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New Contributor
dannyb407
Posts: 59
Registered: ‎09-17-2011

To Keep my 1 year old tiny car or switch to a bigger car.

Bought a 2012 Veloster in Oct. 2011 with HORRIBLE credit (like 503). Pay $450 a month. Owe $18k on it, probably worth about $14-15k. Credit is at 609 and rising quickly, and just saw (and fell in love) with a BMW X1. Sticker price on what I want is about 38k, hoping I can talk them down to about $34-35k. 

 

Does anyone know how financing is with BMW USA? Will my 609 credit score get laughed at? I can afford the car, I make $65-70k/year, but bouncing back now after credit problems after college. I also am a member of Navy Federal CU and will probably go through them, but want to get everyone's opinion on what I should do. We're expanding the family and the veloster is getting too tiny for us now. 

Established Member
Barris
Posts: 113
Registered: ‎12-04-2012

Re: To Keep my 1 year old tiny car or switch to a bigger car.

Within my personal experience I had a 3 series financed by BMW Select with tier 1 lease rate. Both EQ and EX scores were somewhere between 630 and 650. It had a low monthly payment over 4-6 years with a roundup balloon payment at the end which was almost a third of the car's cost. You can either make that baloon payment and purchase the car or you have the option to refinance through a third party lender or trade in your current car and refinance a new one. I belive you can actually get by with a 600+ scoreline.

New Contributor
mytime321
Posts: 108
Registered: ‎09-09-2012

Re: To Keep my 1 year old tiny car or switch to a bigger car.

So it sounds like BMW auto finance is relatively lenient for tier1?

Valued Contributor
MovingForward_2012
Posts: 3,406
Registered: ‎12-19-2012

Re: To Keep my 1 year old tiny car or switch to a bigger car.

Unfortunately, this might not be an option for you party due to your low credit score of 609 and also because of the negative equity of $3000-$4000.

With your credit score, you'll probably end up with 9% interest or greater on a car price of $37,000 to $39,000, this includes the negative equity. So you are looking at a car payment of above $700 a month. Given your income of $65,000-$70,000 a year and your debts, the bank may see this as unaffordable. So if you do get approved, you'll probably get approved for an amount lower than the purchase price of the car.

How many auto loans have you had in your lifetime? Any repossessions or late pays?
Cards: Orchard Bank ($1100) | Cap1 Cash Rewards ($2500) | Chase Freedom ($1000) | Best Buy ($2500) | Discover It ($1000) | Barclay Rewards ($2500) | Current scores: EX FAKO: 684, CK TU: 649, FICO EQ: 680, FICO TU: 698, FICO EX: 658 Happy Homeowner Since 2/6/13! :smileyhappy: Last App: 4/5/13 Gardening until July 2014
New Contributor
dannyb407
Posts: 59
Registered: ‎09-17-2011

Re: To Keep my 1 year old tiny car or switch to a bigger car.

I have no real debts. I've never been late on a payment with my current car which I've had over a year. If I get 15k for my car (which I should get EASILY) I would only finance 20-22k plus the 2-3k difference for the negative equity, which would make it 22-25k, I can't see that being over 400/month. My 609 score should go up about 10-20 more points the next few weeks too. There are a few more things dropping from my report and some inquiries falling off as well. Navy Federal is really good with people that have credit scores where I come from, they look at the bigger picture rather than what your number is. 

Regular Contributor
ImprovingYouth
Posts: 154
Registered: ‎09-21-2012

Re: To Keep my 1 year old tiny car or switch to a bigger car.

[ Edited ]

dannyb407 wrote:

I have no real debts. I've never been late on a payment with my current car which I've had over a year. If I get 15k for my car (which I should get EASILY) I would only finance 20-22k plus the 2-3k difference for the negative equity, which would make it 22-25k, I can't see that being over 400/month. My 609 score should go up about 10-20 more points the next few weeks too. There are a few more things dropping from my report and some inquiries falling off as well. Navy Federal is really good with people that have credit scores where I come from, they look at the bigger picture rather than what your number is. 


 

I thought you were looking to purchase an X1 for 38k? I assume you are referring to the difference between the two loans. Unless you are paying off the loan in full before purchasing the new car I dont see how your new loan amount will be only 22-25k. I don't believe with your credit score you will be able to lease a new car for that amount, but if you qualify that could be a good option for keeping the loan amount/ payments closer to 400/month, but I do not think you will acheive a payment of 400 a month lease or not. The good news is with no missed payments on an auto loan before, your auto enhanced score should be slightly higher than your FICO scores.

IMHO, I would just purchase a used x1/x3 or regular 3 series from 2011+ that will keep your loan amount well under 30k and still has the same look as the new 2013/14s.

Age: 22 //Cards: Chase Freedom, Chase Amazon Visa, Discover IT, CreditOne, CapOne Quicksilver, CapOne Cash, Walmart, Barclaycard, Citibank BestBuy, NavyFederal Visa Signature cashRewards //AAoA: 1 Year 3 Months (but going down quickly :smileytongue:) //CK:692, Sesame:656
Established Contributor
sccredit
Posts: 770
Registered: ‎09-14-2012

Re: To Keep my 1 year old tiny car or switch to a bigger car.

I don't think your math works. 

 

You're looking at a car you are hoping to get for $34k. 

 

You are upside down on your car about $4k. 

 

You are now at $38k + taxes title and license, say $41k. 

 

Your payment will be in the $700-$800 range. 

 

 

Mortgage $299k/$310k
Autos Loans $49.5k/$60k
Unsecured Lines $157.2k

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New Contributor
dannyb407
Posts: 59
Registered: ‎09-17-2011

Re: To Keep my 1 year old tiny car or switch to a bigger car.

Here's my math. 

 

Let's say I get the car negotiated to $35k

Negotiate them to give me $16k on my veloster.

That leaves me with $19k+3k for the negative equity that I have left on the veloster=$22k to finance

I certainly believe I can get approved @ 22k, especially since I did for the veloster @ 503 fico. 

 

Or am I just completely wrong here.

Regular Contributor
ImprovingYouth
Posts: 154
Registered: ‎09-21-2012

Re: To Keep my 1 year old tiny car or switch to a bigger car.


dannyb407 wrote:

Here's my math. 

 

Let's say I get the car negotiated to $35k

Negotiate them to give me $16k on my veloster.

That leaves me with $19k+3k for the negative equity that I have left on the veloster=$22k to finance

I certainly believe I can get approved @ 22k, especially since I did for the veloster @ 503 fico. 

 

Or am I just completely wrong here.


You are completely wrong.

 

The 16k you get on the Veloster will go towards the 19k you already have a loan for. That means you will still owe 3k on that loan after you no longer own the car (this is called negative equity). You CANNOT run a loan on a car you no longer own as a car loan is a secured loan (secured by the vehicle, which may be reposessed upon non-payment). The new loan you get for the new car will have to roll that 3k in negative equity into the loan. That means you will be financing the X1as you say for 35k + the 3k in negaitive equity. 

Age: 22 //Cards: Chase Freedom, Chase Amazon Visa, Discover IT, CreditOne, CapOne Quicksilver, CapOne Cash, Walmart, Barclaycard, Citibank BestBuy, NavyFederal Visa Signature cashRewards //AAoA: 1 Year 3 Months (but going down quickly :smileytongue:) //CK:692, Sesame:656
Regular Contributor
ImprovingYouth
Posts: 154
Registered: ‎09-21-2012

Re: To Keep my 1 year old tiny car or switch to a bigger car.

[ Edited ]

Additionally, your income in my opinion would definitely put this car's price of 30k+ within range of being affordable, especially with no other debt. What is going to drag you down is your score, which is good enough to get financing, but not good financing. You will most likely have a double digit rate. What you should factor in is with a good car payment history, an auto enhanced score (which most car lenders use) will bring up your FICO score. This is a very good thing because even if you brought your score to 620 you are looking at a much better rate.

 

More importantly, dont just be satisfied with getting approved, GET THE BEST RATE YOU CAN GET. Shop around. Do some research. Make the car companies compete for your business, as you dont NEED this car, you have one already. 

Age: 22 //Cards: Chase Freedom, Chase Amazon Visa, Discover IT, CreditOne, CapOne Quicksilver, CapOne Cash, Walmart, Barclaycard, Citibank BestBuy, NavyFederal Visa Signature cashRewards //AAoA: 1 Year 3 Months (but going down quickly :smileytongue:) //CK:692, Sesame:656

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