Would I qualify for an auto loan under this scenario?

[MadMoney]

Hello all.

I would like to purchase a car next year.  As of November 10, 2013 my credit scores are TU (810); EQ (767), and EX (773).  I make $100K +, and have only rent for $500 but pay $460 in credit card payments.  On a monthly basis I pay well above the minimum (trying to pay off CC debt).  Anyway, I am looking at a car for about $60K.  I would put down $5K to $7.5K.  I know on a gross income bases I would qualify but on a net income bases I am concerned as I would be over 60% with a car payment of approximately $900.  This is because I automatically "save" approximately 22% of my paycheck.  I would not need to change anything to make the car payments but I am not sure the bank would see it  that way in making the credit decision.  I really do not want to put more of a down payment as my investments are doing well and with the low interest rates I would be coming out ahead over time.  Thoughts?

[Rkalynsmith]

MOST banks go by gross income anyway. Play around with the auto calculator and see what it says you can afford. I don't see why not. 

[Revelate]

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@Rkalynsmith wrote:

MOST banks go by gross income anyway. Play around with the auto calculator and see what it says you can afford. I don't see why not. 

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Are there any non-buy-here-pay-here places which don't calculate based on gross income?

[Rkalynsmith]

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@Revelate wrote:

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@Rkalynsmith wrote:

MOST banks go by gross income anyway. Play around with the auto calculator and see what it says you can afford. I don't see why not. 

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Are there any non-buy-here-pay-here places which don't calculate based on gross income?

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Gross is before taxes and net is after taxes. In house would be an example that you are looking for. This is why the word MOST was stated...............

[coterotie]

As a banker I would have tackled you and not let you out the door until you took my money.

[MadMoney]

Thanks for your comment.  However, I am afraid they will try and calculate DTI by net income and not take into consideration what I put away in savings as discretionary income which could be used to make payments.  My net DTI is high due to this but I have other means to make the payments without interrupting my savings.  I am sure they will not ask about this in an on-line application.

[Revelate]

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@MadMoney wrote:

Thanks for your comment.  However, I am afraid they will try and calculate DTI by net income and not take into consideration what I put away in savings as discretionary income which could be used to make payments.  My net DTI is high due to this but I have other means to make the payments without interrupting my savings.  I am sure they will not ask about this in an on-line application.

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Nobody worth mentioning calculates on net income.

In-House = buy here pay here, not captive dealer lender (which I know from working at one and buying through another is gross), and why you would be purchasing with any lender not catering to your strata is beyond my imagination.  Someone asks you for net income, just say no and go find a different lender, that's a pretty healthy sanity check for anyone on a lender in my estimation.

You'll be fine, stop worrying .

[coterotie]

I still think you are getting confused about the whole process.

Unless someone is putting a gun to your head forcing you to do the savings, they do not count as a reduction in your net income.

I think every lender on the planet uses gross income or gross/net income and in that case you would automatically gross up your net to include the 22% that you save.

Finally, have you actually looked at an online application?  I just pulled up a couple and all of them ask for gross.

[coterotie]

One other thing, unless those credit cards are zero percenters, then you would be better off paying them off than putting 22% into savings once you had your emergency fund built up.  That is unless you have some type of super company match w/ stock options or something that would return more than the after tax rate on the credit cards.  You are likely in the 35% bracket so a 20% credit card rate is actually 27%. 

[MadMoney]

I am in a match situation with work. Currently, my investments return over 15% on one and 6% on the other.  card rate is reasonable at 11.25% with half the outstanding balance at  a 3.99%  rate. I plan to have the balance paid in full in 12 to 14 months.  I have I have emergency fund in place.   I can live with my current situation right now but would like to have a new car.