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Valued Member
corysti
Posts: 42
Registered: ‎04-03-2009
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Not enough credit...Need advice

Well Im a little over 20 with a credit score of 629 and all of credit reports state excellent but I can't seem to get approved on a new auto loan because they say not enough credit history. How many years of credit has to be on your report before there is enough? Im about to pay off my current car loan (monday to be exact/Almost two years early too!) and I actually just paid off one of my credit cards and got the other one down to 20 percent. So far I've been denied at Captial One Auto but I was talking to a dodge dealership and they said the only thing I should do before I try to get a loan from them is to pay off the current car so they can represent that to their bank, They said it would give be a better chance with approval...Does anybody know anything about this?

 

Also what companies will give you a nice car loan without the heavy apr of 18 percent with my credit score. 


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usmc58555
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Re: Not enough credit...Need advice

Whats you current income?

 

car payment? current car loan information.

 

 

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Credit is not a right, but a business transaction, one that takes into account risk, and charges accordingly based on that risk.
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txjohn
Posts: 4,214
Registered: ‎09-12-2008
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Re: Not enough credit...Need advice

Cory -

 

I'm curious why you are buying another car if you are paying your current car off 2 years early?  Do you have a need of a second?

 

However, you may want to talk with a credit union, they are easier to work with.

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09/03/2009 TU: 777, EQ: 776 ($8 balance on an account dropped me out of 780's)
03/28/2009 TU: 814, EQ: 810, EX: 781 (02/12/2009)
05/18/2005 TU: 563, EQ: 580, EX: 549
Valued Member
corysti
Posts: 42
Registered: ‎04-03-2009
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Re: Not enough credit...Need advice

[ Edited ]

Well the reason Im getting another car because I needed something more gas friendly. I drive a pretty big commute to work everyday and it takes a lot of my money just to pay the gas bill. And the car i have now has high mileage and im starting to see problems with it.

 

I make roughly 22k a year. Then I make another 8k from freelancing a year.

 

Currently pay 260/month on my car. Then 80/month on car insurance.

 

And I've actually though about a credit union but I can't seem to find one that is applies to me.

 

Another thing. My credit score hasn't updated my credit card pay offs and I just actually found out that my capital one credit card now has a 1,000credit instead of 500. 

 

 

Message Edited by corysti on 04-11-2009 09:17 PM

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usmc58555
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Re: Not enough credit...Need advice


 

I make roughly 22k a year. Then I make another 8k from freelancing a year.

 

Message Edited by corysti on 04-11-2009 09:17 PM


Most lenders are looking for 2K a month gross or more before you are even considered. They will not count the freelance money as it is an unreliable non consistent source.

 

Without a co signer you will not be getting financed unless you can produce a significant percentage (25% of transaction or more) down.

Signature line begins:
Credit is not a right, but a business transaction, one that takes into account risk, and charges accordingly based on that risk.
Your credit score is an aspect of your credit profile. Important? yes but just an aspect. Contributing/supplemental information determines the finer point of the deal. Ask any question, respect me not to get mad if the answer is not the affirmation you are looking for,
Senior Contributor
txjohn
Posts: 4,214
Registered: ‎09-12-2008

Re: Not enough credit...Need advice

Cory -

 

What make/model/year of car do you have now?  What mileage does it get?

 

What kind of car would you buy?  How much would you put down?  How much would you need to finance?

 

Here is issue:  The increased cost of a new car may completely offset any savings in fuel.  If this is the case, then you are not improving your circumstance.

 

Secondly, unless you bought a somewhat old vehicle, don't let a few mechanical problems be the reason to buy new.  Have you taken it to a reputable mechanic and had an estimate of repairs to fix the problems?

 

If you can pay off your vehicle and only have to pay occassional repair and maintenance bills, the savings of NO CAR PAYMENT is probably going to be more savings than the cost of fuel.  And if you put the equivalent of car payment into savings, eventually you will have many more options, including pay cash for a late model pre-owned (if you decide too) or a large down on new.

 

But at your income level, I wouldn't bite off a whole lot of debt.  USMC may be correct on difficulty in financing.  But you probably could get a dealer to find financing for you somewhere....who knows what the rate would be?  But trading high gas costs for higher car payment isn't a good strategy, in my opinion.

 

Get the current car paid off.  Take it to the mechanic and keep it maintained. SAVE SAVE SAVE.  rinse and repeat. :smileyhappy:

Credit Scoring 101 - Tuscani   *  Guide to Common Abbreviations
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09/03/2009 TU: 777, EQ: 776 ($8 balance on an account dropped me out of 780's)
03/28/2009 TU: 814, EQ: 810, EX: 781 (02/12/2009)
05/18/2005 TU: 563, EQ: 580, EX: 549
Valued Member
corysti
Posts: 42
Registered: ‎04-03-2009
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Re: Not enough credit...Need advice

[ Edited ]

"Most lenders are looking for 2K a month gross or more before you are even considered. They will not count the freelance money as it is an unreliable non consistent source."

 

Well its funny you say that. Because I've heard 1200monthly and 1800monthly and now 2000monthly which one is it? And how do you think people that does freelance business buys a nice car then?

 

And the reason Im able to pay it off is that someone is wanting to buy my vehicle.

 

 

What make/model/year of car do you have now?

 

2002 Ford Explorer with 150,000 miles

 

What kind of car would you buy? How much would you put down? How much would you need to finance?

 

2007 Cobalt ss with 23,000miles / This is where it gets odd. At my local bank I can get a loan no problem at all I ahve good history with them but at the moment they aren't able to give me a enough for what the car is worth. So I call the dealership and told them the situation and they said send a application and he said his boss didn't see anything really holding me back on a loan other than the current car loan. So really we haven't discussed down payments yet. Finance is 13,500 The bank said I should have no reason for a downpayment because the value of the car is still at around 18000k

Message Edited by corysti on 04-12-2009 08:55 AM
Message Edited by corysti on 04-12-2009 08:57 AM

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txjohn
Posts: 4,214
Registered: ‎09-12-2008
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Re: Not enough credit...Need advice

[ Edited ]

I'm sure you can find financing if you want it.

 

However, I would suggest still coming up with a down payment.  The lower your financed amount, the lower your payment, the less the interest and the less chance of any type of negative equity if you need to sell the vehicle down the road.  Never let financing tell you that you don't need a down, unless they offer 0% APR life of loan rate, then you need to keep the down in savings and collect interest while paying zero interest.

 

If you are selling your vehicle, is this how you are paying it off 2 years early?  If so, will you get any cash from the sale, or just pay off the note?  If any cash is coming....put it down on the car.  Don't finance your TTL.

 

Take the longest term note that has the best APR, but then pay extra every month.  Make sure you can put something into savings while also making car payment, insurance, gas, maintenance, other expenses.  A car is a wasting asset, not an investment so it cannot replace savings.  Whereas other investments, like a home, hold or appreciate value....a car is eventually going to be worth nothing.  And new cars lose 15-20% just driving off the lot.

 

Just out of curiousity....why are you selling the current vehicle if you are only 2 years from payoff?  Why not get it paid off as soon as possible and not have a car payment for as long as possible....put the difference in savings, pay off any other debt?  A new car is nice, but again, it is a wasting asset and not a good investment.  Unless you have a lot of discretionary income and can afford discretionary spending, I would make the current car last as long as possible and get as much value from it as possible.  New cars are nice, new car notes are not.

Message Edited by txjohn on 04-12-2009 09:11 AM

Credit Scoring 101 - Tuscani   *  Guide to Common Abbreviations
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09/03/2009 TU: 777, EQ: 776 ($8 balance on an account dropped me out of 780's)
03/28/2009 TU: 814, EQ: 810, EX: 781 (02/12/2009)
05/18/2005 TU: 563, EQ: 580, EX: 549
Valued Member
corysti
Posts: 42
Registered: ‎04-03-2009
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Re: Not enough credit...Need advice

Right now the value for suv's are crap. The value of my car right now is around 4k and by the time I do pay off my car it will have  over 250k miles on it. Like you said it won't be worth nothing by the time i pay it off. So really if I have someone interested in paying what I owe on the car its sorta a chance Im willing to take.

Starting Score: 475
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txjohn
Posts: 4,214
Registered: ‎09-12-2008

Re: Not enough credit...Need advice

[ Edited ]

True...but there are two values to consider:

 

1.  Sale value

2.  Replacement value

 

Sale value is what you can get.  Replacement value is what you will pay to replace the transporation.  If the sale value is less than the replacement value, then getting $4k to go into $10-20k debt is not actually a good thing.

 

If you buy new, you lose 15-20% as soon as your drive off the lot, plus your TTL.  Then it will further depreciate over time.  Unless you put a good sized down, you will most likely end up "upside down" meaning you can't sell for what you owe.

 

Do the math with both value types above.  make sure you can save money on top of payments and that you are not going to be strapped.

 

Cars are not investments, they are liabilities and wasting assets.  Your current vehicle has all ready suffered the worst of depreciation.  Buying new will subject you to those losses all over.

Message Edited by txjohn on 04-12-2009 09:37 AM

Credit Scoring 101 - Tuscani   *  Guide to Common Abbreviations
Frequently Requested Threads * FICO High Achievers  *  FICO Score Estimator


09/03/2009 TU: 777, EQ: 776 ($8 balance on an account dropped me out of 780's)
03/28/2009 TU: 814, EQ: 810, EX: 781 (02/12/2009)
05/18/2005 TU: 563, EQ: 580, EX: 549

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