Auto Loans

[rockymtngrl]

I am planning to go car shopping next week and I am not sure if I will be approved or at a doable interst rate. Been at the same job 12 years. My gross monthly is about $4500. DTI is about 18% of gross. I have 2 charge offs from earlier this year that I am making payments on and do not show as in collections. Both are around $1000 each. One is on all 3 reports the other is only on Experian. Scores around 620-630. BK7 about 5 1/2 years ago. I have a closed account with Ally that has a string of 30 day lates. I have an open account with Ally with no lates in the past year so really unsure of how that will affect auto enhanced score.

I am wanting to co-sign for my son in college who has no credit on new $17,000 Chevy. Can put down $1000 possibly can push to $1500 if we had to. Also have a trade worth about $750 value. Do you all think I have a chance with a decent rate? I would be satisfied with anything under 10%.

Second part of my question is if the rate if high how difficult would it be to refinance in say 6 months a new car that would probably be upside down? Do dealers do that or just banks? (I'm a bit scared to deal with banks cause they always seem to tell me no!).

I have been studying the threads here and it seems like most with scores around low 600 are coming in under 10%. I am just scared of getting hit with something like 19% which would be a deal killer for sure!

[StartingOver10]

Looking at your credit profile, as you provided in your post, it would be difficult to get a loan under 10% mainly because of the lates and collections after your BK.

That in itself is a credit killer (derogs after a BK).

It sounds like you are beginning to get back on your feet now since you are able to pay on time for the past 12 months and pay down your two collection accounts.

It seems like you are looking to take on a large debt, $17k, for your son's vehicle while he is in college. IMO, based on your post, it would put you in a very difficult financial spot.  Have you thought about your son just buying a small car for cash while he is in school so he doesn't have payments and it allows you the time to recover completely financially? From my experience, a college student doesn't need a $17k vehicle. My kids did well without the car payment while they were in college because they drove small, cheap cars for cash. The insurance payment was practically equal to a car payment and that was enough for them!

Believe me, I understand, I have a BK from 2008 too. It's more difficult to recover in the financial markets we have had over the past 5 years then it was prior to that when credit was easier to obtain. I had to buy a vehicle two years out from BK and I had no subsequent derogs. My score was just over 700 and the F&I guy started the rate at some very high double digit rate. Naturally I turned it down and kept turning it down until it got to 7.14%.  But, I didn't have to contend with the post BK issues. That is where you are going to have your difficulty when you finance a vehicle.  

[rockymtngrl]

Thank you for your comments! I have bought 2 cars post-bk with a few lates showing each time. Both were financed thru Ally- one has been paid and closed the other is about half paid. One was 7% interest & the other 4%. My understanding is that the credit/car loan markets are a bit looser now than the previous 2 times I have bought, but who knows.

BTW- I do not have anything in collections now or any post-bk collections.

[rockymtngrl]

Just to update in case anyone was wondering. Ally did approve with $1000 down and 5% interest for 72 months. Also reread and just noticed the insurance comment from the above poster. Not sure if you are still dealing with it but maybe if you call around you can find better rates? I have 4 new (ish) cars on my policy (full coverage)  plus one older paid for (liability only) & 3 young(ish) drivers (college age) plus spouse & myself & 1 accident and my insurance is about half of what my car payment is. I check rates every 6 months and switch if I find a better deal, which I usually do.

[FrugalRican]

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rockymtngrl wrote:

I am wanting to co-sign for my son in college who has no credit on new $17,000 Chevy.

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Good luck.

[Dadaluma83]

I echo the advice of the posters above. Just use your down payment and get a decent used car for cash. No reason a college student needs a brand new vehicle unless of course they had money for it and for your situation that money is best used to get things back in order for you. Plus the derogs on your report will make the interest rate quite high, making it very difficult to ever refinance, and it would be too much to have you and him be stuck with that debt. As a co signer you are just as responsible for the payments as he is.

Just go to a used car lot and have a car checked out by a mechanic. When my parents got me a car in high school that is what we did. Actually since the vehicle we looked at did need a bit of work we got it for cheap. 8 year old mazda truck with 110,000 miles on it for 4 grand. I took care of it and ended up driving it for 10 years through high school, college, and beyond. Only reason I am not still driving it is because my parents got a new car a few years back and I was given the old one as a hand me down, which of course I continue to take good care of.

[566score]

I was going to suggest ally. they just let me get a new cruze!