Need advice on best options for helping son finance 1st vehicle

[Anonymous]

My 19 year old son lives with us and will be needing a used vehicle for college this next semester. I want to try to help him get financed if at all possible. He has no credit history but has a part-time job that pays roughly 1200 per month. He is looking for a used vehicle in the 5000 to 7000 dollar range, with no money down.

Now I have two options - try to get a loan in my name and allow him to pay me the payments, or, he can get his first auto loan for himself and I would co-sign for him.
Now to be honest, I think it would be hard for me to get another car loan in my name. I already have my car with a 15k loan outstanding and my step-son's vehicle is in my name as well. That has about 7k owing.

My credit is between 645 and 670 average on FICO. My wife's credit is in the low 600's due to a bankruptcy three years ago, so I don't think she would be a decent co-signer.

Income-wise, I make around 50k and my wife runs a business that grosses $170k. Our DTI is pretty decent, however, her credit drags us down if we try to get something together.

Any advice?

[Anonymous]

Have your son save up a down payment and get it approved himself.  Personally for me, i would never take up a car loan if i was not responsible enough to save up a small down payment and prove to myself that i'm capable of fulfilling a auto loan.  If your son saves up 20%, he should be able to get car loan himself with a payment of 20% ($240) of his gross income or less.

[Anonymous]

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@Anonymous wrote:

Have your son save up a down payment and get it approved himself.  Personally for me, i would never take up a car loan if i was not responsible enough to save up a small down payment and prove to myself that i'm capable of fulfilling a auto loan.  If your son saves up 20%, he should be able to get car loan himself with a payment of 20% ($240) of his gross income or less.

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But if he has no credit history?  That's definitely an issue unless they offer some kind of "we-know-you're-still-in-school-with-no-credit-but-we'll-finance-you-anyways-with-proof-of-income" loan.  Or the amount is small enough to not be as stringent?  I'm not too sure on this point.

Four other options I can think of:

Car Now

- You could cosign for him - start building his credit.  Even though you still owe on another auto loan, I think you'd still qualify for the second since it's a small amount, your credit score is good, and you have the income to support it  (joint loans are iffy - are you willing to cover the costs if he stops paying?)

- You could get the loan yourself and have him pay you back (I think this would be the least beneficial for the two of you) 

Car Later

- (The route I would take) Get your son started on building his credit.  It'll take much longer, but it'll be better in the long run - he'll learn and he could qualify for things on his own.  My college gave us "free" bus passes - hint hint, haha. 

- Have him save enough to pay cash for the car? (Meh option)

[Anonymous]

I have financed many first time buyers with no credit with 20% down.  That's my experience and it depends on your local dealer and their relationship with the local banks but it should be easily possible.

*edit* I noticed in your sig you have First Hawaiian Bank.  That's the bank i would approve them thru.

[Anonymous]

Ah, interesting.  Thanks for the clarification.  Yeah, I wasn't too sure about the no-credit lending.  When I was looking to finance a car last year I noticed some dealerships offering it, but for new cars only.  Then there are other lenders that see you have a good credit score, but since you have no prior auto loan history they automatically restrict you.  Too many factors and differing policies - best to just ask and not assume I guess. 

Nice.  Your name looked local, haha.  Why not "slippah"?  If you don't mind me asking: I assume you work for a dealership?  BMW?