Is My File Too Thin For A Decent APR?

Anonymous · ‎10-11-2016

Credit Score: F8 EX (722) Fico TU (730) Auto enhanced TU (715)

AAoA: 6 months (oldest trade 11 months newest trade 4 months)

# of positive trade lines:3

# of negative trade lines:0

Income: 25000 anuual

Lenght of Employment: 1y 2months

Previous Loan Experience: no previous auto loans

Debt-to-Income (DTI): I have no debt, all cc are reporting less than $50 or zero.

Year of Car: 2015

Miles:10k-30k

Purchase/Refinance: purchase 18.5-25k

Requested loan term (72 Months):

Down payment amount:10-12k

Co-borrower/Co-Signer:none

Hi everyone this is my first post but I've used them to help me build my credit this past year from nothing to what it is now, so thanks to everyone for sharing all your experiances and information 😊.

I'm really hoping I can finance a car in December but I don't know if I'll have enough history by then to get a good rate. I tried Cap1 a month ago when my ficos were slightly lower (that's how I got the auto TU score) and they couldn't preapprove me because of too many recent inq and accounts too new. I have 3 cc one with 11 months of on time payments and 2 with 4 months. I also have 3 inq on my TU and EX reports and 1 on my EQ. Two of the TU inqs will be over a year old by december, and one will be on the EX. The other two EX will be 6 months old and the one EQ inq will also be a year old. No negatives on any of the reports and I can make all cc show zero and one with a low balance before I apply. Can I get a loan in December with a good rate? Thanks for the help everyone.

jeffm4688 · ‎10-12-2016

@Anonymous wrote:
Credit Score: F8 EX (722) Fico TU (730) Auto enhanced TU (715)
AAoA: 6 months (oldest trade 11 months newest trade 4 months)
# of positive trade lines:3
# of negative trade lines:0
Income: 25000 anuual
Lenght of Employment: 1y 2months
Previous Loan Experience: no previous auto loans
Debt-to-Income (DTI): I have no debt, all cc are reporting less than $50 or zero.
Year of Car: 2015
Miles:10k-30k
Purchase/Refinance: purchase 18.5-25k
Requested loan term (72 Months):
Down payment amount:10-12k
Co-borrower/Co-Signer:none

Hi everyone this is my first post but I've used them to help me build my credit this past year from nothing to what it is now, so thanks to everyone for sharing all your experiances and information 😊.

I'm really hoping I can finance a car in December but I don't know if I'll have enough history by then to get a good rate. I tried Cap1 a month ago when my ficos were slightly lower (that's how I got the auto TU score) and they couldn't preapprove me because of too many recent inq and accounts too new. I have 3 cc one with 11 months of on time payments and 2 with 4 months. I also have 3 inq on my TU and EX reports and 1 on my EQ. Two of the TU inqs will be over a year old by december, and one will be on the EX. The other two EX will be 6 months old and the one EQ inq will also be a year old. No negatives on any of the reports and I can make all cc show zero and one with a low balance before I apply. Can I get a loan in December with a good rate? Thanks for the help everyone.

Potentially, I'd suggest walking into a local CU when ready to look for a vehicle and ask for pre-approval. With 10-12K down i would imagine you'd qualify for the loan in general and at a good rate. I'd also consider looking into Penfed as they tend to be good with approvals and rates.

You may have a thin file, but you have a huge down payment which will take away lender risk.

Are you looking to finance 18.5 - 25K? Or is that total purchase price + 10-12K down?

Anonymous · ‎10-12-2016

Thanks for the reply jeffm4688. Yes 18.5-25k would be the total purchase price and I would be putting between 10-12k down depending on which car I can afford. I saw a lot of people saying to try local CU's so I called mine, (Kinecta FCU) they pretty much said 8% was the lowest they'd do for a first time buyer which seems pretty high even for my situation. I'll wait until December and give Penfed a try as you suggested. And some other CU's in my area. By any chance would you happen to know if my two youngest cards would still be considered "too new" after they turn 6 months old?

Anonymous · ‎10-12-2016

I wouldn't "shop" various CUs if you already have a solid relationship with one. Those are all inquiries that could affect your auto loan outcome in the end.

In terms of the age of your accounts, you generally need at least one of them to be over a year old to get into the really good interest rates.

8% on a young-and-thin-file loan is not bad, and if you need the vehicle before your year is up on the new credit age, then you can always refi it down the road to improve interest, as your file grows. The increased risk of such a new file cannot be overcome entirely through a large down payment, so I'd call 8% with your current length and depth of history to be reasonable. After all, you do not have any proof to offer these lenders that you will handle long-term credit obligations well, at least not yet. If you get past that one-year mark (and still have perfect payment histories and good utilization, of course) then you'll beat the rate. I suppose the real question is, how soon do you need this vehicle - now, or in another 6-ish months?

Anonymous · ‎10-12-2016

Thanks for the reply hmw_75. I can probably wait until June for my two new cards to become a year old if I absolutely have to. 8% is just not appealing to me at all, especially with all the sacrificing I did to save 10k in less than a year lol. My Cap1 card will be a year old at the end of this month and the two cards will be 6 months by December. Do you think that will be enough or do I absolutely have to wait on the other cards for any hope at a low rate?

My car is over 20 years old and has some crazy problems that I haven't been able to fix due to it being a model year where they started doing weird stuff with obd interface and software but it can definitely get me to work and home...Just not much farther than that lol. So I don't drive it anymore than I absolutely have to but I guess it can work if it has to.

Anonymous · ‎10-12-2016

If you're wanting <3% financing, you are going to need to wait until your file ages a bit. You have to overcome the risk associated with very young files.

You might be able to improve your credit mix - and get points for that in the process - by getting a small personal loan from your CU. It will add an installment line to your history, and then after a few months of paying if ott, you'll have more evidence to help lenders ease up on your interest rates. If you can borrow $500 and pay it off in the course of 3 months, you won't end up spending very much in interet even if hte rate seems crazy (you'll only pay 3 months' worth, after all). With a little installment history added to your mix, you'll look better when you apply for auto financing. If you can get your CU to help you out with this, you could be ready to go around the first part of the year. Since one of your cards is about to pass its one-year anniversary, that helps too. You're close to where you want to be, just not quite there today.

Anonymous · ‎10-13-2016

Well I appreciate all the advice. I'll see if I can keep driving my car for a while and let those accounts age as close to a year as possible. I'll do the prequal with Cap1 in December though since there's no hard inq and if I don't get an offer just keep waiting lol. Thanks a lot guys.