No One Wanted to Buy My Loan

[CreditJourneyLongTime]

Hi All, hope for some clarity about a car purchase. Today I was negotiating prices on a 2016 Honda Odyssey van for my wife, got the numbers where I wanted on the purchase and what I wanted for the trade. When the finance guy pulled my credit no one but Sardimar would buy the loan. This shocked me because my scores had come up quite a bit. I asked what score came up and for a copy of what he pulled; he said it was Equifax and 565. Truly this suprised me as my FICOs show EQ 630 TU 620 EX 623 – I even pulled up the app to double check. I clarified and asked if he was using auto-enhanced and he replied, "no this is standard FICO". 

The terms offered were not horrible; total loan was $27k @ 7.55% for 48, 60, or 72 months. I did the loan and figured I will clarify what's up with my scores and refinance down the road a few months.

When I got home I looked up my scores again on MyFICO and found that my EQ Auto 8 is 650 but the Auto 5 is indeed 565. 

I have active loans in good standing with no late payments with both Chase and BMW, the Chase loan was on my trade-in and I am a customer; the finance manager said he presented the loan to Chase and the declined. My other auto scores are 616/580 and 643/612 respectively. My util is high but my income is $110k; even when my scores were worse I had more banks interested in my business.

First off, is this the case that many banks are still using the Auto 5 score? Secondly, did the finance guy just not know what he was doing to only get one bite on my loan? Lastly, any recommendations for where else I should shop my for a loan as I was planning on replacing my BMW too?

Thanks in advance all.

[jeffm4688]

I think you mean santanander?  I find it ironic that honda wouldn't finance it, never really had an issue financing there. At the end of the day though, it's the finance guy's job to make money, i'm sure he made a few points on the loan even though santander is the only one would would finance it.

I wouldn't of signed for the loan as it sounds like you weren't expecting those terms to begin with. Personally I always suggest get financing before walking into the dealership, it's easier and it always gives the dealer a baseline to either beat or not. The dealer saying your fico auto 5 is a 565 may be the case, but he could of pulled other scores and seen they were higher and just used that to justify the 7%.

The real info, look into Penfed, DCU or a local credit union of your choosing, It's very possible you could refinance ASAP and get a much lower interest rate. I once had a dealer offer 7% which I took before I knew what to look for and I was able to re-finance 2 weeks later for 2.5%. 

Also, util is a huge chunk of your fico scoring model and generally the quickest way to gain/lose points. I'd very much consider bringing that down, auto loan interest still add's up even though it's financed over a long period of time.

[CreditJourneyLongTime]

Appreciate the input. The car is a year old and was a trade at a Ford dealer so I am not sure Honda had the chance to buy it, I have three past loans with Honda/Acura finance each with no late payments, all paid. 

To be honest, I was expecting 6-7% based on my 640-650 Auto 8 scores so that didn't bother me. I am just shocked that no one else even made an offer. I was looking at his computer and saw the 7.55 rate along with the 2% margin that he could mark it up to. When I think subprime I think 15-18% loans, I just dont like the idea that no one else was buying.

Appreciate the suggestings for credit unions, I will have a look at those while traveling this week. Is there any benefit to holding this loan for 3-6 months and then refinacing so there is some history before paying it off?

[sccredit]

DCU offers a "second chance" refinance program for recently purchased cars.  I'd look at that.

[Appleman]

Hello,

I am curious about what your DTI is with the auto loan? Sounds like you have a a solid payment history (?) and income.

Even for car loans they like to see you sitting below 40% for overall DTI. That means at $110K a year, no more than $3,667 a month in payments showing up on your reports. You can get approved with a higher DTI but it will usually start costing you.

You may want to check out a personal loan from someone like SoFi.com (a soft pull pre-qual) as they do not solely look at score. If you can flip some of the credit debt to a personal loan you will see an increase in your score.

Good luck...

[StartingOver10]

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@CreditJourneyLongTime wrote:

Appreciate the input. The car is a year old and was a trade at a Ford dealer so I am not sure Honda had the chance to buy it, I have three past loans with Honda/Acura finance each with no late payments, all paid. 

To be honest, I was expecting 6-7% based on my 640-650 Auto 8 scores so that didn't bother me. I am just shocked that no one else even made an offer. I was looking at his computer and saw the 7.55 rate along with the 2% margin that he could mark it up to. When I think subprime I think 15-18% loans, I just dont like the idea that no one else was buying.

Appreciate the suggestings for credit unions, I will have a look at those while traveling this week. Is there any benefit to holding this loan for 3-6 months and then refinacing so there is some history before paying it off?

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Two comments:  Your expectation of a loan in the 6-7% was met. Sometimes we are our own worst enemy.  If your expectation was 3% or less, then you would have kept saying no to the F&I guy and walked out when he couldn't come up with an acceptable rate. If you had left, it is possible he would have kept looking for a better rate for you.  

Second comment: He only said one lender would pick it up. You don't know that for sure - my bet is he stopped looking when a lender said they would pick it up for x%. 

If I were you - I would do as the others mentioned. Go refi right away. This will get you a better rate and take away all the bonus the F&I guy is getting off your loan

[CreditJourneyLongTime]

All, I appreciate the input. I did apply with DCU however they did not approve the application. Are they known to consider requests verbally for reconsideration?

[sccredit]

What was their reason for decline?

[CreditJourneyLongTime]

Not sure. Received the decline and note saying a letter would be mailed.

[fltireguy]

OP - what is holding your scores down?