topic Re: first time car buyer help!!pls in Auto Loans

first time car buyer help!!pls

Anonymous — Thu, 29 Dec 2011 06:05:14 GMT

Im 21 years old

attending school

living with parents

I just pulled my eq fico score and its a 701 and my tu fico score is a 680

i have worked at my current job for 1 year making just over 2200 a month (gross) previous job was three years at employer

i have no school loans,

2 Credit cards with longest being 4 year and the other being 2.3 years (no missed payments, 3300 limit on one and 1100 limit on the other)

im trying to get fin. for a 30k car loan on a used car for 60 to 72 months with low apr%,

i have no bills just gas,food, etc.

1st question???.....do i have a chance on getting fin. by myself? or do i need a cosigner?

2ed question???....does living with my parents hurt my chances with getting a car loan? should i state that i dont pay rent, or state that i help with small purchases such as food and misc. items and say i do pay rent at my parents?

Re: first time car buyer help!!pls

pizzadude — Thu, 29 Dec 2011 15:14:11 GMT

First of all, you have no debt is that correct ?? If so you are in great shape from a DTI perspective.

I'm guessing that living with your parents would be a positive, since you won't have any rent/mortgage payments.

30K might be a problem since you have never had an auto loan. Have you ever had ANY installment loans ??

Have you considered shopping for a less expensive car ?? You could definately get a good, reliable used car for much less than 30K.

Or saving up $$$ to pay cash for the car ? I would hope that you are socking away some money each month since you are living on the cheap.

Re: first time car buyer help!!pls

Tomoslx2 — Fri, 30 Dec 2011 02:40:22 GMT

What brand of car are you looking at? I ask because certain captives have some good programs for first time buyers (GM Financial)

Also, with a first time buyer, or any buyer for that matter, banks love equity, so if you have a good down payment that always helps.

Re: first time car buyer help!!pls

Anonymous — Fri, 30 Dec 2011 06:29:56 GMT

small debt on my credit card 300 dollar balance, have no installment loans

Re: first time car buyer help!!pls

Anonymous — Fri, 30 Dec 2011 06:31:20 GMT

i am looking at a 2008 bmw m6 for my car,

As for living with your parents, banks will still figure a rent payment into your DTI since you could during the term of your loan have a rent payment. Depending on your region they will have a set amount for a rent figure if you are currently living with parents (600-900 month)so should i state that i do pay rent and say i pay only 100-200 dollars a month becuase i pay no where near 600-900 dollars at my parents)???

Re: first time car buyer help!!pls

Revelate — Fri, 30 Dec 2011 09:33:57 GMT

Well you're stuck on a few points as I have recently found out having recently purchased a used car... I don't think you really need to worry about whether they want to assign rent to you or not for your DTI calculation compared to the white elephants which are in the room.

You're going to almost assuredly get an Auto-Enhanced score pulled, and because you're a first-time buyer (and I recently looked like one having paid cash for my prior one more than a decade ago, Auto Ex 554, go me!), the score the dealer and their lenders will use could be 50-75+ points below where your standard FICO scores state you're at, and you don't have a ton of recourse on that.

Secondly, you're buying a used car: it is unquestionably easier to get a loan on a new car. Used car risk profiles are significantly higher, in general the trend is that people drive them till they break, after which they just walk away from it, and sometimes from the loan attached to it. Downpayment is king here.

Third, your income with little credit history might be a little tricky to swing a 30k loan period currently, new or used. Doesn't matter whether you could make the payments or not unfortunately, I still think I made more money working for Dell at 11/hr living with my parents than I have since I moved out 16 years later.

Probably your best option is if you can make the payments and are dead-set on this particular car, since your parents haven't kicked you out yet, beg, plead, whatever to get one of them as a cosigner. Alternatively, take a family loan from your parents for a non-trivial downpayment; however, make certain to follow the IRS guidelines though! Put it in writing too... though technically anything under 13k can be classified as a gift from the IRS perspective anyway so probably not a huge deal if audited.

I doubt you're going to get a very low interest rate on the car you're targeting without a cosigner, but if you're going to a BMW dealer I know BMW does have a captive sub-prime (first-time car borrower with limited credit history, I apologize for the frank characterization but it's accurate) lending practice unlike Honda as an example so it's possible you might swing the loan on your own, but you're not going to get the low APR's the gold plated people buying new cars receive.

Do make certain whatever financing company you wind up with reports to the bureaus . That way you can take a poor APR and refi as six solid months payment on the auto loan is going to hop up your Auto score immeasurably, and will almost certainly be good for your overall credit too... you don't have to live with the interest rate you initially are financed at if you pay the installments on time. You can't look at this as a three month problem and be successful in this venture unfortunately.

Re: first time car buyer help!!pls

Anonymous — Fri, 30 Dec 2011 17:37:30 GMT

@Revelate wrote:
Well you're stuck on a few points as I have recently found out having recently purchased a used car... I don't think you really need to worry about whether they want to assign rent to you or not for your DTI calculation compared to the white elephants which are in the room.

You're going to almost assuredly get an Auto-Enhanced score pulled, and because you're a first-time buyer (and I recently looked like one having paid cash for my prior one more than a decade ago, Auto Ex 554, go me!), the score the dealer and their lenders will use could be 50-75+ points below where your standard FICO scores state you're at, and you don't have a ton of recourse on that.

Secondly, you're buying a used car: it is unquestionably easier to get a loan on a new car. Used car risk profiles are significantly higher, in general the trend is that people drive them till they break, after which they just walk away from it, and sometimes from the loan attached to it. Downpayment is king here.

Third, your income with little credit history might be a little tricky to swing a 30k loan period currently, new or used. Doesn't matter whether you could make the payments or not unfortunately, I still think I made more money working for Dell at 11/hr living with my parents than I have since I moved out 16 years later.

Probably your best option is if you can make the payments and are dead-set on this particular car, since your parents haven't kicked you out yet, beg, plead, whatever to get one of them as a cosigner. Alternatively, take a family loan from your parents for a non-trivial downpayment; however, make certain to follow the IRS guidelines though! Put it in writing too... though technically anything under 13k can be classified as a gift from the IRS perspective anyway so probably not a huge deal if audited.

I doubt you're going to get a very low interest rate on the car you're targeting without a cosigner, but if you're going to a BMW dealer I know BMW does have a captive sub-prime (first-time car borrower with limited credit history, I apologize for the frank characterization but it's accurate) lending practice unlike Honda as an example so it's possible you might swing the loan on your own, but you're not going to get the low APR's the gold plated people buying new cars receive.

Do make certain whatever financing company you wind up with reports to the bureaus . That way you can take a poor APR and refi as six solid months payment on the auto loan is going to hop up your Auto score immeasurably, and will almost certainly be good for your overall credit too... you don't have to live with the interest rate you initially are financed at if you pay the installments on time. You can't look at this as a three month problem and be successful in this venture unfortunately.

awesome thanks for the helpful info!!

Re: first time car buyer help!!pls

Anonymous — Fri, 30 Dec 2011 19:41:12 GMT

A little off topic but felt it might help you to share this. One thing I've learned to do when car shopping if you are going to be applying for any financing through the dealership or taking a test drive is to have a photcopy of your drivers license to give them. Do not hand them your original drivers license and let them walk off with it. This keeps you in control of the situation, I've had a dealer "loose" my drivers license so they could keep you there and try to keep pushing you to buy. Also, I let them know I'm serious about buying but have an appointment to get to in a little bit so don't have all day. I would leave after a set amount of time and then let them get back in touch with you. Just try to stay in control of the transaction and don't let them pull anything over on you. Good luck.

Re: first time car buyer help!!pls

andyaycw — Sat, 31 Dec 2011 03:31:45 GMT

@Revelate wrote:
You're going to almost assuredly get an Auto-Enhanced score pulled, and because you're a first-time buyer (and I recently looked like one having paid cash for my prior one more than a decade ago, Auto Ex 554, go me!), the score the dealer and their lenders will use could be 50-75+ points below where your standard FICO scores state you're at, and you don't have a ton of recourse on that.

I must respectfully disagree - when I bought my first car last year my auto-enchanced FICOs were about the same/higher than the FICOs I pulled here. I had no mortgages, no prior auto loans, a deferred student loan, and several open revolving credit cards. I had clean credit with no derogs with a credit history of about 4 years. At the time, my EQ and TU pulled from this site were 733 and 741.The dealer pulled auto-enchanced FICOs of 782 EX and 744 TU. I don't have my EX for an apples-to-apples comparison, but my TU FICO of 741 was very close to what the dealer pulled at 744. Plus, I'm pretty sure the reason my EX auto-FICO at 782 was so much higher than my TU auto-FICO of 744 is because my EX report had fewer accounts reporting a balance. Apparently, TU needed a few more days for the updated balances to hit. So it is possible to have a high auto-enhanced FICO even without prior auto loan history.

Re: first time car buyer help!!pls

Revelate — Sat, 31 Dec 2011 09:21:18 GMT

@andyaycw wrote:
@Revelate wrote:
You're going to almost assuredly get an Auto-Enhanced score pulled, and because you're a first-time buyer (and I recently looked like one having paid cash for my prior one more than a decade ago, Auto Ex 554, go me!), the score the dealer and their lenders will use could be 50-75+ points below where your standard FICO scores state you're at, and you don't have a ton of recourse on that.

I must respectfully disagree - when I bought my first car last year my auto-enchanced FICOs were about the same/higher than the FICOs I pulled here. I had no mortgages, no prior auto loans, a deferred student loan, and several open revolving credit cards. I had clean credit with no derogs with a credit history of about 4 years. At the time, my EQ and TU pulled from this site were 733 and 741.The dealer pulled auto-enchanced FICOs of 782 EX and 744 TU. I don't have my EX for an apples-to-apples comparison, but my TU FICO of 741 was very close to what the dealer pulled at 744. Plus, I'm pretty sure the reason my EX auto-FICO at 782 was so much higher than my TU auto-FICO of 744 is because my EX report had fewer accounts reporting a balance. Apparently, TU needed a few more days for the updated balances to hit. So it is possible to have a high auto-enhanced FICO even without prior auto loan history.

Ah, but I very carefully worded that statement as "could be."

Of course the actual Auto-Enhanced scoring profile is far more sophisticated than any simple characterization: in your case with your scores banks would be tripping all over themselves to finance you on a secured loan. Realistically, from that viewpoint, your Auto Enhanced scores *should* be higher than the default FICO ones. For people on the thinish side of things with regards to their file, and no auto-loan history reported, the vast majority of people I've at least talked to (I admit, not enough for statistical relevancy) have seen their Auto scores take a hit.

Re: first time car buyer help!!pls

Anonymous — Wed, 04 Jan 2012 17:15:07 GMT

i have tried 4 different credit unions and have had no luck, any ideas guys?

Re: first time car buyer help!!pls

pizzadude — Wed, 04 Jan 2012 20:00:42 GMT

What are the reasons that you are being given when you haven't been approved by the CUs ?

Re: first time car buyer help!!pls

Anonymous — Wed, 04 Jan 2012 20:41:35 GMT

@pizzadude wrote:

What are the reasons that you are being given when you haven't been approved by the CUs ?

that i do not have enough credit history, it says there are to many inquires in past 12 months and the only inquries in the last 2 years have been one credit card, so im not sure if there counting into factor the loans that im trying to get as multipal inquires,

Re: first time car buyer help!!pls

pizzadude — Wed, 04 Jan 2012 20:47:44 GMT

I don't think that you will be able to finance 30K since you do not have any previous installment loan history. What kind of a down payment were you going to put down ?

Re: first time car buyer help!!pls

Anonymous — Wed, 04 Jan 2012 20:50:21 GMT

@pizzadude wrote:

I don't think that you will be able to finance 30K since you do not have any previous installment loan history. What kind of a down payment were you going to put down ?

its a 50k car with 20k down

Re: first time car buyer help!!pls

pizzadude — Wed, 04 Jan 2012 21:31:49 GMT

Your stated income is around 26K correct ? Even putting 20K down, I think its going to be tough.

Why not take some of the 20K cash that you were going to use for downpayment and finance a less expensive car first to get some installment history, then work up to the BMW ??

Re: first time car buyer help!!pls

Anonymous — Wed, 04 Jan 2012 21:33:04 GMT

@pizzadude wrote:

Your stated income is around 26K correct ? Even putting 20K down, I think its going to be tough.

Why not take some of the 20K cash that you were going to use for downpayment and finance a less expensive car first to get some installment history, then work up to the BMW ??

yes or im going to try and get one of my parents to co sign

Re: first time car buyer help!!pls

Revelate — Thu, 05 Jan 2012 02:14:24 GMT

@Anonymous wrote:
@pizzadude wrote:

Your stated income is around 26K correct ? Even putting 20K down, I think its going to be tough.

Why not take some of the 20K cash that you were going to use for downpayment and finance a less expensive car first to get some installment history, then work up to the BMW ??

yes or im going to try and get one of my parents to co sign

If you're dead set on this car, get a cosigner, go to a dealer. You're putting 40% down, you'll be fine assuming your cosigner income / credit history isn't a flag. Make payments and go establish some more credit history too.

You're likely going to get a 20% interest rate or thereabouts going alone if you could even get it at all, and then the payment is something laughable like 800/month for a 5 year note: conversely, even if you get 8% that drops it to around 600 which is more workable. Even with the car, you still need date money.

It's unasked for, but I'll give you a piece of advice from my own wayward life: go finance a cheaper or older car. Yeah, that car might be pure sex now and for the next few years, but I'd strongly suggest setting yourself up for a better position later. This car's going to be a high payment on your income regardless, and there's a highly probable chance that money might be better served long-term doing something else with it.

Also if something happens and you total the car... well... that could be detrimental for a decade. I hate to say it, but so much of life management is doing your own risk analysis, and that car isn't a defensible position for you currently, much like my purchasing a one bedroom condo isn't a defensible position for me as after the theoretical mortgage, comes the theoretical wife and children. 1 bedroom doesn't even count as a starter-home in that scenario, whereas a 2 bedroom could be made to work for several years while saving up for a larger one.

It's your life, but I'd strongly suggest you reconsider... there's plenty high quality used cars around the 30k strata (12-15 down) that leaves you in a much better position financially, and still will impress whoever you're dating at the time.

Re: first time car buyer help!!pls

Anonymous — Thu, 05 Jan 2012 03:52:31 GMT

CU's are typically better for financing but you may qualify with one of the dealer's lenders. The problem is you would most assuredly receive a higher rate and you will be looking at mortgage size car notes. It's risky in the Banks eyes as you might get tired of paying $800 plus dollars a month in lets say 2016 (only 4 years in your loan) for a 10 year old car... You may default and give the car back and the bank will take a loss. I suggest looking following your desire. If you HAVE to have this particular car and will pay anything for it go through the dealers lender. Refinance in 12-18 months. Be prepared to not apply for any new loans in the next couple years as you may have many, many inq's on your CR for the next couple of years.

Good Luck