Would I be able to qualify for an auto loan?

[Anonymous]

Credit Score: Eq: 625 Ex: 609 Tu:629

AAoA: ?

# of positive trade lines: 5

# of negative trade lines: 3 collections. 2 paid. and 1 unpaid that just popped up on reports yesterday (due to fall off 2020) -_-  and 1 CO unpaid that is due to fall off EX 1/2018 and TU 2/2020

Income: $40,000/yr

Lenght of Employment: 1 year (previous job 2 years)

Previous Loan Experience: 1 auto loan repo'd in 2014, paid collection balance off last month

Debt-to-Income (DTI): ? not sure?

Year of Car: 2016/2017 Honda Civic

Miles: n/a

Purchase/Refinance: Purchase

Requested loan term (XX Months): 72 months

Down payment amount: $5,000

Co-borrower/Co-Signer: Co signer with 740+ score

Other: Have been rebuilding the last 7 months. Scores started around mid 400s, and was at mid 600s as of last week, until a new collection appeared on my reports yesterday ugh so they all dropped a little. I want to see if they will do a PFD, but it's more than I can PIF at the moment, plus now I am saving for my down payment, so I am torn. I had intended on paying off the CO balance before applying for the auto loan so I could go into this with no outstanding balances, but with the new collection added, that's about $1300 that I did not plan for, and I really want to have $5000 to put down. I plan on purchasing at the end of the year.

Any feedback is appreciated!! Thank you all!!

[Appleman]

I am thinking with the co-signer you should be OK. However, I am not the guy approving loans.

Keep in mind that the Auto credit market is beginning to tighten up as lenders have been seeing increased deliquencies with holdings of auto loans.

DTI = Debt to income level.

$40,000 / 12 months = $3,333.33 a month gross pay.

Add up all the bills that show up on your credit report plus rent. The easiest way to see this is getting a free Credit Sesame acount as they will calculate it for you.

For example:

Credit card - Min pay $200

Rent - $700

Loan - $50

= $950 in monthly payments / $3333.33 = DTI of 28%. Usually a lender wants you below 40%. In this example it would leave up to $383.33 for a car payment and it would put you at a DTI of 40%.

[Anonymous]

Thank you so much for responding @Appleman!! I have a few questions....

With that formula, it looks like my DTI is 12% currently. I have a small balance on 1 cc, and the others are all at zero. My rent is only $400/month. The collections/CO are in closed status so they are not showing up as apart of my balances. Should I be including them? And will it be super frowned upon that I have a collection and a charge off with balances? Because I honestly don't think I'll be able to pay them both off and also save for my $5k down pmt.

Also, will the co-signer's DTI be included separatelt or combined with mine?

Are there any dealers/auto lenders who tend to not be as strict as others w/o the outrageous rates? I tried the Capital One navigator just to see, and nothing came back. I had an old Capital One cc a few years back go into collections, and I just paid it off with Portfolio Recovery last month as well, so I am sure that is why. They did however, approve me for their secured Mastercard a couple weeks ago, Hoping this will give me some positive recent history with them.

[Appleman]

The co-signer will be looked at individually. If they have a reasonable DTI that allows for taking on more debt it should be good.

As far as how a charge off or collection balance impacts your DTI ratio, I am honestly unsure. Same with paid versus money owed collections.

Good luck and let us know how it works out.

[Anonymous]

I'm not the loan officer but (going out on a limb) I'd say yes.  I was pre-qual for cap1 to spend 14.5k at an interest rate of 11.5% to 23.9% on 7-10-17 no cosigner. ultimately I walked out with a 2014 kia sportage, no money down, gap, service and warranty for 13.7k payment 285 for 60 months 14.45% yesterday payment due 9-1-17.

a little about me:

rebuilding for the past year 10 open accounts never late aaoA 5 months (because there are so  many new ones)   income 27K   dismissed ch 13bk as of 2015...NEVER GET A BK DIMISSED current auto/FICO from the dealer was 641.lots of stdent loans that have lates in 2012, discharged in 2017....2 medical collections (i'm working with insurance to fix it)

road loans also approved me but wanted $600 or more down and they are willing to allow you to buy a car with negative equity (if  you don't know better) Cap1 will to but not with no money down.  

2 credit unions and all dealer financing options denied me because of the account age or dismissed bk...I'd say yes you can get the loan on your own, with a co-signer you're golden and should check out a credit union

[Anonymous]

Thank you both for the detailed feedback!! I feel like I should be okay, but like you said, we're not the ones giving out the loan. And plus I will have a hefty down payment that I'm hoping will give me some benefit. See, cap1 won't approve me yet since I just paid off a previous collection cc of theirs last month. I am a member of Baxter credit union, I couldn't find too much info on them in the forums though.

[Appleman]

Give Baxter Credit Union a call. You can ask if they can share their requirements for obtaining auto financing. I am sure they will encourage you to apply, but initially just seek information. May be worth a visit to a branch and talk to a loan officer.