topic Re: Auto loan help?? in Auto Loans

Auto loan help??

Anonymous — Thu, 20 Aug 2015 01:41:53 GMT

So I would like to get an auto loan to buy a car that my dad bought for me through a buy here pay here lot. Yes yes I know horrible decision but he put a down payment for me on it last year before college when I had zero verifiable income and the interest is outragous and he couldn't get financing himself since his credit is horrible. My question is how can I go about doing this if I wanted to? The loan amount is small at $6000 left from a previous $8000 so any advice would help.

My Fico 8 scores are: Ex 727 TU 731 EQ 720

Inq: EX 4 TU 8 EQ 6

I am a college student who makes roughly $550 every two weeks so not a lot but still verifiable income and I don't have any rent paymenets since I live at home with my mom. I am even starting a new job in a week that will start me off at $10 and once I'm done with training they will make me full time and pay me $12.50/hr. So any advice in regards to my quesion will help a lot since I really don't wanna pay like 3-4k in interest on such a small amount for a loan :/

Re: Auto loan help??

Anonymous — Thu, 20 Aug 2015 04:49:05 GMT

Most likely the car is underwater, meaning you owe more on it than it is currently worth.

What you will have to do is save enough money to pay off the difference first, so steps are find out what that number is, figure out how long it will take you to save that (Obviously while making payments). I would sign up for a credit union that is local to you, and deposit the money there. Talk to a loan officer about it and explain your situation, they often can tell you exactly how much they would lend you in that kind of situation (if they will).

If for some reason you can't get a loan, just pay off the car as quickly as possible, and either use that car as a down payment on another cheap car with a small loan so you can build up your car credit, or just keep drive it until it dies if you like it at all while you save up money for your first awesome car.

Good for you being responsible and wanting to do something about it, I just can't guarantee that you will be able to.

Is it actually a loan with an APR, or is it just a flat fee baked into the payments, so even if you pay it off early it's the same amount?

Re: Auto loan help??

Anonymous — Thu, 20 Aug 2015 06:14:27 GMT

Yeah not a smart decision on my end but I really needed a car last year and it was a tough time(parents got divoreced) so money was tight. But if it helps my mom said she would co-sign for me since she can see that I've really matured over the past year in terms of credit (have 15k in CC Limits) and personal finances. She has like an 800 credit score, perfect credit, no baddies, 20+ years history, 75k income...etc etc. I also have 1.2k as a deposit if needed? But the car is on some type of loan. All i know is that if i pay it off fast it'll be cheaper and less interest charges. Also I already have a local credit union that I've banked with since I was 16 so that should help. But man I feel like I'm in such a big hole I'll never get out?

Re: Auto loan help??

Anonymous — Thu, 20 Aug 2015 06:27:23 GMT

Also I looked up my KBB value and it says my vehicle is worth around 7k? So would this help my situation any better?
My car is a 2009 chevy cobalt coupe LT 2DR w/premium wheels, rear spoiler and 92k miles currently. So in all honestly I don't see why a bank wouldn't loan me the money if the car is worth more than the loan? Also like I said above I'd be willing to put 1.2k down AND I have collateral. Forgot to mention this above but I own a 2000 pontiac grand prix which runs perfectly fine at 116k miles. Not much but it is collateral in case a bank wants more security.

Re: Auto loan help??

Anonymous — Thu, 20 Aug 2015 11:08:14 GMT

Call whoever holds your loan, ask them for a "payoff amount". Then go to the credit union. With your limited history it's hard to say what they will do, a lot of times they do 90% loan to value, meaning they will loan you 90% of what they think the car is worth. You are responsible for the rest.

Car loans are secured loans, they don't care about any other assets really, it's all about the value of the vehicle you are buying. A lot of CUs use the NADA guide, so look up the value there as well.

Like I said, it's hard to say what they will do, take all the information you have and make an appointment. Let us know what happens!

Re: Auto loan help??

Anonymous — Thu, 20 Aug 2015 11:26:11 GMT

Hmm okay. Well even if its only 90% I have the last 10% in cash so that woulf help. Are there any major banks you'd recommend or just local CU's? Also on the nada guide what do the CU's go by? The trade in or clean retail value? But alright I'll go sometime this week or next week with my mom. She has a few banks picked out who gave her bf really good rates.

Re: Auto loan help??

Anonymous — Thu, 20 Aug 2015 11:34:22 GMT

Verifiable income when it comes to autoloans isn't very needed at least here in upstate NY. In my whole familys car adventures a dealer has never once asked for a verification for income, just if you have any. This goes the same way with local banks and credit unions.

Re: Auto loan help??

Anonymous — Thu, 20 Aug 2015 11:38:51 GMT

@ZackHere about how much could i fudge up my income than if on my pay stubs it shows 1.2k/month? Could I get away with maybe 1.4k?

Re: Auto loan help??

Anonymous — Thu, 20 Aug 2015 12:34:49 GMT

@Anonymous wrote:
@Anonymous about how much could i fudge up my income than if on my pay stubs it shows 1.2k/month? Could I get away with maybe 1.4k?

Never do this. It's unnecessary and unethical.

Re: Auto loan help??

Anonymous — Thu, 20 Aug 2015 12:47:21 GMT

Last year when I applied and got denied for a car loan the dealers all increased my unverified (contruction) income by like $200-$300? Sorry I didn't mean to offend anybody I'm just trying to get this car in my name and start my auto credit history

Re: Auto loan help??

Hoya08 — Thu, 20 Aug 2015 14:15:20 GMT

@Anonymous wrote:
Also on the nada guide what do the CU's go by? The trade in or clean retail value?

From my PenFED experience, they went with NADA clean-retail (for purchase and refinancing). PenFED provided 100% financing, which was 94% LTV since the sale price was lower than the retail price.

Re: Auto loan help??

Anonymous — Fri, 21 Aug 2015 03:23:33 GMT

Long story here folks so listen up...

I walked into my local CU (TCU) and waited for the approval process with my loan specialist. He says I'm denied solely for not having any installment loans and that his underwriters declined the app due to that. So he says I can get a co-signer and come back for the same rate or lower(was offered 4.5% based on my CR). So I called my mom who agreed to do it but really wanted me to try on my own and I did and even offered to put a down payment of $1000. The total loan amount requested was $6k so not much in terms of loans. Well my mom comes and co signs we are approved signed all the paper work and call the sleasy buy here pay here lot and apparently my dad has a tax lien against the vehicle by the state of indiana...We literally called them before to ask if it was possible to switch the title before the app process and they said yes no problem. But yeah long story short my dad owes $780 to the state and the bank doesn't want anything to do with this anymore unless we can resolve it. So I'm paying that tax lien for him but the CU specialist said it takes the state almost 30 days to remove a lien so if it goes over 30 days than we must re apply. Also of note is that my parents are divorced and my dad really doesn't care about his credit whatsoever so I'm never seeing this money back again if I pay it. But either way the cars worth it. According to my CU's bluebook value the cars worth 7.6k with all my accessories. So I guess my question is should my mom and I just look for another vehicle for around 6-7k or should we try to resolve the lien issue? Also the terms offered with my mom was 4.5% interest, payments were $108/month, and the CU would gladly refinance it in 6 months once I made every payment up to that point on time and in full.

Re: Auto loan help??

Anonymous — Sat, 22 Aug 2015 12:46:08 GMT

UPDATE:

My mom and I went to Indy(HQ for Department of Revenue) because our local DOR can't remove a lien and would snail mail the paper work to Indy and we'd have to wait 3-4 weeks which isn't acceptable with my CU since they wanted the title by next friday at the very latest. Well Indy is 3 hours away from where we live so it was a nice ride and after a ton of pain and heart ache we were able to pay the full amount and get the title stamped saying the state removed their lien!!!!!!!!! So yes I'm now approved for the 6k car loan officially at 4.25% with a co-signer and my payments are $108/month for 60 months. Obv I'm planning on paying it off when sooner than that since it's such a small loan but man I'm so excited to build up my revolving loans/auto credit history

Re: Auto loan help??

Anonymous — Sat, 22 Aug 2015 14:59:09 GMT

@Anonymous wrote:
UPDATE:
My mom and I went to Indy(HQ for Department of Revenue) because our local DOR can't remove a lien and would snail mail the paper work to Indy and we'd have to wait 3-4 weeks which isn't acceptable with my CU since they wanted the title by next friday at the very latest. Well Indy is 3 hours away from where we live so it was a nice ride and after a ton of pain and heart ache we were able to pay the full amount and get the title stamped saying the state removed their lien!!!!!!!!! So yes I'm now approved for the 6k car loan officially at 4.25% with a co-signer and my payments are $108/month for 60 months. Obv I'm planning on paying it off when sooner than that since it's such a small loan but man I'm so excited to build up my revolving loans/auto credit history

Congratulations and good for you!

What you want to do is pay more than that every month, but pay it for 2 years! The reason is, car loans are front loaded on interest, and what raises your profile to car lenders is having at least two years before you pay the car off early, as this insures they get their profit.

If you like the car should be a no brainer. Do the math with how much you can realistically afford to pay extra every month and stick to it, your credit will thank you for it over time.

Re: Auto loan help??

Anonymous — Sat, 22 Aug 2015 15:40:32 GMT

Thanks for the feedback

But yeah the loan officer at my CU told me to at least keep the loan for a year but he recommends a 1 1/2 years or more to build up my credit history. What else would you recommend to do? I plan on purchasing a new car after college in 3 years. And I was planning on paying $205/month to pay it off in 2 years time. Does that sound good or should I just pay a lump sum after 2 years versus higher payments?

Re: Auto loan help??

Anonymous — Sat, 22 Aug 2015 17:22:07 GMT

I think paying the 205 a month is a good idea, it will help you build payment discipline knowing "I am losing this much money every month".

If that will pay it off at 2 years, perfect. Then you can save for a year, have a trade and down payment. At that point your CU will give you an even lower interest rate and you can get a new car.

Re: Auto loan help??

Anonymous — Sat, 22 Aug 2015 18:50:39 GMT

Yeah I'm not sure if my CU will offer a lower rate than 4%. My mom had a 750 EQ score 80k income and her DTI ratio was like 20? But I was thinking about refinancing with Horizon bank or another local CU in the future to try to get a lower rate and also to get my moms name off the title so that she can buy a car if she chooses too. Also if I do this it will clear her name and I really didn't want to use her as a co-signer and want to get her off asap. So when would be the best time for that assuming I'm making on time payments in full?

Re: Auto loan help??

gdale6 — Tue, 25 Aug 2015 23:28:47 GMT

@Anonymous wrote:
Yeah I'm not sure if my CU will offer a lower rate than 4%. My mom had a 750 EQ score 80k income and her DTI ratio was like 20? But I was thinking about refinancing with Horizon bank or another local CU in the future to try to get a lower rate and also to get my moms name off the title so that she can buy a car if she chooses too. Also if I do this it will clear her name and I really didn't want to use her as a co-signer and want to get her off asap. So when would be the best time for that assuming I'm making on time payments in full?

Make your payments for 6 months to a year and then try to refi. Look into DCU (Digital Credit Union) they have rates below 2% if your profile supports the low rate.

Re: Auto loan help??

Anonymous — Wed, 26 Aug 2015 02:22:43 GMT

Well my scores should all be above 700 as they pretty much are now except EQ at 693. Any other qualifications I should know about? Inquirys? Income? DTI Ratio? Etc.

P.S I've heard good things about DCU and PenFed.