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MB financial question.

New Visitor

MB financial question.

Hey everybody, first time poster, but long time lurker!

So I have a question for you guys, that I would love to get some advice for!

So basically, I started building my credit at 22, winter of 16. Scores were ok at everything around 650, so I bought a fiat 500x as a daily driver in the summer of 17, but at a interest rate of 15%, crazy I know, but I thought of it as a a way of stepping into the car financial lane, so I wasn’t that worried about high interest. I have payed every payment on time, along with a couple of credit cards as well, everything has been on time. Nothing too negative on my reports, but for one thing. That one thing happens to be a medical charge off Worth 544 dollars. This was seriously not my fault, as my car insurance company was supposed to pay for that, but I guess there was some communication error between the hospital and my insurance company, thus it ended up on my credit.

My current scores sit at ex:660, eq:680, and TU:750. Large margin of spread there for whatever reason. I have a short credit history, with my longest CC at 1 year 3 months, and my shortest at 6 months. So averaging right around 8 months.

My question to you guys is, I want to buy a car for my parents next year, a CPO CLS550 to be exact. I will have a down payment of around 12-18k to put down, and I make 30k a year, with no other expenses as I live with my parents. The car will most likely be around 40-48k, So lets say I give 15k on a car that costs 45k, the loan amount will be 30k. But with my income will they even let me touch the car? I ask this because my parents are gonna be the ones paying the payments on the car, and they make well over 100k, but alas their credit is shot because of co-signing on leases for my uncles, who weren’t responsible. My payment for my Fiat is 344 dollars a month, that *suprise surprise* my parents pay for. the finance company thinks I make the payments for $344, out of the $2500 I make a month, that’s makes it roughly 13.7 percent of my monthly income, will adding another 700 dollars in monthly payments for this hypothetical mercedes loan be too much?

Basically with the Info that I have provided, do you think I’ll be able to finance a Mercedes Benz in the summer of 18? Or are my chances not good? I’ll have a year worth of car payments under my belt at that time, and my credit will go up some as well.( I hope anyway)

Thanks in advance guys!
5 REPLIES
New Visitor

Re: MB financial question.

Also, one more data point, I pay all my card balances down to zero every month. I have zero percent utilization on $7,450 total limit.
Message 2 of 6
Regular Contributor

Re: MB financial question.

You will run into a couple issues most likely: 1) not trading in your current open auto loan and 2) debt to income. I highly doubt MB Financial will play ball with you, and if they did, it almost certainly would not be a promotion APR (like 1.9% etc). If you insist on doing this, I'd think you'd be better off getting approved with a credit union so you know exactly where you stand. The dealership will most likely find a bank to do the deal (because you're putting down so much), but they will probably shotgun the app to 20 different lenders (meaning all those inquiries will show for 2 years) and I don't think the interest rate would be favorable. 

 

Obviously you didn't ask this, but just my two cents - when you buy this expensive car for your parents, remember you're carrying that debt with you for years. So, while you may live with them now, you might not want to live with them in 2 years. Then you'll have to deal with qualifying for your own place with a $700+ car payment in your name. Believe me, I understand wanting to do something nice for parents, but if my parents needed a car, I'd be getting them something more practical. 

Starting Score:Low 500s in 2013
Current Score 11-13-17: TU: 750 EX: 801 EQ: 762
Goal Score: 740 Across the Board
In My Wallet: Cap1 QS1 - Cap1 BuyPower - PenFed Power Cash Rewards - PenFed Promise - AmEx Delta Gold - AmEx Green - DISCO - NFCU Cash Rewards

Message 3 of 6
New Visitor

Re: MB financial question.

Thanks for the reply! Lol not what I exactly wanted to hear, but truth is a tough pill to swallow I suppose!

I wouldn’t really mind if it’s not the prime 1.9 percent interest rate, but it can’t be anything above like 6%. If I do go for it, what do you think it’ll be? And as crazy as this sounds, I’ll be with my parents for a while lol, my culture and background dictates it! So for the long run I’m not worried, just acquiring the **bleep** thing!
Message 4 of 6
Regular Contributor

Re: MB financial question.

Hard to say what the rate would be. I work in finance for a franchised car dealership, and I would be shocked if you were able to get a 6% rate. It's not that your credit is bad, you just have a very thin file and limited income. Even though your living expenses may be at a minimum for a while, most banks won't allow for car payments to eat up 40% of your income. When you get closer to buying time, I'd definitely try a credit union before going to a dealership. If you're not a member of one, you may want to look into joining one (I like Navy Federal a lot, if you have a way to get in with them). 

Starting Score:Low 500s in 2013
Current Score 11-13-17: TU: 750 EX: 801 EQ: 762
Goal Score: 740 Across the Board
In My Wallet: Cap1 QS1 - Cap1 BuyPower - PenFed Power Cash Rewards - PenFed Promise - AmEx Delta Gold - AmEx Green - DISCO - NFCU Cash Rewards

Message 5 of 6
Valued Contributor

Re: MB financial question.

Take over your own payments and let your parents do what they want with the money they were spending on you.

A parent would much rather see an independent kid. Is giving a financed car really a gift or another obligation to you parents?

Message 6 of 6