topic Re: I can't get approved for an auto loan, and I don't know why! in Auto Loans

I can't get approved for an auto loan, and I don't know why!

zeusta20 — Wed, 23 Feb 2011 06:45:11 GMT

I have been doing a lot of research on car buying tips. I'm 20, (turning 21 in July), and I have been trying to get approved for an auto loan, but I keep getting denied. I've had credit for almost 3 years, and my credit score is above 720. I was trying to buy a car that was 24,000 AFTER taxes, licensing, all that stuff. I qualified for the special financing rate which was 2.9 for 60 months, and 3.9 for 72. But I STILL got denied. The salesman at the dealership told me that it wasn't my credit score, but because I only have 2 credit cards on my credit, and I have no previous credit history with an auto loan. He said i'd probably qualify if I had a cosigner, but unfortunately, I've got the best credit score, and financial standing than anyone else in my family. So quite frankly, I don't know what i'm supposed to do.

I understand that I have no history of financing an auto loan, but how can I even start if I can't get approved in the first place! Its like a catch 22. And I have no clue how i'm supposed to even start building my credit history with an auto loan if I can't get an auto loan in the first place.

Re: I can't get approved for an auto loan, and I don't know why!

Anonymous — Wed, 23 Feb 2011 07:04:58 GMT

I would recommend trying a local credit union. They may be willing to finance you, especially if they have a first time buyer program. Are you putting any money down? Most banks probably want to see like 20% down since you don't have autoloan history.

Re: I can't get approved for an auto loan, and I don't know why!

zeusta20 — Wed, 23 Feb 2011 07:14:04 GMT

I wasn't at first, because I thought I could get approved with no money down because of my credit score. So then since I found out I wasn't getting approved, I decided to try and put 2000 down to see if that was going to do anything (which it didn't). I actually bank with a credit union, but the dealership had already ran a credit app through them, and it still came back denied. I'm not sure if thats the same thing or not. But the salesman ran it by various credit unions. Still no luck...

Re: I can't get approved for an auto loan, and I don't know why!

MarineVietVet — Wed, 23 Feb 2011 16:23:10 GMT

@zeusta20 wrote:
I wasn't at first, because I thought I could get approved with no money down because of my credit score. So then since I found out I wasn't getting approved, I decided to try and put 2000 down to see if that was going to do anything (which it didn't). I actually bank with a credit union, but the dealership had already ran a credit app through them, and it still came back denied. I'm not sure if thats the same thing or not. But the salesman ran it by various credit unions. Still no luck...

Hi zeusta,

What reason(s) were you given for the denial? By law you have to be told the reason and also be told what CRA was used to make the decision to deny credit. This is supposed to be in the form of a letter.

Also you say you have a credit score of 720 but where did you get that score? Was it lender pulled or did you buy that yourself?

From a BK years ago to:
EX - 9/09 pulled by lender 802, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

Re: I can't get approved for an auto loan, and I don't know why!

Anonymous — Wed, 23 Feb 2011 18:56:02 GMT

Hi, I've had a similar situation. Given that you have limited history, no money down will not be an option. 100% financing is generally for those who have successfully closed an auto loan these days. You're likely trying to request too much or are not putting enough money down. It took me a while to figure that out.

Without history, I noticed that most places would only approve me for loans in the 10K - 16K range even though I had an income of over 100K. I ended up putting down a 4K down payment on a 12K car and was approved at a subprime rate.. But it was my foot in the door. I paid the car off in just over a year (~16 months) and was able to get another loan for the car I wanted. Hope this helps.

Re: I can't get approved for an auto loan, and I don't know why!

zeusta20 — Thu, 24 Feb 2011 13:18:54 GMT

Well, when I bought my credit score from this site, it said my EQUIFAX was 700, Experian was 711, and Transunion was 751. When the dealership ran it, it said my Equifax was 721. So I assume thats what my real score was. And I never really received a specific reason in writing. It was just what the salesman at the dealership said.

Re: I can't get approved for an auto loan, and I don't know why!

zeusta20 — Thu, 24 Feb 2011 13:21:00 GMT

Yea. I was thinking about doing something like that, but I didn't want to spend thousands of dollars on a car I didn't want. I understand where you're coming from though. That does make sense.

Re: I can't get approved for an auto loan, and I don't know why!

MarineVietVet — Thu, 24 Feb 2011 17:55:42 GMT

@zeusta20 wrote:
Well, when I bought my credit score from this site, it said my EQUIFAX was 700, Experian was 711, and Transunion was 751. When the dealership ran it, it said my Equifax was 721. So I assume thats what my real score was. And I never really received a specific reason in writing. It was just what the salesman at the dealership said.

When you say you got your scores "from this site" do you mean myFICO? I ask that because you can't buy Experian scores here. No one has been able to buy their own Experian FICO score since February of 2009. Creditors can pull Experian and also there is a CU (PSECU) in Pennsylvania that supplies that information to it's members only.

The score the dealer pulled is legitimate and could be a FICO Auto Enhanced Score.

Edited for a typo.

Re: I can't get approved for an auto loan, and I don't know why!

JonStur — Thu, 24 Feb 2011 17:46:50 GMT

That's a tough one..you could always try Cars Direct.com or Up2Drive.com.. I'm sure they'll approve you, however you're not gonna get the rate you want..

Re: I can't get approved for an auto loan, and I don't know why!

Anonymous — Thu, 24 Feb 2011 20:12:12 GMT

I am sorry:

Scores alone are not the biggest driver for securing an auto loan.

With the vagaries of FICO- a trained chimp with a Chase Freedom card and a $300 limit would have a FICO of 735 after a few years. They still would not be credit worthy for a loan.

When trying to get your deal bought the other factors that weigh heavily on the loan are:

length of credit history
length of employment at current employer
DTI
income (if you are not pulling 16-18 hundred a month you are not getting bought by anyone)
income vs expenses
type of vehicle being bougth
ltv of vehicle

But I digress.

I am surprised that your salesman was not more honest that you could have some challenges to get approved.

In all honesty you need a co signer, or a Credit Union or other First time buyer friendly institution, assuming you have enough monthly income for a loan.

Also huge red flag on a car loan is "living with parents" and paying no rent. To the finance company that is transitory situation that could change in a heartbeat with your parents employment, or just a fight.

Re: I can't get approved for an auto loan, and I don't know why!

zeusta20 — Thu, 24 Feb 2011 20:20:15 GMT

Thats right. I apologize. My Equifax and Transunion were from this site. But I received my Experian score from a different site. I'm subscribed for Identity Theft Protection, and I get my credit scores from there as well, but I trust myFico over that. Which is why, for the most part, I go off of my scores from this website.

Re: I can't get approved for an auto loan, and I don't know why!

zeusta20 — Thu, 24 Feb 2011 20:35:02 GMT

Get mad? Of course not. There's no point in getting upset if I'm the one asking for the advice. If I didn't want the truth, I wouldn't ask.

Okay...

Credit History: There's nothing I can do about that. Only time.

Length of Employment: Been at my job for about two years

DTI: I'm not sure what the Diesel Turbo Injection is on the car I chose

Income: I make over 1800 a month.

Income vs Expenses: I've pretty much have everything paid off except for about, $600 on one of my credit cards. And my Credit Line is $1900

Type of Vehicle being bought: 2011 Hyundai Sonata GLS with Navigation

and I'm not sure what you mean by LTV, if you could clarify, that would be great.

So based on the information I've provided for you, what do you think would be a way to go about financing a car. I'm just confused because, this is my first time financing a car, and if I can't get approved for the loan BECAUSE OF THE FACT THAT I DON'T HAVE PREVIOUS FINANCING HISTORY, then how can I start if they don't approve me?

Re: I can't get approved for an auto loan, and I don't know why!

zeusta20 — Thu, 24 Feb 2011 20:35:33 GMT

I see...thanks for your input. I will definitely keep those options open.

Re: I can't get approved for an auto loan, and I don't know why!

Anonymous — Thu, 24 Feb 2011 20:51:03 GMT

@zeusta20 wrote:
Get mad? Of course not. There's no point in getting upset if I'm the one asking for the advice. If I didn't want the truth, I wouldn't ask.

Okay...

Credit History: There's nothing I can do about that. Only time.
Length of Employment: Been at my job for about two years
DTI: I'm not sure what the Diesel Turbo Injection is on the car I chose (Debt to income)
Income: I make over 1800 a month.
Income vs Expenses: I've pretty much have everything paid off except for about, $600 on one of my credit cards. And my Credit Line is $1900
Type of Vehicle being bought: 2011 Hyundai Sonata GLS with Navigation

and I'm not sure what you mean by LTV, if you could clarify, that would be great. (loan to value: amount of loan vs vehicle value)

So based on the information I've provided for you, what do you think would be a way to go about financing a car. I'm just confused because, this is my first time financing a car, and if I can't get approved for the loan BECAUSE OF THE FACT THAT I DON'T HAVE PREVIOUS FINANCING HISTORY, then how can I start if they don't approve me?

Umm that list I left was basically a generic but not all inclusive list of the other factors involved beyond score in getting a loan.

To answer your question about how to obtain big financing if you never had any before: Simple: a co signer or big money down.

I know its rough, but that's really it.

You may be able to talk to the finance manager and see if he could come up with an amount down that would get you financed.

You can also personally stop into your credit union and talk to a loan officer in person and see what they say.

if you have a familial relation in the military you could see if someone could sponsor you into Navy Federal Credit Union.

Re: I can't get approved for an auto loan, and I don't know why!

mross1080 — Fri, 25 Feb 2011 00:39:57 GMT

I had the same issue for my first loan. I had to settle for a subprime company on a smaller loan 12k. I made 6 payments and applied for loan for a new car and got 0 down financing and was in and out in about an hour and sold the first car later that week privately and paid off the first loan. Since then I havent had any problems getting a loan. Have gotten several others since then. Its a tough situation and ive been there and understand how frustrating it is but just tough it out if you have to on something less expensive to get your foot in the door and then trade up a little later if you dont have anyone to cosign. I really wish I had the luxury of a cosigner but you take what you can get. Good luck. I think it will work out for you!

Re: I can't get approved for an auto loan, and I don't know why!

Tazman81 — Fri, 25 Feb 2011 21:00:14 GMT

Who do you currently bank with and how long have you been with them. Check with them to see if you can qualify for a loan. It may not be at the same rates you wanted through the dealership, but it is a start. If the interest rate is too high, then after a year of on time auto payments, you will have a history and can refinance. Or if you get a high interest rate and just make larger (or double) payments each month, then the higher interest rate is not such a big factor. That is what I had to do on my first auto out of bankruptcy where my interest rate was a wopping 24.99% YIKES!!!

Re: I can't get approved for an auto loan, and I don't know why!

zeusta20 — Sat, 26 Feb 2011 12:54:37 GMT

I bank with Wells Fargo and I also bank with a credit union...As a matter of fact, I WORK for Wells Fargo. However, I only use my WF account for bills and keep my credit union account for all my other funds. My credit union i've only banked with for about 4 months. WF i've banked with for over 2 years. Maybe even 3 or 4.

Re: I can't get approved for an auto loan, and I don't know why!

Tazman81 — Sun, 27 Feb 2011 15:13:04 GMT

@zeusta20 wrote:
I bank with Wells Fargo and I also bank with a credit union...As a matter of fact, I WORK for Wells Fargo. However, I only use my WF account for bills and keep my credit union account for all my other funds. My credit union i've only banked with for about 4 months. WF i've banked with for over 2 years. Maybe even 3 or 4.

I would try to get a loan through WF. They have 2 seperate options. You can try through Wells Fargo Bank, and then you can also try through Wells Fargo Financial (which is usually for those that need to establish a history or have credit blemishes).

Re: I can't get approved for an auto loan, and I don't know why!

Anonymous — Sat, 31 Dec 2011 09:10:29 GMT

I'm having a simular problem. I'm 20 I turn 21 in march of 2012. I almost have 2 years of credit on an auto loan but I have 2 cosigners on it and (proof that I have been the only one making the payments) and one capitolone credit card. With those 2 lines of credit I never missed a payment and was never late and always paid in full. My credit score is 675 so its fair. I work for Continental Airlines and my starting salary is 32k a year. I am moving to Chicago and recieved and 50% pay raise to a little over 47k a year. The thing is the longest job history I have is a year. I started out when I was 18 for expressjet and kept getting promoted then finally went mainline so my job history is that strong reguardless of my work ethic and ability to advance. Also I have less than 2 years of credit history but I can't even get approved for a dang $300 credit card or get approved for an auto loan. At first I thought it was my age, then my job history, then my crdit hisory, then I thought it was the fact that I had 2 cosigners on my auto loan, then I thought I was being cheated but it turns out its all the above. Also I have a large amount of crdit inquiries and I'm hoping somethings will change when I'm 21. By then my age will be improved and I will have 2 years of credit history not to mention a fairly higher credit score. It seems you may just have to stick it out and wait.

Re: I can't get approved for an auto loan, and I don't know why!

taggl00 — Sat, 31 Dec 2011 09:40:45 GMT

when i was 18 (1994) i went and bought a brand new mitsubishi for 16k. i had no credit but had 5k to put down. dealership said all i needed was a co-signer as i was putting down almost 1/3. my mother co-signed and i drove out the dealership with my new car. i was working at mcdonalds at the time making 24k a year.

a large downpayment and usually most people can get financing.