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Regular Contributor
Posts: 175
Registered: ‎12-27-2015
0

Just what is a "well qualified" buyer?

Just wondering - what would the auto finance companies mean when their best rates/terms are for "well qualified" buyers? What FICO score? Percent Down? Income? Ratios?

FICO 8 Scores
2/14/17,EFX - 614, 4 Derogs,TU - 621, 6 Derogs, EXP - 603, 3 Derogs
3/7/17, EFX - 579, TU - 595, EXP - 588, same Derogs
4/8/2017 EFX - 683, TU - 791, EXP - 605 All Chargeoffs removed from TU
5/8/17 EFX 750, TU 796, EXP 625 All chargeoffs removed from EFX
5/15/17 EFX 743; TU 794; EXP 715
Valued Member
Posts: 43
Registered: ‎08-01-2016
0

Re: Just what is a "well qualified" buyer?

From what my friend said thats a finance manager at a major audi dealer -- at least 680 score and a few paid, never late auto loans in past 10 years. A few minor if any delinquencies.  any other approval just means your in a higher tier

Valued Contributor
Posts: 1,193
Registered: ‎01-31-2008
0

Re: Just what is a "well qualified" buyer?

[ Edited ]

Depends..... $16,000 Kia or $100,000 Mercedes?

 

'Well qualified' will be very different for each of the cars above. 

Valued Contributor
Posts: 1,468
Registered: ‎08-12-2012
0

Re: Just what is a "well qualified" buyer?

[ Edited ]

Flyingifr wrote:

Just wondering - what would the auto finance companies mean when their best rates/terms are for "well qualified" buyers? What FICO score? Percent Down? Income? Ratios?


It would mean you meet their credit score and income level requirements for that rate and varies by lender. The 1.75% used auto loan at my credit union would require a stable long term income and a fairly high credit score. In order for them to give that low of a rate on something that decreases in value, they can only afford very low risk debtors at that rate.

 

Edit:::A dealer can often offer an artificially low rate on auto loans to higher risk individuals only by mitigating the risk by charging more in the negotiated purchase price of the vehicle. Due to that dealer arranged financing can not be compared to the credit you get elsewhere. If they can add 5000 to the purchase price, they can offer 0% financing, but you could buy the car 5000 dollars cheaper elsewhere with cash.


TU fico08=814 4/23/17
EX fico08=803 4/23/17
EQ fico08=804 4/23/17
Garden since 4/5/2017

Established Member
Posts: 77
Registered: ‎06-02-2016

Re: Just what is a "well qualified" buyer?

In my mind a well-qualified buyer will depend on the vehicle and dealership (chrysler capital for chrysler, GM financial for GM's, etc). Typically It would be someone in the 740+ credit score range on auto-enhanced scores, with a certain amount of money down depending on the particular promotion at the time. Income typically doesn't have much of a factor in being "well-qualified" as long as your DTI/PTI limits are in line, which typically depends on the lenders. Most lender's like to stay around 10-15% PTI based on your Gross income, and under 50-55% overall DTI. Also you typically have to have some sort of auto loan experience because it's not unusual for a college student to have what I consider a "fake" 740+ credit score from deffered student loans and a 500 store credit card, with no real comparable credit.

 

Aside from credit score though, many national lender's don't strictly go off of credit score for placing customer's in tier's. For instance, Well's Fargo Dealer Services, may place a 720 credit score in a tier 2, while a 689 credit score could be a tier 0 or tier 1 because they have internal scoring systems that judge the ridge associated with that applicant based off of other factors than credit score.

 

 

Valued Member
Posts: 39
Registered: ‎09-16-2016

Re: Just what is a "well qualified" buyer?

[ Edited ]

Was just approved for Honda's (Honda Finance) .9% - 60 mo. rate.  

 

Don't know my auto scores but others were Exp: 731, Equifax: 742, TU: 744

 

Very low util. and was purchasing a modest vehicle compared to income so I assume that helped, but can't say for certain.

 

Current FICO 743, no baddies
April '16 550 4 collections

Current credit and limits (in order of approval)
Discover It (Unsecured at 6 mos) 4k -- Cap 1 Quicksilver One (500) -- Overstock (3400) -- NFCU Cash Rewards (25k) -- Share Secured Installment (500 - paid down to 40ish) -- Amex PRG (NPSL) -- Amex BCP (20k) -- Amex EDP (5k)
Valued Contributor
Posts: 1,468
Registered: ‎08-12-2012
0

Re: Just what is a "well qualified" buyer?


Teo wrote:

Was just approved for Honda's .9% - 60 mo. rate.  

 

Don't know my auto scores but others were Exp: 731, Equifax: 742, TU: 744

 

Very low util. and was purchasing a modest vehicle compared to income so I assume that helped, but can't say for certain.

 


Teo would that be Honda Finance?  The reason I ask is I financed my goldwing through them and changed my mind 2 days later and ran it through my credit union. For a while just having that on my report caused myfico to indicate it was a subprime lender...even though I never even made a payment there. I had no Idea they would be a subprime lender.


TU fico08=814 4/23/17
EX fico08=803 4/23/17
EQ fico08=804 4/23/17
Garden since 4/5/2017

Valued Member
Posts: 39
Registered: ‎09-16-2016
0

Re: Just what is a "well qualified" buyer?

@sarge12 - yes, Honda Finance - going to edit my post to be clear. NFCU could only give me 3%
Current FICO 743, no baddies
April '16 550 4 collections

Current credit and limits (in order of approval)
Discover It (Unsecured at 6 mos) 4k -- Cap 1 Quicksilver One (500) -- Overstock (3400) -- NFCU Cash Rewards (25k) -- Share Secured Installment (500 - paid down to 40ish) -- Amex PRG (NPSL) -- Amex BCP (20k) -- Amex EDP (5k)
Regular Contributor
Posts: 175
Registered: ‎12-27-2015
0

Re: Just what is a "well qualified" buyer?


SEMO wrote:

In my mind a well-qualified buyer will depend on the vehicle and dealership (chrysler capital for chrysler, GM financial for GM's, etc). Typically It would be someone in the 740+ credit score range on auto-enhanced scores, with a certain amount of money down depending on the particular promotion at the time. Income typically doesn't have much of a factor in being "well-qualified" as long as your DTI/PTI limits are in line, which typically depends on the lenders. Most lender's like to stay around 10-15% PTI based on your Gross income, and under 50-55% overall DTI. Also you typically have to have some sort of auto loan experience because it's not unusual for a college student to have what I consider a "fake" 740+ credit score from deffered student loans and a 500 store credit card, with no real comparable credit.

 

Aside from credit score though, many national lender's don't strictly go off of credit score for placing customer's in tier's. For instance, Well's Fargo Dealer Services, may place a 720 credit score in a tier 2, while a 689 credit score could be a tier 0 or tier 1 because they have internal scoring systems that judge the ridge associated with that applicant based off of other factors than credit score.

 

 


Thanks for the comprehensive response. Afterf sitting out 7 years of 500's and low 600's I am now in the mid 700's with no debt. I am so used to thinking "that's not me" when I hear the ads saying "well qualified buyer" that I didn't know one when I saw one.

FICO 8 Scores
2/14/17,EFX - 614, 4 Derogs,TU - 621, 6 Derogs, EXP - 603, 3 Derogs
3/7/17, EFX - 579, TU - 595, EXP - 588, same Derogs
4/8/2017 EFX - 683, TU - 791, EXP - 605 All Chargeoffs removed from TU
5/8/17 EFX 750, TU 796, EXP 625 All chargeoffs removed from EFX
5/15/17 EFX 743; TU 794; EXP 715
Valued Contributor
Posts: 1,468
Registered: ‎08-12-2012
0

Re: Just what is a "well qualified" buyer?


Teo wrote:
@sarge12 - yes, Honda Finance - going to edit my post to be clear. NFCU could only give me 3%

That was given as part of the reason my scores were not even higher, that I had a subprime lender on my credit report. Until then I did not know they were sub-prime or that that is seen as slightly negative by fico08. Just wanted to let you know.


TU fico08=814 4/23/17
EX fico08=803 4/23/17
EQ fico08=804 4/23/17
Garden since 4/5/2017

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