topic Re: First time auto loan in Auto Loans

First time auto loan

Anonymous — Mon, 29 Apr 2013 07:37:42 GMT

I'm looking for a bit of advice on auto loans. I have a credit score around 750 but I'm only 19 and had credit history for about a year. The only downfall is I work part time and make only 8.50/hr with about 25-30 hours per week. I would like to get an auto loan from my credit union but not sure how it works. Do I ask them if they'll finance me for a certain used vehicle that's about 20,000? Or will they just tell me how much they're willing to loan me?

Re: First time auto loan

maiden_girl — Mon, 29 Apr 2013 09:52:25 GMT

You won't be able to finance alone 20k working part time at 8.50 an hour. You will need a co signer. Banks take into account your annual income and total hours worked plus expenses such as rent and utilities. .your annual income if my math is correct is only around 10k..have you considered getting a junker?

Re: First time auto loan

Anonymous — Mon, 29 Apr 2013 13:22:07 GMT

Credit score while important, is defintely not the most important factor of qualifying for a loan. Believe me, you don't want a car payment being close to 40 percent of your take home! (PErsonal experience...)

I'm assuming you're full time and at 8.50 after takes you're looking at maybe 1100 for the month. You want to finance 20K and let's just say with a cosigner you get an APR of 8%, you're looking at a $350 payment!

I agree with the other response, there are very good reliable used cars out there that can be had for what you can afford right now!

Re: First time auto loan

maiden_girl — Mon, 29 Apr 2013 15:13:52 GMT

@Anonymous wrote:
Credit score while important, is defintely not the most important factor of qualifying for a loan. Believe me, you don't want a car payment being close to 40 percent of your take home! (PErsonal experience...)

I'm assuming you're full time and at 8.50 after takes you're looking at maybe 1100 for the month. You want to finance 20K and let's just say with a cosigner you get an APR of 8%, you're looking at a $350 payment!

I agree with the other response, there are very good reliable used cars out there that can be had for what you can afford right now!

And yes, lenders don't only take your FICO score into consideration. What they are looking for is account age and a long history of timely payments..a person with a 660 FICO and 18 years of history will get a better rate than a person with a FICO of 750 and 1 year of history...

Re: First time auto loan

Anonymous — Mon, 29 Apr 2013 15:36:05 GMT

Some financial gurus say no more than 20% of your monthly net income. I suppose there are some exceptions, like recent graduates, home owners with paid off mortgages, if one spouse earns far more than the other, etc.

Keep in mind:

Insurance... full insurance is required by law, since technically you do not "own" a car not paid off. It can also be expensive depending on where you live in the States. I recommend you go online and run a basic insurance quote for whatever car you may consider. Strangely enough I did this once, a Hyundai Elantra vs. Sonata - the Elantra's premium was $20/month more (thats $1200 over 5-years).

Maintenance and fuel cost... SUVs require more service, and everyone knows they consume more fuel.

If you can, put money aside, into a savings account for example, to see how comfortable you will be with a car loan payment. I would do this for at least 1 year.

Re: First time auto loan

Anonymous — Mon, 29 Apr 2013 18:28:13 GMT

That was going to be my next question, if I go directly to the credit union and ask them to find me a vehicle do I still need a down payment? Also I found that for the vehicle I looked at my insurance would be about 273 monthly. Honestly I was curious to see if I could get something a bit more recent or just get a bit more money to go with what I have and buy an older vehicle if its well maintained

Re: First time auto loan

Anonymous — Mon, 29 Apr 2013 18:35:44 GMT

I also forgot to add that I don't have any other expenses currently. My friends and I are staying in my mothers owned house and since we split the bills we don't really come out of pocket much

Re: First time auto loan

Mike360 — Mon, 29 Apr 2013 20:41:32 GMT

Even with no monthly bills and no credit card debt you're still gonna need a co-signer due to not enough credit history and lack of income.

Re: First time auto loan

Anonymous — Mon, 29 Apr 2013 21:00:47 GMT

I understand that much and was expecting it. I won't ask for as big of a loan because I will be living out of my means. Do financial institutions give small loans where I could write a check to a private seller or would it be considered a high risk?

Re: First time auto loan

sccredit — Mon, 29 Apr 2013 22:51:57 GMT

@Anonymous wrote:
Some financial gurus say no more than 20% of your monthly net income.

IMO 20% for a car payment is way too high.

Re: First time auto loan

dabrian — Tue, 30 Apr 2013 04:16:33 GMT

Find something on CLfor under 2k with your income. When your income increases over time you can afford nicer vehicles.

Re: First time auto loan

zeusta20 — Wed, 01 May 2013 08:24:27 GMT

I was in your shoes at one point. When I was 20, (almost 23 now), I had great credit. My income wasn't too bad either for my age. I tried to finance a 2011 Hyundai Sonata, and they wouldn't allow me to. Not because of my credit score, but because I had only established credit for two years. I was even going to do a down payment of 4k, and that still wasn't enough. They said I'd need around 7k or 8k in order to be approved on my own.

Unfortunately for me, I have the best credit in my family, so a cosigner wasn't going to be able to work for me.

Now that i'm almost 23 (in july), I'm actually currently in the process of getting a car. To this day, I have yet to have a car loan on my credit. So when I apply, I'm still a little worried wondering if 5 years makes a bigger difference than just 2 years of credit history. I have 6 credit cards (two of which I just got in march) and 1 unsecured personal loan (which I got in October 12'). I'm HOPING this is enough credit history to finance a car. WE WILL SEE!

For your age, I'd just stick to some super cheap. If you have the luxury of a cosigner, then by all means, DEFINITELY use that as a resource.

Re: First time auto loan

Anonymous — Wed, 01 May 2013 13:40:00 GMT

Be careful with having so many from what I've learned so far between 2-4 cards are good I believe. And thanks everyone fir your input Ill just save and get the 87 Monte Carlo I originally wanted. After that ill be able to get another job and get in a dealership.

Re: First time auto loan

Anonymous — Wed, 01 May 2013 14:36:55 GMT

I think you'll be happier down the road with the decision. Believe me, I know I was there when I was young! Had a 1990 Volvo 240 for a while, then a rust bucket 94 Isuzu Rodeo before I had my job and had credit to get a used 05 Acura TL back in '09!

Re: First time auto loan

zeusta20 — Wed, 01 May 2013 16:12:25 GMT

@Anonymous wrote:
Be careful with having so many from what I've learned so far between 2-4 cards are good I believe. And thanks everyone fir your input Ill just save and get the 87 Monte Carlo I originally wanted. After that ill be able to get another job and get in a dealership.

Oh, I am. I'm very meticulous when it comes to my credit.

but really?? I've heard 3-5...I'm already pretty much at my limit. I was stopping at 5, but then I heard about the rewards combo with the CSP and the Freedom. I had gotten the CSP, so I HAD to get the freedom. Now that i'm at 6, I'm pretty much set. No need for any other cards. I don't wanna have a lot of credit cards anyways. Even now, I don't even carry all my cards with me. I only carry 3 out of the 6 that I have. lol. CSP, Freedom, and my AMEX.