topic Re: Question about an auto loan! in Auto Loans

Question about an auto loan!

Anonymous — Fri, 14 Nov 2014 02:24:48 GMT

Okay well I'm gonna be in the market soon but decided that I could put down a max of $1k down now so started looking into ways to finance for a vehicle. I decided to try road loans to see what they could do and they approved me for the amount that I needed but I wasn't happy with the terms. They claimed my FICO score is the one they used and that it was a 637, which they said put me at a 25 percent interest rate and like 1600 down minimum...that seemed like a horrible deal to me. The source of the credit check said on the page that it was experian. Is this still my FICO score then? Anyone have experience with them?

What should I do? If that is my actual fico score (which surprised me since my other 2 scores besides experian are in the 580s), could I have a shot at negotiating at the dealership based on this offer? Any advice is needed! Am I in a good position to only put $1k or less down with my credit score for around a $12k car?

Re: Question about an auto loan!

Anonymous — Fri, 14 Nov 2014 04:25:07 GMT

25% is atrocious. A couple years ago, my scores were 620, and we got 15% rate with cap one and nothing down, only trade in. They may be using your Fico, however, Fico has little-known "subdivisions" of scoring specific to certain industries, such as auto, insurance, etc., typically available only to businesses. They may be looking at an auto Fico, not your general Fico scores, and typically a dealership is not going to negotiate with you based on this information. They will usually still run your credit also. You may want to try with a dealership for a better rate. While you may get multiple inquiries, it should only count the equivalent of one inquiry against your scores, since Fico allows you to "shop" for a home or vehicle with little penalty for multiple inquires made in a short time period.

Re: Question about an auto loan!

ExplicitElicit — Fri, 14 Nov 2014 14:21:44 GMT

@Anonymous wrote:
25% is atrocious. A couple years ago, my scores were 620, and we got 15% rate with cap one and nothing down, only trade in. They may be using yourFico, however,Fico has little-known "subdivisions" of scoring specific to certain industries, such as auto, insurance, etc., typically available only to businesses. They may be looking at an autoFico, not your generalFico scores, and typically a dealership is not going to negotiate with you based on this information. They will usually still run your credit also. You may want to try with a dealership for a better rate. While you may get multiple inquiries, it should only count the equivalent of one inquiry against your scores, sinceFico allows you to "shop" for a home or vehicle with little penalty for multiple inquires made in a short time period.

This is correct you have 30 days for inquiries when shopping for an auto loan and they will be counted as one (but still show on your report at separate). The only thing is you have to be sure that the inquiry is counted as an "auto", some lenders like Ally tend to count all inquires even auto loans as credit card. Road loans cab be useful for some but the count on people taking bad deals so they can make money. I would look into Capital One, they have been able to help others in a similar situation as you. Also are you a member of a credit union? They have great rate and can usually work with less than prime scores while offering you a competitive interest rate. If you're not a member I would consider joining a local CU.

Re: Question about an auto loan!

Creditaddict — Fri, 14 Nov 2014 15:04:26 GMT

do you know what kind of car you want?

do you have a carmax near you?

Re: Question about an auto loan!

Anonymous — Fri, 14 Nov 2014 20:06:29 GMT

@ExplicitElicit wrote:
@Anonymous wrote:
25% is atrocious. A couple years ago, my scores were 620, and we got 15% rate with cap one and nothing down, only trade in. They may be using yourFico, however,Fico has little-known "subdivisions" of scoring specific to certain industries, such as auto, insurance, etc., typically available only to businesses. They may be looking at an autoFico, not your generalFico scores, and typically a dealership is not going to negotiate with you based on this information. They will usually still run your credit also. You may want to try with a dealership for a better rate. While you may get multiple inquiries, it should only count the equivalent of one inquiry against your scores, sinceFico allows you to "shop" for a home or vehicle with little penalty for multiple inquires made in a short time period.
This is correct you have 30 days for inquiries when shopping for an auto loan and they will be counted as one (but still show on your report at separate). The only thing is you have to be sure that the inquiry is counted as an "auto", some lenders like Ally tend to count all inquires even auto loans as credit card. Road loans cab be useful for some but the count on people taking bad deals so they can make money. I would look into Capital One, they have been able to help others in a similar situation as you. Also are you a member of a credit union? They have great rate and can usually work with less than prime scores while offering you a competitive interest rate. If you're not a member I would consider joining a local CU.

Thank you Explicit, yes, I neglected to mention that in more detail in my OP. Thanks for covering

Re: Question about an auto loan!

Anonymous — Sat, 15 Nov 2014 04:12:50 GMT

I was denied for financing through Capital One. The car I'm wanting is a 2012 Kia Optima with 51k miles on it. The kelly blue book is 12k and I'm willing to put a max of 1k-1500 down, which I think is reasonable for the price of the vehicle. I'm going into the dealership tomorrow blindfolded and am open to any last minute suggestions.

Re: Question about an auto loan!

Creditaddict — Sat, 15 Nov 2014 05:09:39 GMT

Should be fine through kis financial

Re: Question about an auto loan!

Creditaddict — Sat, 15 Nov 2014 05:09:45 GMT

Kia

Re: Question about an auto loan!

Anonymous — Sun, 16 Nov 2014 17:23:33 GMT

So this is finally what happened after I went to the dealership...The vehicle was worth 12,500 and looked like it had one small crack in the front bumper (so i probably could have gotten the vehicle down a bit) . After the finance manager took over an hour to come back with an offer for financing, he said he would need 5k down on that car at 27 percent interest for 300 a month (i think he said for 72 months as well). Then he told me about another vehicle that I would only need 2k down for and I told him I don't even want to look at it and that the car I wanted you were asking for ridiculous terms for and that if you couldn't beat that, I was going to go. So I left.

What the hell is going on? I seem to not be having any luck being able to get a vehicle. I was willing to put 1500 down and I make only 8.50 an hour at full time, but still. It seems that I am not having any luck getting a car. My credit scores are as follows: experian = 639, equifax = 589, transunion = 587.

Any similar stories or advice on what I should do? I really want a vehicle but it seems that everyone needs me to prove 1600 dollars a month income or some even 1800. And it seems that even with my credit not being that bad that I am getting ridiculous rates.

Re: Question about an auto loan!

Creditaddict — Sun, 16 Nov 2014 17:43:56 GMT

Oh income is an issue I bet
Over 30% fresh out of bk

When I bought my Honda accord from carmax it was $12 with under 75k miles.

You need to find reliable, value holding, low miles, around $10k and not older than probably 2009-2010!

Re: Question about an auto loan!

Dj4Money — Sun, 16 Nov 2014 20:18:05 GMT

@Anonymous wrote:
So this is finally what happened after I went to the dealership...The vehicle was worth 12,500 and looked like it had one small crack in the front bumper (so i probably could have gotten the vehicle down a bit) . After the finance manager took over an hour to come back with an offer for financing, he said he would need 5k down on that car at 27 percent interest for 300 a month (i think he said for 72 months as well). Then he told me about another vehicle that I would only need 2k down for and I told him I don't even want to look at it and that the car I wanted you were asking for ridiculous terms for and that if you couldn't beat that, I was going to go. So I left.

What the hell is going on? I seem to not be having any luck being able to get a vehicle. I was willing to put 1500 down and I make only 8.50 an hour at full time, but still. It seems that I am not having any luck getting a car. My credit scores are as follows: experian = 639, equifax = 589, transunion = 587.

Any similar stories or advice on what I should do? I really want a vehicle but it seems that everyone needs me to prove 1600 dollars a month income or some even 1800. And it seems that even with my credit not being that bad that I am getting ridiculous rates.

What was wrong with the car they offered you with less down? You only have to drive it for a year/year and a half to prove to creditors that you are reliable.

Do you have a car now? Could you get around with a moto scooter? Is taking the bus an option? I ask these because here's the honest truth. You are going to have to fix your credit problems.

The federal interest rate is .09 not even half a percentage point. So what the banks are telling you that you don't have a handle on your finances and don't trust you.

Income isn't that big of a problem; assuming you work 40 hours a week you make enough income for most auto loans. The problem is whatever else is dragging your score down.

Do you have credit cards?

Do you have any collections?

My scores are similar to yours (EX 630, EQ 586 TU 564)

What I have determined is that to avoid problems similar to yours; high interest rates, income verification and cars I don't want. I need to get control over my credit file.

Re: Question about an auto loan!

StartingOver10 — Sun, 16 Nov 2014 23:20:27 GMT

This may sound harsh but OP, I see three issues: 1) your current income 2) your credit and 3) your down payment. If you gross income is less than $1500/month you are going to have an especially hard time getting any auto loan. Take a look at the stickies above and IIRC the minimum monthly income lenders want to see is $2000 (at a dealerhip).

I think you would be better off going to a credit union rather than using the dealership. The dealership will hit you hard on the rate because they think you don't know any better AND because the dealer gets a larger commission on the back end by hitting you hard on the rate. You can certainly find out from the cu what their minimum requirements are for an auto loan (income and credit) before you have them pull your credit record.

From your posts you say the dealer 'ought' to accept $1500 - but you aren't taking into account your credit and mitigating the lender's risk. The dealer has to sell the deal to the lender. The best way to do that is to have a larger down payment. That's why I say you would be better off going to a credit union. They will let you know how much risk they are willing to take on with your deal. I suspect you will need to put down 25%+ or more to get any decent rate and the loan itself would have to be less than $10k. In fact, if your actual gross montly income is $1500/month or less, you would be better off not having a loan at all as it very likely will create a hardship for you.

It might be best overall for you to get on your feet first by working on your credit first. Get a beater for a year or so until you get the credit straighened out and a decent down payment. In the meantime put away a solid 'car payment' into savings each and every month so by the time you are ready you can show you have the abilty to pay plus you have a good sized down payment. JMO.

Re: Question about an auto loan!

Dj4Money — Mon, 17 Nov 2014 00:36:28 GMT

@StartingOver10 wrote:
This may sound harsh but OP, I see three issues: 1) your current income 2) your credit and 3) your down payment. If you gross income is less than $1500/month you are going to have an especially hard time getting any auto loan. Take a look at the stickies above and IIRC the minimum monthly income lenders want to see is $2000 (at a dealership).

I think you would be better off going to a credit union rather than using the dealership. The dealership will hit you hard on the rate because they think you don't know any better AND because the dealer gets a larger commission on the back end by hitting you hard on the rate. You can certainly find out from the cu what their minimum requirements are for an auto loan (income and credit) before you have them pull your credit record.

From your posts you say the dealer 'ought' to accept $1500 - but you aren't taking into account your credit and mitigating the lender's risk. The dealer has to sell the deal to the lender. The best way to do that is to have a larger down payment. That's why I say you would be better off going to a credit union. They will let you know how much risk they are willing to take on with your deal. I suspect you will need to put down 25%+ or more to get any decent rate and the loan itself would have to be less than $10k. In fact, if your actual gross monthly income is $1500/month or less, you would be better off not having a loan at all as it very likely will create a hardship for you.

It might be best overall for you to get on your feet first by working on your credit first. Get a beater for a year or so until you get the credit straightened out and a decent down payment. In the meantime put away a solid 'car payment' into savings each and every month so by the time you are ready you can show you have the ability to pay plus you have a good sized down payment. JMO.

You are right! My last car loan, FICO was 615 (Experian) in late 2006. I got 13.5% interest, put down $1,500 and the car was $11,500. My income was $1,500 and I had to show proof of income.

It wasn't an undo hardship that did me in, just a series of decisions that caused the lender to panic and take the car back from where it was being repaired. I had continued to make payments until they wanted back to back payment in order for me to get the car back and THAT is undo hardship.

That said if I had discovered Dave Ramsey earlier, I would had that emergency $1,000 savings and could have easily dealt with a series of problems that were money related but not because I had a car I couldn't afford, just not much margin for error.

So I am with you, I would encourage the OP to take a deep breath and find the cheapest source of transportation possible. I would build a $1,000 emergency fund (Baby Step #1). From there based on your hourly wage it looks like your gross income is $1360. My hours were cut around the Financial Crisis so I was making $1200 NET and was still able to make my payment with plenty of room to spare.

$1360 x 12 = $16,320

Most banks will assume even if you live at home, you pay $400 a month for rent; I am not even talking about other expenses. That leaves $11.520 or less than a $1,000 a month in real terms.

That means you need a cheap car and a low interest rate. If all you can come up with is $1,000; as I said before I suggest you wait, you'll need 20-25% downpayment to even get a realistic payment.

Based on what's left, you need a payment about $150, because your expenses for just the car will run at least $200. My old job was 19 miles one way; I spent $170 in fuel which was premium, prices are similar today. My insurance was $110 a month and I never set aside money for maintenance. It wasn't a big deal as long as I watched brake lining because replacing pads is cheap, but replacing pads and rotors is expensive...

The amount you need to borrow is $10,000; maybe a bit more. They will allow a bit more if you get a new car because they will stretch the payments out.

Buying a used car only ensures you get a car with a bunch of miles on it, no warranty just to say you didn't buy a Chevy Spark or Kia Rio? Also doesn't your employer offer discount pricing on cars?

I was lucky, the car I wanted was only 3 years old, just out of bumper to bumper warranty but still had the majority of the drivetrain warranty. It was also a performance car (SRT-4) so I didn't mind getting one used.

Getting something like that used IMHO fine, getting Toyota Corolla used?? NO WAY.

Re: Question about an auto loan!

Anonymous — Tue, 18 Nov 2014 05:38:57 GMT

I don't see how your income would hold up to payments on a $10K car. I would respectfully suggest that you consider saving up and looking for a car 1/3 to 1/4 of that price. After you buy the car you will have to insure it. If you owe on it, you will have to buy insurance to protect the lender. If you own it outright you can get by with state mandated minimum liability coverage. Don't forget you will have to buy gasoline and there is also maintenance on the car. That is why I thing you should reconsider attempting to by a $10K car.