Setting up a game plan

[Anonymous]

Hello All,

I'm new to the forum and looking to firm up a game plan for the purchase of a new car.  I fico scores pulled from here are EU:748 and TU:740 with the only revolving credit hanging over my head is an overdraft on a checking account which can be paid off fairly easily.  I also have a 8k student loan which should be paid off within a month or two.  I'm currently in grad school and will graduate in May.  Looking to purchase the car around then.  My take home pay will be 1,800.00 a month.

Now here is the specifics:  I have a job where my housing will be provided, as will all household amenities.  So basically the only monthly bill I have is my cell phone for about $160.00 a month.  I've owned and paid off two cars before (one directly through Nissan Finance) almost ten years ago..  No baddies of any kind on my report, but I've been in school for about 8 years without a lot of credit activity.

So I'm wondering if the 1,800.00 without housing concerns will be enough for a 25k car loan on a new Hyundai Sonata.  I know lenders are looking for no more than 20% utilization of monthly income for car loan but considering the fact that I don't have to worry about housing, I'm wondering if a 25% rate, say 450.00 a month is sensible. 

Oh and another question, have credit unions pushed back on just walking in without having an account established with them? 

Thanks for your time and attention

[cdtotten]

Well, a $25,000 not counting any taxes, tags, fees, etc... @ 2.9% (very good rate for a CU currently) has payments as follows:

36 months = $726

48 months = $552

60 months = $448

Each point of interest higher will raise the payment $11/month, so you can calculate accordingly.

Based on your income, it seems like you truly are on the very top end of what you can afford. I would try to save up atleast 6-12 months to have a decent down payment when you go to by. If your fixed costs are truly only $160 a month, you shoudl easily be able to save $800-1000 a month in a savings account and next thing you know you have a great down payment, which will make it a lot easier to get approved and financed.

[Anonymous]

CdTotten,

Thanks for the reply.  The 25k I quoted would the the highest amount (that includes all fees and taxes).  I should be able to put 2k down to reduce the amount financed but really what I was curious about is the nature of DTI.  From my own research, after posting my question, it seems that DTI is computed against gross income, which for me is around 2700.00 a month. 

I've seen other posts in here that not having housing expensises could be an issue.  I guess that's my real question,  my job will provide all that, and while I'm sure I could speak to the loan officer at the local CU I'm wondering if that issue would preclude me from online CUs where I wouldn't be able to explain the nature of my work and hence the lack of housing expensive.  2.9% does seem to be the best rate going these days so I assume I'll apply at the local CU, hope for that rate, and then see if Hyundai financing can beat the rate.  I was just a bit unsure about applying at a CU for a loan without having a prior account/relationship with them.  From looking around it seems its not a huge issue.  I'll skip the online CU unless I need to try that. 

Thanks again

[Anonymous]

I would consider not paying the student loan off immediately and using some of that for a stronger downpayment.

In all honesty, not having "rent" due to work factors against many people since what if you lose the job?  What if they change the perk?  What if four months after financing they make you suddenly pay $300 a month. 

I suggest as you get nearer to the car purchase you consider talking to a actual dealership finance manager or your local loan officer, they can offer you the best structuring options, but I definately would keep a 3-5K out of paying off your student loans just in case.