What are my chances of approval?

Anonymous · ‎08-28-2012

I am 21. I have over 6 years of verifiable credit history. I have 4 total credit accounts all credit cards. Combined I have $10,440 in total credit with a uti of 4%. My highest card is $7,500 that I owe $0 on and have never held a balance. I have nothing bad on my credit.

I am wanting to finance a used VW Jetta diesel to trim my fuel costs as I drive 60 highway miles a day to work. It will be a private party purchase(I know not many banks do then.). I want to pay no more than $15,000. I have 30% down and am saving $800 to $1,000 a month so will have more as time passes. I make only $1,500 a month as of right now in a restaurant. I have bank statements to support my income.

What are my chances of approval?

Revelate · ‎08-28-2012

@Anonymous wrote:
I am 21. I have over 6 years of verifiable credit history. I have 4 total credit accounts all credit cards. Combined I have $10,440 in total credit with a uti of 4%. My highest card is $7,500 that I owe $0 on and have never held a balance. I have nothing bad on my credit.

I am wanting to finance a used VW Jetta diesel to trim my fuel costs as I drive 60 highway miles a day to work. It will be a private party purchase(I know not many banks do then.). I want to pay no more than $15,000. I have 30% down and am saving $800 to $1,000 a month so will have more as time passes. I make only $1,500 a month as of right now in a restaurant. I have bank statements to support my income.

What are my chances of approval?

I don't think you'll have much of a problem from an approval perspective, 30% down and being prepared with bank statements, good stuff for any lender; APR may be a little fungable on a private party loan but the biggest obstacle you have is finding a bank that will do the private party loan, though my understanding from reading this forum is that it isn't as difficult these days to do. One of the benefits to the modern age and online access to lenders.

I'd try some local CU's in your case, and failing that trawl search through the forum on private party loans from various other lenders, there's been a few financed in the past several months though I forget whom with specifically. I would spend the $20 to pull your credit score from here (I'd recommend the EQ version) just to get a ballpark number of where you're at FICO wise and what's on your credit report before you start shopping for a loan. Surprises in a loan app are to be avoided if at all possible, though be aware if you haven't financed a vehicle before, your scores may be lower if the lender looks at what's called an "auto-enhanced" score as you would look like a first-time buyer in that scenario.

Anyway there's good information to be found here, and welcome to the forums!

PS: saving 60% of one's income is impressive at any financial strata . Absolutely well done.

Anonymous · ‎08-28-2012

Thanks for your reply.

My Equifax FICO purchased from this website is 770 which is suprising to say the least. I am wondering what my auto enhanced score will be? I AM in fact a first time car buyer so I am guessing it's pretty low. As I stated above, I am wanting a car for no more than $15,000 but want to pay down to only finance $10,000. I do not have a cosigner with credit better than me. And if a cosigner is required will one with bad credit hurt my chances of approval?

Thanks,

Michael.

guydiver · ‎08-29-2012

Financing matters aside, have you considered the vehicle you are purchasing? A diesel typically is more expensive to maintain than a gas car. The fuel is more expensive, which practically negates any advantage realized in mpg over a gas powered economy car of similar engine size. Diesels have turbos, injectors,glow plugs,fuel and air filters and such that can be extremely expensive to maintain and repair as compared to gas. I would suggest you absolutely NOT even consider this unless you have a warranty of some sort, and preferably some mechanical skills for the maintenance. VW makes a decent car, but it is still a diesel. Just saying........

Anonymous · ‎08-29-2012

@guydiver wrote:
Financing matters aside, have you considered the vehicle you are purchasing? A diesel typically is more expensive to maintain than a gas car. The fuel is more expensive, which practically negates any advantage realized in mpg over a gas powered economy car of similar engine size. Diesels have turbos, injectors,glow plugs,fuel and air filters and such that can be extremely expensive to maintain and repair as compared to gas. I would suggest you absolutely NOT even consider this unless you have a warranty of some sort, and preferably some mechanical skills for the maintenance. VW makes a decent car, but it is still a diesel. Just saying........

^ Being mechanically inclined justifies this purchase.

You can purchase a NEW small economy gas powered car with your score. WIth what you're paying in down payment you can also get a great interest rate. Or save a bit more to get a new car that you actually want in 6 months.

A used diesel can be a headache if its your daily driver and ONLY driver.

Anonymous · ‎08-29-2012

I think you have a good chance for approval.

Using Edmunds TCO calculator that includes almost all aspects of cost of a car over 5 years (for a 2009 model), for my location it looks like your savings would be about $2,000 over 5 years. Definitely check it out for yourself and your zip code before signing.

Also, typically if your credit score/income is high enough and your downpayment is enough for the finance company you will not need a cosigner. Typically, they will only request a cosigner if your credit is weak. I was a first time car financer (I paid for my two previous cars in cash) and since my history was strong enough I did not need a cosigner and qualified for top tier financing.

If they do require a cosigner, having a cosigner with bad credit will simply mean that they decline your application for financing anyway because the reason they are looking for a cosigner is because they do not feel you are credit worthy on your own. Adding someone with bad credit simply increases the loan risk further and would be rejected. I do not think you will need a consigner, you have decent credit lines with good payment history.

Cellice · ‎08-29-2012

@Anonymous wrote:
I am 21. I have over 6 years of verifiable credit history. I have 4 total credit accounts all credit cards. Combined I have $10,440 in total credit with a uti of 4%. My highest card is $7,500 that I owe $0 on and have never held a balance. I have nothing bad on my credit.

I am wanting to finance a used VW Jetta diesel to trim my fuel costs as I drive 60 highway miles a day to work. It will be a private party purchase(I know not many banks do then.). I want to pay no more than $15,000. I have 30% down and am saving $800 to $1,000 a month so will have more as time passes. I make only $1,500 a month as of right now in a restaurant. I have bank statements to support my income.

What are my chances of approval?

You should not have much difficulty getting approved. However, your interest rate will be higher if this is your 1st auto loan experience.

I would honestly recommend you do some research on the cost of ownership of the diesel Jetta vs gas Jetta. Diesels are rare in the US so maintenance cost are sky high because not many mechanics are experienced. Furthermore, Diesel fuel in many states are more expensive than premium gas. That could quickly errode any MPG savings.