Trying to get a 65k auto loan

Anonymous · ‎02-10-2016

Here's some backstory:

I'm 23 trying to get an auto loan for 65k. I had 10,000 to put down but i decided to put 5k towards debt to lower my utilization from 100% to about 48%.

It hasn't hit my credit reports yet, they're still showing between 80 & 100%. MyFICO is showing a score of 669 for EQ and around 630 for TU and EX.

I have $32,000 in student loans and they are in forebarance for 6 months with a monthly payment of $364 after that.

With the $5,000 paid of my CC debt, my monthly payment isn't any more than $150 per month. I'm paying 0 for rent right now. The only problem is I have one derogatory mark on my CR from verizon for a bill ($365) (which is currently in dispute) from a few months ago.

Let's say my monthly gross income is around $3500 from salary and $1500 from freelancing (online, car related stuff - which is why i'd like to buy a 65k car so I could use it to help my freelancing work grow - since more expensive cars are more appealing).

What would be my best bet of getting approved for an auto loan for that price range? I'm willing to do about $5,000 down but 0-$3000 down would be preferred. I can also save more if necessary.

Can anyone recommend some credit unions that would be most likely to approve me with this information?

Anonymous · ‎02-10-2016

Hello Jesse! Welcome to the forums!

For specific advice about which credit unions might cater to borrowers like you, you might try the myFICO Auto Loans Forum.

One thing that is going to be crucial to qualifying for this loan is that you can verify your income. The $3500 from your salary shouldn't be any problem. You have paystubs for that. But freelance income is always a challenge to prove. If you made $18,000 freelancing last year (and it shows on your taxes), then you shouldn't have a problem. If you have contracts or even invoices for the last few months showing $1500/month on average, you'll probably be okay. Even a bank statement showing deposits totaling those amounts might do it. But if it's just you projecting that you think you can make $1500/month moving forward, it's probably not going to work.

The reason it's crucial for you is that your total debt payments (credit card, student loans, and car payment for that car) would be a minimum of $1500/month (figuring a minimum of $1000/month for a $60k 60-month car loan at 2%). That's the best case scenerio. It could be even higher than that. If your income is $5000/month, that's 30% debt to income (DTI). With your scores, that's borderline, but you'll probably find someone willing. But if you can only verify $3500/month income, that's 43% DTI. That's going to be tougher.

One caution: by wrapping up 30% or more of your income in debt without any mortgage or rent, you're virtually guaranteeing you won't qualify for a mortgage during the life of this loan (unless you increase your income significantly). And you may make it difficult to even rent. You would be seriously limiting your options if you do want to move into a place of your own.

Good luck with it!

Anonymous · ‎02-10-2016

Thank you so much, that's the reply I was looking for. I can verify the freelance income using monthly statements from paypal that I can pull up. My mom said she would cosign but she's trying to buy a house right now which is why she won't. After the next few months if I ever needed her to cosign for an apartment or anything she'd be all for it with a 800+ credit score. My balance on my revolving credit cards was 8900/9400 and as of this week it's 4500/9400. I still have $5,000 I can put as a down payment and will continue to save up more money and then try to get the loan.

Anonymous · ‎02-10-2016

(Mod Cut-Non FSR, I dont want to see anymore of this in writing or in gifs that you posted in another thread.)

So, add both of your pays together (3,500 job plus 1,500 freelance) so let's just say you have a salary of 60K. First, there has been no taxes taken out so reduce that.

Next, get a loan on a $65,000 car without even 10% down, plus an existing 32K in student loans, and sitting on 48% util? How long of a term did you want on this car? With a 6 year note, and a 9% rate (which I don't think you would get based on what you have provided), you would be looking at around $1,200/mo for just the payment.

Any idea what it costs to insure this car? You are not 25+ so factor that in also.

I know the golden rule here is "kindless no matter", but someone should have the leeway to step in and provide a real life slap in the face that someone is about to make a crippling financial decision (if approved).

Anonymous · ‎02-10-2016

I've made what people car "poor financial decisions" when it comes to cars in the past. I make 1500 freelancing on average. The past two months it has been over 2000. I'm not asking on your opinion on whether or not you consider it a good decision, I'm asking how I can make it happen. In the end all that matters is I'm happy. Even if it was around $1,000 a month that's maybe 1/5th my income. A little under 1/4 after taxes. Also my freelance income increases every month. I CAN put $10,000 as a down payment by the end of next month which I probably will.

I have already gotten insurance quotes and I know what I'm in for with maintainence. Honestly, I've been a car enthusaist my entire life, I'm only going to be young once, so why can't I just make one "poor financial" decision that makes me happy. The car holds its value. It's USED at around $65,000. My student loan payments are only $364 per month and my credit card payments less than $170 after paying off more than half my CC debt.

I'm not going in this blind. Please don't treat me like I have no idea what I'm in for. I'm 100% aware of what I'm in for, I want to know the best course of action to get it done.

Bankrupt2019 · ‎02-10-2016

Pay the credit cards off , leave a balance under 9% on one card. Wait for balances to report and scores to update.

This is a win-win, you won't pay ridiculous interest on credit cards and youll get a better rate on your auto loan.

Anonymous · ‎02-10-2016

@Anonymous wrote:
I've made what people car "poor financial decisions" when it comes to cars in the past. I make 1500 freelancing on average. The past two months it has been over 2000. I'm not asking on your opinion on whether or not you consider it a good decision, I'm asking how I can make it happen. In the end all that matters is I'm happy. Even if it was around $1,000 a month that's maybe 1/5th my income. A little under 1/4 after taxes. Also my freelance income increases every month. I CAN put $10,000 as a down payment by the end of next month which I probably will.

I have already gotten insurance quotes and I know what I'm in for with maintainence. Honestly, I've been a car enthusaist my entire life, I'm only going to be young once, so why can't I just make one "poor financial" decision that makes me happy. The car holds its value. It's USED at around $65,000. My student loan payments are only $364 per month and my credit card payments less than $170 after paying off more than half my CC debt.

I'm not going in this blind. Please don't treat me like I have no idea what I'm in for. I'm 100% aware of what I'm in for, I want to know the best course of action to get it done.

So, according to you, this is not your first rodeo.

Opinions aside, I have no idea how to pull this off but it would seem difficult for you to get this done with tranditional lending.

Also, I am myself a lifelong car enthusiast. After I made my disastrous purchase when I was 22 I ended up learning my lesson, recovered, and told myself that some years down the road I will have my life/career/finances established that I can afford to purchase a non-appreicating asset and can live with the loss of value.

Anonymous · ‎02-10-2016

@Anonymous wrote:
@Anonymous wrote:
I've made what people car "poor financial decisions" when it comes to cars in the past. I make 1500 freelancing on average. The past two months it has been over 2000. I'm not asking on your opinion on whether or not you consider it a good decision, I'm asking how I can make it happen. In the end all that matters is I'm happy. Even if it was around $1,000 a month that's maybe 1/5th my income. A little under 1/4 after taxes. Also my freelance income increases every month. I CAN put $10,000 as a down payment by the end of next month which I probably will.

I have already gotten insurance quotes and I know what I'm in for with maintainence. Honestly, I've been a car enthusaist my entire life, I'm only going to be young once, so why can't I just make one "poor financial" decision that makes me happy. The car holds its value. It's USED at around $65,000. My student loan payments are only $364 per month and my credit card payments less than $170 after paying off more than half my CC debt.

I'm not going in this blind. Please don't treat me like I have no idea what I'm in for. I'm 100% aware of what I'm in for, I want to know the best course of action to get it done.
So, according to you, this is not your first rodeo.

Opinions aside, I have no idea how to pull this off but it would seem difficult for you to get this done with tranditional lending.

Also, I am myself a lifelong car enthusiast. After I made my disastrous purchase when I was 22 I ended up learning my lesson, recovered, and told myself that some years down the road I will have my life/career/finances established that I can afford to purchase a non-appreicating asset and can live with the loss of value.

Except I wil have made far more money from using the car as a marketing tool than the amount that has depreciated.....It's also helping grow my business. Targeting the 'high end' car market.

JBjunior · ‎02-10-2016

Of concern to me is that you are willing to carry unnecessary credit card debt and are willing to use the money for a luxury payment. If you pay off the credit card debt you will see an instant improvement in your score and won't be paying interest. You can let your score improve over the next few months and save money for whatever your heart desires.

Anonymous · ‎02-10-2016

@Anonymous wrote:

I'm not asking on your opinion on whether or not you consider it a good decision, I'm asking how I can make it happen. In the end all that matters is I'm happy.

I won't give you an opinion on whether I consider it a good decision. I'll tell you how to make it happen... Apply for financing from Santander. They will gladly charge you an interest rate at least commensurate with the risk you present so you can be happy