challenge
New Member
800PlusScore
Posts: 11
Registered: ‎02-07-2012
0

Re: Interesting situation about first car loan


Revelate wrote:
To the OP: someone will finance you, I wouldn't worry overly much about that.


I'm just afraid some lender is going to slap me with some high rate.

Frequent Contributor
ScoreBooster
Posts: 461
Registered: ‎05-30-2008
0

Re: Interesting situation about first car loan


800PlusScore wrote:

Revelate wrote:
To the OP: someone will finance you, I wouldn't worry overly much about that.


I'm just afraid some lender is going to slap me with some high rate.


Before you go to the dealer and let him check the offers available to you, you can do that as well. Capital One would be a good place to start.

New Member
800PlusScore
Posts: 11
Registered: ‎02-07-2012
0

Re: Interesting situation about first car loan


ScoreBooster wrote:

800PlusScore wrote:

Revelate wrote:
To the OP: someone will finance you, I wouldn't worry overly much about that.


I'm just afraid some lender is going to slap me with some high rate.


Before you go to the dealer and let him check the offers available to you, you can do that as well. Capital One would be a good place to start.


I thought Capital One was bad with all the horror stories I've read

Frequent Contributor
ScoreBooster
Posts: 461
Registered: ‎05-30-2008
0

Re: Interesting situation about first car loan


800PlusScore wrote:

I thought Capital One was bad with all the horror stories I've read



Their blank-check program is as easy as it gets. They are a high volume car-lender - and that's why you get more negative stories. But generally - and based on my own experience - they do a good job.


myFICO is the consumer division of FICO. Since its introduction 20 years ago, the FICO® Score has become a global standard for measuring credit risk in the banking, mortgage, credit card, auto and retail industries. 90 of the top 100 largest U.S. financial institutions use the FICO Score to make consumer credit decisions.

>> About myFICO
FICO Score - The Score that matters
Click to Verify - This site chose VeriSign SSL for secure e-commerce and confidential communications.
Fair Isaac Corporation is a BBB Accredited Financial Service in San Rafael, CA
FOLLOW US Social Media Facebook Twitter Pinterest Google+
}