Need car loan advice

[Anonymous]

Hi Guys,

I am looking to apply for a new car loan with my spouse in the amount of 50K. Spoke to the CU and was told they we should be approved easily.

We have no lates or degratory info. Our total take home pay annually is 88K after taxes.

Below is our current balances

Mine - current EQ FICO is 688, TU is 700

Mortagage - 170K

Student Loans - 58K - deffered till 2013

Credit Card total 6 with a balance of 13K and credit available of 13K

Spouse - current FICO is 697 TU is 710

Student Loan 75K - deffered till 2013

Credit card total 6 with a balance of 15K and credit available of 12K

What are our chances of getting approved?

Thanks

Andy

[MarineVietVet]

I'll let the auto geeks (I say that with much respect!) give you detailed advice but I noticed something that might just be a typo.

You say your credit cards have a balance of 13K and credit available of 13K. That would make the utilization 100%.

Your spouse has credit cards with a balance of 15K and credit available of 12K. That would make utilization for these at over 100% (125%).

Please tell me those are typos?

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

[Anonymous]

My total credit limit on the cards is 24k and have used 12k leaving me with a available credit of 12K. The same for my spouse, hope it makes sense now.

Thanks

Andy

[cdtotten]

What are your monthly fixed payments on the mortgage/cars/debt? I am curious where your DTI falls. Although your income is great, I would be concerned about the amount of debt that you have.

You have combined CC debt of $28,000 (thats a lot) - util of 53% (most lenders won't like this - neither does FICO)

Student loan debt of: $133,000 (a whole lot)

So total non-mortgage debt of $161,000 and you want to purchase a $50k car? That doesn't make any sense. I'm not saying you can't afford it, because at least for now it seems you probably can, but those student loans are going to come due and monthly payments will be around $1,000, which will really affect your DTI.

It is my firm belief that if you have $28,000 in credit card debt, then there is no reason you should be buying a car of that nature. Do you have any savings?

I'm not trying to be rude at all, but it appears you are trying to live well above your means.

[Anonymous]

Mortgage - 1500

Car - 400

CC - 1200

Amex - Paid in full every month

I am not worried about  my and spouses student loan as they will be paid off once we graduate and i do appreciate your concern.

I was in the process of paying off all my CC first (paid one CC in full 5K) and then applying for a car loan, but it has been very difficult for us to manage with one car. I do have saving but wouldnt want to liquidate it.

My car range is between 40-45K and with taxes around 50K

Thanks

Andy

[cdtotten]

Using the figures you provided,  your monthly debt payments are $3,100. Your monthly income is $7,333. A car loan of $45k @ 5% for 48 months is going to carry a payment of about $1,000... putting your monthly DTI right at 56%, which would be considered high by most lenders, but definately doable. I would think the bigger problem would be not putting any money down on such a large purchase. Every lender will differ, so won't know until you actually have your credit run.

A thought: If you do have savings to pay off your CCs, you might want to do that. Those savings are bringing your FICO down by prob 40-60 points. Thats a lot, and unless your CCs are at 0% interest, then it doesn't make sense to try to save at 3% and pay cc's at 10%.

Obviously I am not going to convince you otherwise, but based on the picture you have painted for us, it does not make financial sense to purchase that expensive of a vehicle. You can't bank on future increases in earnings, or job prospects, because I am sure a lot of people on this board can tell you how they went down to 1 income because of something out of their control and then had no way to pay for the debts they thought they could easily cover. If I were you, I would

a. pay off the CC debt immediately if possible.

b. Build an emergency fund equal to at least 6 months of your monthly expenses

c - 1. begin paying down your student loan balances

c - 2. begin looking at a new car.

[Anonymous]

Thank you very much for your input.

Regards

Andy

[Anonymous]

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@Anonymous wrote:

Thank you very much for your input.

Regards

Andy

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When people come to these forums asking for advice they must remember that the persons answering questions are not paid to do so. We are all only sharing our personal experiences and collective knowledge in hopes of both answering questions, and helping people NOT to make mistakes that we ourselves and the people in outr life made.

To the OP:

no one needs a 45K car.  its that simple.  And although we all know that you are making good money now, your student loans are pretty large on the horizon.

Can you get into the car you want? probably. You have enough free income now you may need some money down, but you should be able to get it.  I do really really caution you on comitting yourself to a $1000 a month car payment. there are many under 30K cars out there that are really good and economical and stylish.

More importantly there is a lot of uncertainty out there between now and the future and you guys graduating and getting your student loans paid off. I really, really must caution you to make some conservative economic decisions now. Who knows what unplanned or unforeseen things can happen tomorrow.