06-19-2011 01:00 AM - edited 06-19-2011 01:06 AM
Let's start this by saying my job requires that I have a vehicle. I, currently, do not have a vehicle and I'm using a rental to do my daily work travels.
Second, is the credit overview and third will be my actual situation for advice in this post.
$139k student loans remaining. all currently deffered (debt to income is 103)
collections accounts include a $5800. medical bill as the highest. There are several other medical related collections as well (about 7 total)
Other: charge off credit card: 486, collection account (for credit card; $654).
A week ago, several duplicate collections entries were removed as well as a $102 collection account. (I called the company, offered to pay it in full if it were deleted from credit altogether).
The only good: several paid off student loans (over five years ago) and one paid off loan for a vehicle I had 7 years ago.
I stopped using my credit in 2007 because I had such high student loans that each time I applied for credit, I got denied largely because of the loans being so high. Nevertheless, collections that appeared last year were the only recent activity because I could no longer afford to make payments. Within a month, they were on my credit as collections.
Here is the situation:
I applied for a car loan through GM and was denied. my score was 590/equifax. The same day, I applied with Roadloans and Capitol One. I was approved by roadloans and received their loan agreement. The Equifax score was 584 on that application. So, the next day, I spoke with a Nissan/BMW dealer and he told me that all I needed was a 575 to be approved for financing. I allowed him to pull my score and I was denied because the score was 557/Equifax (and even lower for T.U. and Experian).
I was perplexed at how my score would drop over 40 points in one day with four inquires. Turns out that the score really did take a hit, mainly because my credit had not been pulled in well over a year & it was bad. So, it had an immediate impact in my attempt to get auto financing.
Thus, I am stuck with a loan agreement from Roadloans/Santander, which I have not signed off on, that will finance $15000 w/$1200 down on used vehicle between 04 - 10 with 60k or less miles. The interest rate is 25.24%, which is $1 for each dollar financed. I have gone to ten dealearships in a week and I have not found one single vehicle that will fit the terms of their loan. Each dealership representative tells me not to use the loan because the interest rate suggests that I have had two repos and a bankfuptcy...and I have not. They all feel that I can get a much better rate if I look harder in other places, but searching for auto financing is not my thing. I, generally want to ask any bank/financer what their credit score requirements are, plus interest rate floor & ceiling. I refuse to have my credit pulled for at least one month at this point. I feel that anyone who wants to consider me, face to face, can review the credit report I've already pulled to make any preliminary decisions.
What kind of options do you think I have regarding the auto loan delimna?
Of course! I pulled my credit and scores. But it wasn't until I pulled my FICO that I got an idea of best plan of action to try and improve my score as quickly as possible. I don't know how well the score simulator works for predictions, but it 'suggests' that I pay 20% of the total outstanding debt on the two credit cards I mentioned earlier, and in one month, my score will increase to 577 - 617 range, which is an automatic increase of 20 points from now.
I only have two cards on my report. One show as a revolving closed/charge off account ($486). The other shows as an 'other' collection account ($654). I called the first account and paid 20% on the balance already. I will be receiving a payment letter that I can send to Equifax. But the second company says they don't send any type of payment letters until the account is paid/settled in full. So, I told the representative that it was pointless for me to pay any amount unless it was the full amount, which I can't afford at the moment. What I am considering, is to make a small payment, then dispute it on my credit file. If the company doesn't update it, then it will likely be deleted...right?
Back to the score simulator: I'm considering paying more on the first account so that my overall balance will reflect a full 20% reduction---eventhough a payment will, likely, only be reflected on one account. Do you think that will generate the same score increase?
Summary: I would appreciate an informed and objective reply. Please don't disrupt your replies to me with subjective/heckling/smart-mouthing comments. I am looking for informed advice only about what I have presented to you. Please be respectful of that if you choose to reply.. Thank you.
I'm only tracking my Equifax score. It is currently 560.
06-19-2011 01:46 PM - edited 06-19-2011 04:06 PM
Please answer some questions:
2-income, gross monthly
3-Time with current employer
4-Current car obligation/monthly rental
5-miles put on car each month/week
6-What work do you do
7-Single, married, or in committed relationship
8-Type of degree (4, 2, or 6 year attained)
9-expenses, rent etc monthly
until we know more there is no real advice that can be given.
06-19-2011 04:06 PM
Please answer some questions:
3-Time with current employer 1yr 1mth
4-Current car obligation/monthly rental 200/wk
5-miles put on car each month/week 1200
6-What work do you do territory product mgr
7-Single, married, or in committed relationship single
8-Type of degree (4, 2, or 6 year attained) masters
06-20-2011 03:46 PM - edited 06-20-2011 03:51 PM
Had to mull this overnight.
1- I asked some additional questions right as you answered my first set.
You made a great plea for information, but with just your score no one can give you advice. So if you can answer that as well maybe we can offer some advice
Btw how much is it costing you a month to service your sudent loans?
How much are all your monthly obligations including student loans but not including the $800 a month you are spending on a car?
Are you really making Gross only $45,000 a year?
2- You want a positive upbeat non negative answer. I'm not sure I can give you one. At some point a terminal cancer diagnosis is a terminal cancer diagnosis.
3- If you are in student loan debt for $105K and are only grossing $45K you may be one of those people, assuming you are working a job in the field you graduated in, who took on more student debt then the job you were going into could pay.
Now if you are underemployed in that sector, OK. but after a year you should be looking elsewhere-that income seems unsustainable.
Here are the facts:
You only make 45K a year which is $3,750 prior to taxes, health insurance and retirement. If your loan service is 700 You are making what nothing after paying the 800 on the car and car insurance.
Now lets do story time:
A "friend" of mine went to John Carrol University and charged up more then $105,000 in student loan debt to be a lawyer and took a job as a prosecuter for the city of Cleveland. He makes less then $55,0000 a year, He waits tables in the same county he prosecutes in at a national chain restaurant every Friday night as a closer, then Saturday on an open to close to help pay his bills. He is expecting his time as a prosecuter to lead him to a judge ship or a much more lucrative career in private practice as a criminal defense lawyer, but right now yeah he does what he has to.
With the score you have, and a lack of positive information, and the income you have with the debt you have I do not see you getting any loan but what you have been offered. the numbers do not work. And the numbers do not work in more then your credit score but more along the point of free income to debt.
If you are making 45K a year and servicing a student loan of $105K i just do not see you looking like a viable buyer.
And I must say at 45K a year I have to assume you are getting a car alotment since your employer has to know you are burning through car value and gas like I go through toilet paper.
the $800 a month renting a car is definately killing you and keeping you on the treadmill without going anywhere. The actual good thing about it, you are not worrying about maintenence and depreciation. I do not know if a $3,000 beater car can keep up with the miles.
a- Secure a co signer, family, friends or relatives and buy a new small cheap car, or a used one at conventional rates
b-secure a much larger down payment half down should get you bought anywhere at a better rate
c- save and buy a beater car with cash, that will at least free up $800 a month and lead you to be able to save money to buy a better car in cash
d-buy lottery tickets
e-look for a part time job to help stretch your income. Waiting tables, gas station cashier whatever.
f-consider a buy here pay here
g- consider taking your degree and going officer in the military with some kind of tuition repayment bonus.
h- change jobs/move if you have to completely to make more and get you debts (DTI) under control.
i- consider a Buy Here, Pay Here that will report to the bureaus, but ultimately the miles you are putting on the car is going to kill the models most BHPH sell.
j- Definately consider a local credit union. Do some research. Yuo probably are going no where at below 600 but if you can get higher maybe.
You want an answer thats going to be Roses and Kittens and with the information I do not see one happening outside lottery win, inheritence, or someone who rented the car you just got into leaving $20,000 in the trunk.
06-20-2011 03:53 PM
A newer car should be a long way down your list. Buy something used for about twice what you have saved up, then bank your current rental amount, and use it to either save up for a new car or pay down debt. Or if you can, borrow a car from a family member for a couple months to save up some money.
Or buy a motorcycle, save on gas and the sticker price.
Use the information here to figure out how to improve your credit, and whatever you do don't sign up for a bad car loan. It will haunt you.
06-20-2011 04:05 PM
A newer car should be a long way down your list. Buy something used for about twice what you have saved up, umm how is he going to buy a car worth more then he has saved up? then bank your current rental amount, and use it to either save up for a new car or pay down debt. Or if you can, borrow a car from a family member for a couple months to save up some money. The 1200+ miles either a week or month hes putting on it is a little excessive for a family member to loan a car out to.
Or buy a motorcycle, save on gas and the sticker price. probably does not work with his regional manager/supervisor position
Use the information here to figure out how to improve your credit, and whatever you do don't sign up for a bad car loan. It will haunt you. Actually a "bad" loan through Santander could be less then what he is paying now. the issue is if the car they will approve can handle the miles up until it gets paid off.
06-20-2011 04:13 PM
A newer car should be a long way down your list. Buy something used for about twice what you have saved up, umm how is he going to buy a car worth more then he has saved up? Finance 50%, the payments will be lower, and with what he saves from the rental he can pay it off in a couple of months. When I was an Area Manager for a retail company I drove a 500 dollar car for two years, then bought a 7k car at a small dealer with dealer financing because of my credit.. then bank your current rental amount, and use it to either save up for a new car or pay down debt. Or if you can, borrow a car from a family member for a couple months to save up some money. The 1200+ miles either a week or month hes putting on it is a little excessive for a family member to loan a car out to. Possibly.
Or buy a motorcycle, save on gas and the sticker price. probably does not work with his regional manager/supervisor position Maybe not, depends on where he lives. I ride one, and am an Operations Manager for a large company. You can get a really nice used bike for 3-5k.
Use the information here to figure out how to improve your credit, and whatever you do don't sign up for a bad car loan. It will haunt you. Actually a "bad" loan through Santander could be less then what he is paying now. the issue is if the car they will approve can handle the miles up until it gets paid off. Better to get a short term solution now and work on the credit file, and buy better later. At 45k a year with all those loans outstanding he can't have it all. That's a recipe for disaster. I recommend patience, based on my personal experience.
I wonder if he is getting mileage reimbursement from his job that would offset the cost?
06-20-2011 06:37 PM - edited 06-20-2011 06:43 PM
haha! I love the terminal cancer diagnosis comment. HILARIOUS! but true..
I thought I provided as much detail as possible. But, maybe this will help as well.
Student loans will never exceed $250/mth...they are all in defferment and will likely be reduced to a lower amount when the deferrment ends. I manage those loans very well and I am not trying to pay them off at the cost of having a sub standard life. In other words, the government believes that I should always be able to obtain necessities like, food, clothing, shelter, transportation without the student loan burden weighing it down. Hence, they work with me and I make sure they keep a current status.. (it's very easy to manage student loans).
My monthly income includes my reimbursement package from my job for the use of my vehicle. I have incentives as well, but I've only disclosed what I've made so far this year after taxes and health benefits, which is $19k as of May 2011. I do not have cost of living expenses as I live in a house that's bought & paid for by my parents. My utilities are also paid as well (when I was younger, I contributed a lot to my parents well-being..so they are returning the favor so to speak)..So, I'm in a position to do some serious improvements to my credit. But, most of this year was focusing on bills that are NOT on my credit to make sure they stay off. So where is my money going you may ask: bills & work mostly. However, I have MORE than enough income to make a $400/mth car payment. And, even though I will be able to rent a car for less than $150/wk starting next week, I do not think it's feasible because it takes away money that I could be saving as down payment. Also, I agree with you that using a family vehicle is out of the question when I will be putting on nearly 5000 miles a month. That's just absurd.
So, to summarize, income is $45k---after all deductions. Again, that's is based on no other bonus incentives.
I am looking at a used 2006 vehicle with 32k miles. My Equifax is 560; needs to be 575 to be approved @16% apr financing with $2k down payment.
What I have already approved is Roadloans/Santander $15k @25.24%apr with $1200 down. While my credit is not bad, it's not shot to hell to be FORCED to accept this Santander offer. I made this post seeking advice on whether I could find something better (at least 18% apr) or if the reality of my credit is just to accept the offer and work around it till I can refinance the vehicle. by the way, I live in one of the poorest counties in the nation...so yea, I definitely underemployed, but this is the first bonafide job I found afte nearly 18 months of no work at all.
If I didn't mention in the original post, I had an accident in my vehicle a few weeks ago. It was a 95 tacoma--not worth much (but it was paid for). So, this is about timing. I had not intended on saving for a car till September of this year, with a plan to purchase in February of next year. But, I GOTTA DO IT NOW! And I just don't want to take the bad loan terms unless I really have no other options.
Again, my credit has been terminal, but it's revivable (lol!). If all that is needed is current activity on those old credit card accounts..so be it.
I hope that helps.
06-21-2011 10:44 AM
Is it possible to refi after a few months if/when the situation improves?
That's a good suggestion; It depends on the bank and amount owed compared to the value of the vehicle, there will be restrictions. Also, some banks have a mileage limit on what they will finance for a used car. It might be a good idea to look into the bank he's planning to refi with and see what their limits are.
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