topic Re: Applying for a second auto loan in Auto Loans

Applying for a second auto loan

Anonymous — Wed, 26 Feb 2014 16:11:43 GMT

Hello,

I have a few things going on. My husband crashed his old car and now we need a new one. His credit really sucks and I know he won't get approval for a loan so I have to buy the vehicle myself and treat it as my second vehicle until he can improve his finanical situation. I've kept my maiden name and everything is separate including our bank accounts. However, I already do have an installment loan with my credit union. I was in a wreck last July and was able to completely pay off my re-finance loan for my wrecked car and they approved me for an installment loan on my new vehicle. I have not missed any payments and am happy with the loan. However, when I bought the car I didn't go straight to my credit union for a loan and the dealership ran a few inquiries on my credit (last July), how does that affect my chances for approval now? I have a score range from 660-700 and my DTI ratio is 25% - about 60 percent of my credit is being used. I would definitely wait as long as I can to apply for this loan by paying down the debt more BUT sharing the car has been such a pain in the ass. I am hoping that my credit union will approve me for a second installment loan. We do not rent or own because we live with family for now, so home payments aren't a factor for me. My student loans are paid every month and are never missed. How do you think my chances are looking? Please let me know before I jump into another inquiry! Any words of wisdom are appreciated! Thanks!

Re: Applying for a second auto loan

Remember0 — Wed, 26 Feb 2014 19:13:14 GMT

It'd really help if you could pay down some of that cc debt to lower DTI and increase fico. Calculate this and tell me what it is:

(Total min payments of all credit cards + rent/mortgage + current car pmt. + new car pmt. estimated @ 5%) / (your monthly pre-tax income) = ?

You may have to apply joint with your husband to be honest so you can use his income. But if you are primary and he's secondary, some banks/CUs won't raise the apr. The trick is finding that bank/cu.

Re: Applying for a second auto loan

Anonymous — Wed, 26 Feb 2014 19:36:31 GMT

Thank you so much for the response.

As it is right now:

Credit card monthly payments:

Discover $61

Master Card Diamond $51

Master Card Thankyou Preferred $270

Amex $61

**two cards were recently paid off, not sure if they will show as such on the credit report but I can provide proof that they are paid off

Wells Fargo Retail - min payment was $35 a month

Nordstroms - min payment was $25 a month

Current car payment is $372 for the 2010 Camaro with my credit union, Truliant FCU

My monthly income is $4,160

**I didn't figure out the new car loan details yet, but I'm shooting for it not to be over the amount I am paying right now.

2010 Chevy Silverado price is $23,500 - we are going to try and negotiate the price so that my monthy payments won't be over $800 (including my current car payment)

**My husbands credit score is below 600, I would rather not include him as a joint on the loan application.

Thanks again!

Re: Applying for a second auto loan

Remember0 — Wed, 26 Feb 2014 21:29:54 GMT

I'm sorry, but I don't think you'll be able to go it alone with that particular stated income. Here's what a lender is looking at...though you didn't tell me the rent/mortgage, so I assumed 1k, let me know if it's lower. And if for privacy reasons you don't feel okay giving me the exact amount, round it up/down $50 or something. It being higher only makes the DTI worse:

(1000 (imputed rent) + 61 + 51 + 270 + 61 + 60 (paid off cards) + 372 + 350 (new car @ 20k+ttl @ 5% for 72 months)) / 4160 = 53%

Especially with it being a second car in your name, it's going to be very hard to pull that off imo. Keep in mind lenders hate giving subprime borrowers (generally <720 or <680 depending on lender) two cars in the first place if not joint on the second, so that also works against you depending on the lender.

If we were talking mortgage, that proof of payoff for CC might have worked. But I doubt an auto lender works with that. When do your next statements (that reflect 0 balance) cut on those cards? It'll update as 0 to your CR shortly after the next payment. Still that just lowers DTI by 1-2% ish, which won't make this deal work in and of itself.

The biggest thing we might be able to work on here is rent/mortgage. Obviously your DH also shares that burden. If you have a joint mortgage, many lenders will only take half the amount into consideration. Not sure about how rent works personally, but I bet there's a bank/cu out there that's willing to take half if you have a joint lease. Could any of this maybe apply in your case?

Re: Applying for a second auto loan

Anonymous — Wed, 26 Feb 2014 21:40:04 GMT

I don't have rent to pay or a mortgage. We live with some relatives at the moment until we decide where we want to live.

Re: Applying for a second auto loan

Remember0 — Wed, 26 Feb 2014 21:58:41 GMT

Well that definitely helps. Some lenders impute rent, but that's typically <$500. Even if I impute 500 which is on the high side, the DTI comes down to 40% (or 41% if those paid off cards don't report). Make sure to note the 0 rent down and explain the situation (just live w/ relatives) if asked.

40% is definitely workable imo. I'd try to apply with a local CU/a place like DCU just to see if you can't get an approval. That way when the dealer tries to finance you you won't get ripped off with APR. I do definitely think a dealer will be able to work out the financing so you'll be approved, though.

EDIT: Something else to keep in mind is if you guys decide to buy down the road, it'll be harder to get financed for you alone due to your debt load (the car loans). Your husband would have to go onto any mortgage probably making the APR higher.

Re: Applying for a second auto loan

Anonymous — Thu, 27 Feb 2014 02:03:31 GMT

We did discuss what comes next after the vehicle purchase. While we don't have to pay rent or a mortgage we are taking advantage of paying off these CCs and my student loans. (unfortunately the wreck has had bad timing) By the time we move out the cars should be the only things we are paying on. We may have to rent one more time until we get the vehicles paid off. My husbands financial situation should be resolved by the time we leave here in order to get approved to live in a lower cost apartment. We had rented previously but we bought out the lease and moved out because the money was wasted on a crappy apartment instead of going to our debts.

Re: Applying for a second auto loan

Anonymous — Thu, 27 Feb 2014 03:08:54 GMT

I think it will be extremely hard for you to get a second auto loan. Regardless if you say you don't pay rent or mortgage they factor that in anyway. The only option I see is for you to apply joint. Most banks only use the second applicant for income and dti purposes. In fact, the primary applicant is used for the apr.

Re: Applying for a second auto loan

Anonymous — Thu, 27 Feb 2014 04:56:17 GMT

Thank you for your input. I know that his income would help, but he has a few things in collections and some medical bills. I am just weary of having him on the application for those reasons.

Re: Applying for a second auto loan

Remember0 — Thu, 27 Feb 2014 17:14:40 GMT

I'm not good with how approval on two simultaneous autos works, but I think it might be passable.

I did impute rent into your DTI and 500 seems like a decent number esp. since lenders assume you'll be splitting with DH. I honestly do think a dealer can get you financed and don't think that 1 app to a local CU/DCU would hurt to see if you are okay individually (just 1 INQ and if they deny, you can ask them about adding DH w/o increasing rate).

Re: Applying for a second auto loan

Anonymous — Thu, 27 Feb 2014 19:04:11 GMT

This may seem dumb, but what is DH?

I am going to see if my credit union will approve first, I hope they do because I like their rates. I'm not sure how much the dealership would bleed me dry on interest.

**Also I decided that since I already have that Camaro that I am still paying on for roughly $20,000 it may not be a good idea to buy for around the same price I paid for that car after tag/title/tax etc. Do you think my chances would be better if I went for a truck priced at $15,990?

Let me know, thank you everyone!

-Blair

Re: Applying for a second auto loan

Remember0 — Thu, 27 Feb 2014 19:15:09 GMT

Sorry, DH is internet slang for husband, "dear husband" specifically.

Good idea on the CU. There's a small chance they just might not want to risk 2, and another cu would approve, but I doubt it. If they deny, ask them why and if they'd approve if they weren't the holder of your current auto loan.

Honestly, in general, yes lower loan = more chances of approval. But I say if it's a local CU ask them maybe after they approve if they'd go to 20k? I don't think 5k will matter all THAT much imo. I don't really see a approval for 15k, but a rejection for 20k tbh. Same decision for both.

Re: Applying for a second auto loan

Anonymous — Fri, 28 Feb 2014 19:11:27 GMT

Okay, so it does look like we are going through with trying to buy the truck tomorrow. In what order do I try and convince them to sell me the truck? What would I say after my husband tries to talk them down (he's better at that than I am). Do we need to sound like we really need the truck? Or do we lay low. Should I wait to call the credit union once I get there for the sense of urgency? Or have the pre-approval (if i COULD get pre-approved) before I go in there. Hopefully I can just have my husband get approved on his own first.. but that probably won't happen. If it were to happen for him I would be happy because that saves me a trip to the DMV tag office... ew.

Re: Applying for a second auto loan

Remember0 — Sat, 01 Mar 2014 02:49:30 GMT

Always negotiate price first. If you make it look or sound like you need the car in any manner, you're going to get hosed...that I can promise. Heck, don't even say there was an accident. IMO you think it'd be cool to get another vehicle, but don't need it. If you don't get the right price, no need for the truck. Usually you get a better price if you physically walk away after they say no more and leave a number if they can come down x more (usually I do like $250-500, though you may not want to push it that far).

After you get a price, talk financing in my opinion. If you get a pre-approval from a CU it's good because they can't jack your financing up above that and need to compete. That's my preferred way of dealing with it unless I'm helping someone who's credit is like super-prime (for auto 720+), the DTI is well within reason, everything seems like a no-brainer, and they're buying a new car that I know has incentive rates. ONLY in that particular case when all that fits do I say meh, don't bother with the cu, just demand the best rate (like 0 or max 1.9% on promo models).

In your case, I think getting a CU/local bank approval (you only first on app if you want, if they deny see what they do with DH on loan as secondary maybe). Then with a baseline, don't tell the dealership the exact rate, but ask what's the best they can offer for you or DH (not sure who you ideally want on the loan). ou can try all scenarios. Tell them DH only, see what they offer. Tell them you only if that rate isn't satisfactory, see what they can do and don't be afraid to negotiate on even the APR (they can with most lenders mark it up by 2-3%, though I've sometimes seen way more, and keep most of the extra you're paying in interest...obviously there's more negotiating power if you have a pre-approval here).

The lender might care about why you are getting two vehicles in your name if not in DH's name. At that point, I think it's fair to divulge that hey we currently only have one car and he needs one of his own. But not before the price is set imo.

Let me know if something here is confusing...typed this pretty fast so I don't know

Re: Applying for a second auto loan

Anonymous — Mon, 17 Mar 2014 18:11:05 GMT

So I have an update on the whole purchase. The best rate we could get was $391 a month on a nice 2007 Chevy Silverado.

However, purchasing the truck was my last ditch effort on saving our marriage so that he could committ to working more and quitting his costly drinking habit. I am looking at a divorce now. I'm not necessarily "stuck" with the truck in my name because I have some interested buyers. HOWEVER, he wants to keep the truck, I told him he either needs to work it out with a lender to purchase the truck in his name or work it out with his father to buy the truck from me and issue him the monthly payments. (Aside from my interested buyer). I think if its within 30 days of purchase the dealership can switch everything over to him. (He got approved on his own for a crappier rate). If it is taken off my hands within 30 days, does it affect my credit at all? If at all, how much?

Re: Applying for a second auto loan

Remember0 — Mon, 17 Mar 2014 18:35:07 GMT

I'm sorry to hear that. It might remain on your credit. As long as it reports paid in full as agreed and no lates or repos, the fact that you only had the loan for 1 month won't hurt even if it reports to your credit. Just make sure to get a letter from the lender that the loan was paid in full (in case anyonee ever asks questions during mortgage underwriting as to why you had a car loan for only 1 month).

Re: Applying for a second auto loan

Anonymous — Wed, 14 May 2014 23:38:42 GMT

Just in case anyone followed this story, I DID get approval for the second vehicle. $390 a month. On a $20000 loan (including tag title tax) Too bad I bit the big one when I had to sell it back to the dealership for a buyout. Thank goodness I'm getting a divorce at 26, he's nothing but trouble financially, despite all the opportunities I presented for improvement.