@wrw0010 wrote:
My wife is trying to buy a car and was recently turned down for a no downpayment loan. Her utilization is very high (95%) so her auto enhanced equifax was only 600.
Would it be better to pay down her credit cards to 25% or should we offer a downpayment of 30%? If I pay the cards down, we'll have very little left for a down payment.
I'm really just worried about getting her approved. Rates are of secondary importance in the short run as I can probably refinance it later next year.
It think it would take more dings than just high utilization to get a FICO score that low, so you need to take a close look at all the factors. Also, beware of assuming you can probably refinance into a better rate soon unless you have a reality-based plan (on which you already are taking action) to improve your finances over that time scale, subprime lenders make much of their profits from customers who think they will be able to refinance out of that loan! Also, take a close look at any loan terms you are offered: many subprime loans will have a prepayment penalty clause in order to prevent the customer from refinancing into a lower rate, whereas it is rare for prime loans to have any prepayment penalty (I have never had a loan with any prepayment penalty clause). In your position I would make reducing debts the absolute top priority, and try extremely hard to avoid taking on new expenses (such as that car) until the debts have been reduced. Unless the car is required for employment purposes (and is therefore part of the income side of your financial plan), it is probably a luxury best posponed until you can afford it. You don't say what sort of car, or how much, but if you were looking at a new car or a late-model used car, then you can increase the down-payment percentage by getting something less costly so the same amount of cash represents a larger percentage of the price.
TU 791 02/11/2013, EQ 800 1/29/2011 , EX Plus FAKO 812, EX Vantage Score 955 3/19/2010 wife's EQ 9/23/2009 803
EX always was my highest when we could pull all three
Always remember: big print giveth, small print taketh away
If you dunno what tanstaafl means you must Google it
