Preparing for a new auto loan - a few questions

[djw1976]

Hi all,

I have recently become a myfico 3B member to track my scores but have always used these forums for information.

I just want to preface this question with a statement that I am aware many will point out after reading my question, I

am looking for helpful advice not criticism or a lecture, thanks in advance!

I am looking to finance an Audi S3 2018 for around 47,000, I haave already called my CU I am a member of through work,

Pacific Service Credit union in California, and asked them what scoring model they use to determine loan qualifications.

They said they use Fico Experian Auto Enhanced and that a score of 730 and above would put me in top tier. They said

they could check for me without a hit to my credit to see where I was at, I already had all my Fico scores from this website

but I was curious to see what they came back with. They said I was at or near 750 and would be approved for top tier which is

currently 3.15% but since I have a checking account with them it would drop to 2.9% with terms up to 72 months @ 100% LTV.

My question is, I currently carry high utilization across my 3 Credit Cards in the low 90% range and has been like this for 6 months

now. I have about $6000 saved for a down payment but am wondering, (after I ran a myfico simulation for scores), if I am better

paying down my cards with at least 2500 of that money which would increase my Fico scores about 35 points across the board,

with TU,EQ,EX. The reason I ask this is twofold because I want to know (1- if I go into the Audi dealership with already financing in

handd from my CU I would like to see if they can give me a better rate in the 1.9%-1.0% range and if my high utilization is going to

mess that up or if they just look at the Credit scores and income. The other reason (2 - is it going to be more benifical to use all the

6000 on the down payment instead and lower the monthly payment? Thank you.

Here are my details-

Income 116,000 annual

Total credit card debt - 9500

Fico Scores - Fico 8 scores EQ-734 TU-722 EX-729 / FICO AUTO 8 EX-744 TU-739 EQ-747 / FICO AUTO 2 EX-708 / FICO AUTO 4 TU-715 /
FICO AUTO 5 EQ-756 / FICO AUTO 9 EQ-680 TU-682 EX-684
No derogetory marks on credit

AAoA 3yrs 9 mo

DTI - 35% after factoring in new car loan

[pipeguy]

Generally, vehicles can be financed at 100% of their value, which of course puts you upside down as soon as you drive off the lot. 

Assuming that tax and fees will be more or less equal to any "discount" you get - I'll just use the sticker price for my examples. 

$47k financed at 2.9% for 60 months is $844 a month or $713 a month for 72 months or $620 a month for 84 months if you can find a lender that'll go 84 months. Total payments will equal $52,000 for 84, $51335 for 72 and $50,640 for 60 months. 

$42k (assuming you are going to go $5k down) $754 for 60 months, $637 for 72 and $554 for 84 months. 

If it were me, I'd get my Credit Cards paid down before I took on payments that size, especially because credit card debt is high interest debt compared to a 2.9% simple interest (not compounded) cost for borrowing. 

[Anonymous]

Agree with pipe guy, I would prefer to knock down cc debt, which is gonna be higher apr, with the added bonus of lowering you utilization,which would raise your score.
I’m surprised your score is that high with 90% utilization.At the end of the day I’d rather have the 2.9 Audi money, further, and some may disagree, I’d get the longer term if the apr were equal and it is simple interest with no prepayment penalty, just gives you some flexibility.

[marty56]

My experience is that using a local CU's money is better then using the dealers.  Most of the perks they offered me in the past I really wouldn't get use out of since I don't put a lot of miles each year on the car.  Also many times those low dealer rates limit your car choice.  To me, getting the car model, color, and options trumps all other things.  Also building a multi product realtionship with a local CU may help you down the road with a mortage or other product that could save you a lot of money then.  You never know.