topic Re: Gardening now, but car was totaled... in Auto Loans

Gardening now, but car was totalled...

Ravensfan2001 — Mon, 10 Dec 2012 10:50:07 GMT

My 19-year-old child was in a car accident this week, and I'm expecting to hear by Tuesday that the car was totalled. So we are in desperate need of another vehicle.

I am currently rebuilding my credit, been in the garden for about 2 weeks, but have 16+ recent inquiries and several credit accounts opened this year, most were opened last month (in my signature line). All currently open accounts are perfect. I have 5-8 collection accounts (depending on which credit bureau) and 2 unpaid medical judgments from 2010. Two recent collection accounts are paid, the rest are 6+ years old, except for Midland, which will fall off in 2014. I want to apply for a mortgage in early 2014. By then, I should only have 3 small collection accounts, and 2 judgments, all hopefully paid. My income is $60,000 a year and I've had the same employer for 12 years (income increased by more than half to $50,000+ 4 years ago after I got my degree).

My son has 2 student loans, which don't need to be paid until he graduates, so no payments have been made and account is reported in good standing. He also has a Capital One Mastercard $300, opened in May 2012, and a Discover $1500, opened in November 2012. His Credit Karma score is 689 as of last month. He has almost $10,000 in savings and has been employed at his first job since July 2011, making about $11,000 a year (sounds funny, but he got a lot of $$$ for his HS graduation, and he's cheap, so he doesn't like to spend on his girlfriend. lol). He is also a full-time student.

My questions are...

How bad will it hurt my credit if I add an auto loan for a new car?

How bad will it hurt my chances of getting a mortgage? I do plan to apply for a mortgage by myself since my husband's credit is hopeless right now.

How likely will my CU approve me for another auto loan? I currently have one with them since March 2011.

Would my son get a good deal considering his situation?

For anyone that knows about car insurance, does it matter whose name the car is under?

Does anyone know if Lending Tree does a hard or soft pull for an auto loan?

Re: Gardening now, but car was totalled...

StartingOver10 — Wed, 12 Dec 2012 17:05:11 GMT

To answer some of your questions above:

1) If you add an auto loan to your credit it will affect your credit score (new account, many inquiries and new debt it you get a loan in your name)

2) Adding a car loan to your debt will affect the amount of money you can borrow for the purchase of a new home. It may affect it badly enough to prevent you from getting a mortage at all. It is not possible for me to tell you how much it will affect you because we don't have your income and debt info to figure out ratios. You are already in a spot because you are only going to use your income and not the entire household income according to your post.

3) Call up your CU and ask if they will approve you for another auto loan with the existing loan not being paid off. They might be able to tell you without another HP.

4) When my daughers were your son's age and they too were in accidents, I had them purchase their next vehicle. It actually gives them more responsibility and they are more careful driving the vehicle. I also had them pay their own insurance. That made a huge impact on the value of the car they were purchasing because the insurance payment was larger than the car payment. It's a good lesson for your son to learn now. He may decide he doesn't want to handle payments while he is in school.

5) Yes, it matters how the insurance is handled. Speak to your insurance agent and get quotes for vaious types of vehicles. If you have a driver in your household and he doesn't have separate insurance, then your insurance will increase dramatically (typically when you have an under 25 yr old driver living at home with you).

6) I don't know about lending tree except that it results in a lot of hard pulls on your credit.....

Re: Gardening now, but car was totalled...

Anonymous — Wed, 12 Dec 2012 18:02:55 GMT

To add what was already mentioned:

Why are you wondering about this when he has 10k in savings? He could easily find a very nice car for cash and not worry about a single payment. Its unlikely he could get approved for a loan with his income.

On the insurance part was the accident his fault? Did he recieve a citation for it? If he recieved a citiation then his insurance will bump pretty good and how much will depend on what kind of car he gets. It would save a little money if he is on your insurance as a second driver but in the end your still paying more if it was his fault.

So in the end and of course this is my suggestion would be to just use the cash to purchase a vehicle.

Re: Gardening now, but car was totalled...

Ravensfan2001 — Wed, 12 Dec 2012 18:27:04 GMT

The accident was his fault. Right now, our insurance went up only $8 for 6 months (renewal in January). I'm afraid of what it'll be after all this is settled.

As for my son getting a car, he won't budge. He doesn't have as much as I thought he did. But I can't force him to apply, either. Tried the guilt trip thing on him. He doesn't want car payments while he's in school. And he was even saying that he'll take time off school so he can work more to help out. I said HECK NO. I'd hate to put off a mortgage application another year, but I think I would hate it more if my son doesn't finish college.

So stressful!!!!!

Re: Gardening now, but car was totalled...

Ravensfan2001 — Wed, 12 Dec 2012 18:29:52 GMT

P.S. I called my CU and they didn't have to do another hard pull. With all the new accounts and hard inquiries, my score took a big hit, so they're looking everything over and going to call me back today or tomorrow.

Re: Gardening now, but car was totaled...

StartingOver10 — Wed, 12 Dec 2012 19:20:27 GMT

Does he need a car?

Seriously, he is responsible for his own transportation even in college*. I know that our college-aged adult children are experts at trying to get us, as parents, to pay for their vehicles, but it would be a mistake to reward him for an accident he had that totaled the previous vehicle. By buying him another one, he definitely is getting rewarded for his accident. Think long and hard about this - at 19 it is time he pay for his own wheels...JMO.

*edited for spelling

Re: Gardening now, but car was totaled...

Anonymous — Wed, 12 Dec 2012 18:36:04 GMT

@StartingOver10 wrote:
Does he need a car?

Seriously, he is responsible for his own transportation even in collage. I know that our collage-aged adult children are experts at trying to get us, as parents, to pay for their vehicles, but it would be a mistake to reward him for an accident he had that totaled the previous vehicle. By buying him another one, he definitely is getting rewarded for his accident. Think long and hard about this - at 19 it is time he pay for his own wheels...JMO.

I agree 100%

Re: Gardening now, but car was totalled...

Ravensfan2001 — Wed, 12 Dec 2012 18:53:50 GMT

Maybe I didn't explain it well enough. The car he totalled was my car. And the car we need is for me. There are 3 of us in the house that drive and work and right now, we only have 1 car between the 3 of us. He never had a car of his own. So I am not rewarding him for anything. No need to assume that he's taking advantage. I clearly stated the information I was looking for.

Re: Gardening now, but car was totalled...

Anonymous — Wed, 12 Dec 2012 19:08:07 GMT

To answer your above questions

My questions are...

How bad will it hurt my credit if I add an auto loan for a new car? Your adding a new tradeline so AAOA will take a hit

How bad will it hurt my chances of getting a mortgage? I do plan to apply for a mortgage by myself since my husband's credit is hopeless right now. If your planning on mortgage in the next year then you may have to hold off on the mortgage. It will be hard having two auto loans in just your name and applying for a mortgage just under your income and having derogs on your report unless you have a high income. 60K income on 2 20k auto loans and applying for a mortgage wont cut it

How likely will my CU approve me for another auto loan? I currently have one with them since March 2011. It depends what your DTI is and most lenders dont use HHI anymore so if your husband isnt on the loan prob very hard to get approved.

Would my son get a good deal considering his situation? He could get a deal but you stated he doesnt want a car payment and he could get approved but with a hefty down payment

For anyone that knows about car insurance, does it matter whose name the car is under? The car can only be listed in the person whos loan its under.

Does anyone know if Lending Tree does a hard or soft pull for an auto loan? When applying for any loan its going to be a HP.

Re: Gardening now, but car was totalled...

Anonymous — Fri, 14 Dec 2012 04:01:19 GMT

First, your questions

*How bad will it hurt my credit if I add an auto loan for a new car?

You would be very lucky to get a loan after that many inquiries and adding several new accounts. I opened 4 new accounts and tried to co-sign a student car for my wife and was declined due to many new accounts opened recently. I doubt that the new TL (if approved) would hurt scores much at all if you have several inquiries and new TLs from 1 month ago.

*How bad will it hurt my chances of getting a mortgage?

If you don't apply for anything 1 year prior and keep everything current you would only have to worry about your DTI. If it is over 45% you will have difficulty getting approved and may need a bigger down payment.

*How likely will my CU approve me for another auto loan? I currently have one with them since March 2011.*

Talk to them, if you have had a long relationship with them they may be more lenient and ignore the recent accounts/inquiries (specially if the insurance pays off the loan in full).

*Would my son get a good deal considering his situation?

I tried getting a loan for a car 1 year ago and my credit was fairly decent and I was required to put 10%+ down and would get a relatively high interest rate, I was 21. Reason I was given was that I had no experience with auto loans before. Also take into account that insurance will be higher due to his age.

*For anyone that knows about car insurance, does it matter whose name the car is under?

I had a minor accident on my mother's car when I was 18, I was not on her insurance (she bought a 6 yr plan or something when she bought the car) and the insurance provider paid without a fuss. It might have helped that I wasn't at fault.

*Does anyone know if Lending Tree does a hard or soft pull for an auto loan?

No idea about the above.

If you had full insurance the loan will most likely be paid off (hopefully you had gap insurance in case of a new car). Best case scenario it would leave you with 0 debt on the loan, worse case you would have to pay leftovers without the car.

If it were me I would make my child liable for a portion of the cost (if it was his fault) regardless of what scenario. This should teach him responsibility and would be an example that everything has consequences.

Re: Gardening now, but car was totalled...

Jutz — Fri, 14 Dec 2012 05:27:26 GMT

StartingOver answered the Lending Tree question above. It results in several hard pulls in an attempt to "match you" with a lender. I'd say do the leg work yourself and shop rates with your score in mind and you can eliminate some off the bat.