UPDATE: Never had a car loan before -- can I get approved?

[Drklon]

Update: We were anxious about nothing.  We were approved no problem (auto enhanced scores were 709/wife and 683/me).  No money down, 3.3ish APR, and we got to take advantage of a fantastic dealer incentive to keep the principle balance low.  Feels awesome to have a new car, and eases a bunch of worries we had about our other car.

My FICO is not great...I just paid down some credit cards and the score estimator estimates that I'll be around 700.  My wife is in the same area.

I am a graduate student with a job offer in hand.  My wife and I will be making about 80k a year starting this summer.  We're currently making about 35k working part time, but the income is pretty sporadic (I made about 15k last summer and she makes about 2k a month).  

Our car has started to die, and we are in need of a new (at least to us) one.  I'm going to need a commuter car, so we're looking at a new Ford Fiesta, Honda Fit, or Chevy Sonic.

Our only credit issues are 3 years old or more; I have a 90 day late on an installment account.  My wife had a car loan when we were married, but it has since aged off of her reports.  She has some 2 random $25 medical collections that showed up when we pulled her reports; she disputed them but they still remain.  They are slated to fall off in early 2014.  We also have a 2008 collection that we were on jointly.

Beyond that, we have relatively low monthly expenses.  My concerns: 1) our current car is essentially valueless, so we aren't going to have much of a down payment. (we could probably spare 1500 from our savings if needed, but we'd rather not and 2) the only installment account showing up on either of our credit reports has a 90 day late payment.  It is paid in full and was 3 years ago.

Any tips / tricks?  I've looked at the student financing options, but all of them require clean credit.  It looks like they are aimed at people with NO credit history at all.  The ones that show requirements generally say that there can be no derogatory information.

Should we look into a lender like Capital One, or will we be able to qualify for dealer financing?  

Thanks!

[SamsungHDTV]

I don't think you will have a hard time getting a loan. I'd go try credit unions if I were you, and then give the dealership a chance to beat the rate.

[Drklon]

Thanks. I applied tonight for a CU loan, and I also did a capital one app and the loan app of the dealer I will likely use. Capital One approved instantly for well over what I need at 2.49 percent, so I'll have a back up if the dealer or CU can't come up with anything better.

[SamsungHDTV]

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@Drklon wrote:
Thanks. I applied tonight for a CU loan, and I also did a capital one app and the loan app of the dealer I will likely use. Capital One approved instantly for well over what I need at 2.49 percent, so I'll have a back up if the dealer or CU can't come up with anything better.

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I knew you weren't going to have a hard time getting a loan. And at 2.49%, very nice. Now once the CU approves you(if at a lower rate than capital one), make sure you respectfully mention that you are rate shopping and that capital one has approved you for 2.49%. The CU I went through actually lowered their rate to beat the dealership. 

CU 1 approved me for 4.89% with zero down

CU 2 approved me for 3.89% with 10% down

Dealer approved me for 3.80% with zero down

Mentioned this to CU 1 when they were following up with me

CU 1 "Let me inform my underwriting dept and see what we can do"

CU 1 we can approve you for 3.75% and if you start a checking with autopay we can bring down to 3.35%

Me: when do i sign the paperwork?

lol. I actually gave the dealer one more chance to beat the rate but they were either unable or unwilling.

[Drklon]

Yeah, I posted an update in my original post.  We went this morning and went with a local credit union loan that the dealer put together.  It is at slightly higher APR, but we were able to use a dealer incentive that significantly lowered the principal amount of the loan.  We have the car, loan, and rate that we want, so we are happy.

My only concern is that the finance guy pre-qualified the loan (it took about an hour from when we finished the credit app until we went in to the finance office to sign everything), but it looked like he just printed out a form to submit to the local CU.  I insured the car on the spot and they sent us on our way, and all of the paperwork already lists the CU as the lienholder, but I'm worried that something weird will happen with the loan and we'll be called back.  We signed all of the loan docs and everything, but I'm pretty sure the loan won't close until the credit union actually approves it.

I'm just anxious about the whole thing -- I guess if something happens we can just walk in with the Cap 1 financing at the lower rate.