topic Re: First Auto Loan - Higher End Car - Porsche in Auto Loans

First Auto Loan - Higher End Car - Porsche

Anonymous — Fri, 22 Dec 2017 12:46:20 GMT

I am 21 with a 750-770 Fico score.

However, I have never had an auto loan. Unfortunately, my current car's lease is under my father's name since I was living at home at the time and it had to be that way for insurance (I paid for it 100%). I am worried that even though I have done everything "right" the fact that I haven't had an auto loan is going to hurt me when it comes time to applying for financing due to Fico's Industry Specific scores.

The car is about $80K and I am going to put down 10%.

How much of a factor does the "auto" specific parts play in?

I had a student loan that has been paid off and closed. And 7 credit cards that I don't carry a balance on so utilization is under 3% with a combined credit limit of >$70k.

I have worked hard and put myself through college (parent's couldn't afford it), I already contribute the IRS limit to 401Ks, etc. So please don't tell me that I should just buy a cheaper car.

I guess I am mostly just looking for advice on the whole proccess and what to expect.

Thanks!

Re: First Auto Loan - Higher End Car - Porsche

marty56 — Fri, 22 Dec 2017 13:08:19 GMT

I would take a copy of your CR and go to a local CU and see what they can do for you. They only question could be what your income is.

IMHO as long as you have the income, you would be approved.

Re: First Auto Loan - Higher End Car - Porsche

pipeguy — Fri, 22 Dec 2017 14:48:50 GMT

@Anonymous wrote:
I am 21 with a 750-770 Fico score.

However, I have never had an auto loan. Unfortunately, my current car's lease is under my father's name since I was living at home at the time and it had to be that way for insurance (I paid for it 100%). I am worried that even though I have done everything "right" the fact that I haven't had an auto loan is going to hurt me when it comes time to applying for financing due to Fico's Industry Specific scores.

The car is about $80K and I am going to put down 10%.

How much of a factor does the "auto" specific parts play in?

I had a student loan that has been paid off and closed. And 7 credit cards that I don't carry a balance on so utilization is under 3% with a combined credit limit of >$70k.

I have worked hard and put myself through college (parent's couldn't afford it), I already contribute the IRS limit to 401Ks, etc. So please don't tell me that I should just buy a cheaper car.

I guess I am mostly just looking for advice on the whole proccess and what to expect.

Thanks!

Although you might be able to get a credit union or dealer specific lender to finance you, it is a foolish move even if you can afford it. $72k loan at 2.5% (quoting very low rate) for 5 years equals $1295 a month for payments and that doesn't count insurance (full coverage required on financed loans) will probably add $800 to $1000 a month to that number on a Porsche, toss in maintenance and you are looking at $2500 to $3000 a month for 5 years - you are better off buying a house. If you insist on paying $150,000 to $180,000 for a car over 5 years, you'd be better off leasing for 2-3 years and buying a maintenance package up front. I'm not sure that a Porsche is leasable by someone 21 years old, but it'll be cheaper as far as cash flow.

Re: First Auto Loan - Higher End Car - Porsche

Kree — Fri, 22 Dec 2017 14:57:31 GMT

Income wil lbe the biggest factor here. Digital Federal Credit union is easy to get in with a $5 donation. Very good interest rates.

Capital One has soft pull prequals so you could check with them to see if you can get a loan with your income.

If you qualify through a relative (or yourself but you didn't mention military service), USAA has an amazing car buying service, and decent loans.

Also, I might be missing something, but from what you have said, I do not see a open installment loan. Opening one a few months before purchasing could increase your score, however that will only affect interest not approval with your current score, and you might already be at the best interest rates. The car loan would provide you with a installement loan as well, so for scoring purposes opening another loan would only be detrimental. probably.

EDIT: one last thought, check with insurance companies before you buy. It would be a shame if they flat out refuse to insure you due to your age. I think some companies due for things like Porsches. but you might be able to get your dad to co-sign (not for the money, but for the umbrella insurance with him. If needed.)

Re: First Auto Loan - Higher End Car - Porsche

Anonymous — Fri, 22 Dec 2017 15:04:53 GMT

@pipeguy I'm not sure where you are getting those numbers, I have a quote from StateFarm for $280/month for the car with pretty much maxed out coverage.

I am not sure what the maintenance plan for the Porsche is, but for my Audi is was just $3000 for 5 years everything included. I can't see the Porsche being much more.

For those asking, I have an income of around $180k and I am currently renting with my girlfriend (marriage intended). I have money saved for a down payment on a house, just waiting for her to save up enough to match it.

Re: First Auto Loan - Higher End Car - Porsche

Anonymous — Fri, 22 Dec 2017 15:07:08 GMT

@Kree I am unfamiliar with Installment Loans, what is their purpose? Is it just taking out a loan and then paying it to improve your credit score?

Re: First Auto Loan - Higher End Car - Porsche

Kree — Fri, 22 Dec 2017 15:28:04 GMT

An installment loan is any loan where you promise to pay a monthly payment for X number of months. The classic insttallment loan for most people is a car loan, so your score will benefit from buying this car. likely.

Part of FICO scoring is based upon 'credit mix' i.e. having different types of credit. So having a monthly payment loan give points. Especially once mostly paid off. There are quite a few posts about how it can boost your score.

If you need more points up front, then there are other ways to get a loan for little cost. I think this board calls it the Shared Security Loan method SSL. or maybe SLL something. I dont quite remember. But with your score, I think adding an extra loan before getting the car, while giving a temporary boost in score, would actually make your application weaker due to an extra inquiry, and lower Average Age of Credit

EDIT: with your income, this car is no problem. Go get it. Also as an aside, do you have 6 months income saved up for emergencies? The bigger your budget, the more you have to lose if you accidentally go unemployed for a while.

Re: First Auto Loan - Higher End Car - Porsche

Anonymous — Fri, 22 Dec 2017 16:01:26 GMT

Get the house first or you will kick yourself . You mortgage will factor in that car payment and reduce your approval amount. I have the same income and credit score range as you do ( and I am single.) I still would never spend 80k on a car when there are much more fun places to put your money. You will be kicking yourself when you realize you could have bought a house in that slightly better neighborhood , or a vacation home which will appreciate in value.

Once you have the house and are married with a temporary ( before kids) second income you can get whatever car you want.

Also - good that you are doing the IRS limit - but that is only 10% for your income. Up that another 5- 10 percent in investments when you can. The more you make the more you need to retire without feeling a drop in lifestyle. Dont count on the current rate of return it will not last.

Also - what is with the " waiting for her to save her half " you do realize that that can be fixed with a pre-nup. Don’t let the historically low interest rates get away from you.

Re: First Auto Loan - Higher End Car - Porsche

Anonymous — Fri, 22 Dec 2017 16:20:44 GMT

@nursemanit Those are some fair points. I guess I am looking at it more of a hobby than just a "car", which is the only reason I would consider spending $80k. I don't spend much money (about $1600/month which includes rent, food, car and everything) (no debt) I work from home and have no real expenses. The rest goes to savings. 22% goes straight to 401K, 10% goes straight to a 529 college savings plan (for future children or if I decide to get my doctorate). And the remainder goes into various CDs and mutual funds. As of right now, the price of the car is doable, I mean I could buy the car in cash if I wanted to, but I would never buy anything with cash while interest rates are so low. I am returning 5% with the $80k sitting in my accounts.

I get that an additional $80k could be used to buy a bigger house or a house in a better area, but we have already decided all the details and are content.

As for my girlfriend saving for the down payment, that is something she wants to do. She has also just graduated college, so she is looking to build up work experience before she puts in for a location transfer at the company she is working at.

Thanks for the advice and I will definitely think about it, might make sense to go with a lower-end car instead of jumping right into my dream car.

Re: First Auto Loan - Higher End Car - Porsche

Kree — Fri, 22 Dec 2017 16:32:34 GMT

@Anonymous wrote:

Get the house first or you will kick yourself . You mortgage will factor in that car payment and reduce your approval amount. I have the same income and credit score range as you do ( and I am single.) I still would never spend 80k on a car when there are much more fun places to put your money. You will be kicking yourself when you realize you could have bought a house in that slightly better neighborhood , or a vacation home which will appreciate in value.

Once you have the house and are married with a temporary ( before kids) second income you can get whatever car you want.

Also - good that you are doing the IRS limit - but that is only 10% for your income. Up that another 5- 10 percent in investments when you can. The more you make the more you need to retire without feeling a drop in lifestyle. Dont count on the current rate of return it will not last.

Also - what is with the " waiting for her to save her half " you do realize that that can be fixed with a pre-nup. Don’t let the historically low interest rates get away from you.

Dude is making 180k. He can afford a nice neighborhood house even with the car. I don't know what OP does, but a Porche is probably an unofficial job requirement.

Although OP, if it is status, Tesla might be a better choice for a hip professional, or a Masseratti. If it is driving fun, Carerras are not actually that much fun. I'd take a Miata over cheaper 911s. A lotus could be nice. Or again the Teslas are amazing(too bad about the waiting lists).

A well upkept 65 mustang doesn't do much in the corners, but they look amazing, and there is something about 60s pony car acceleration. You push your foot down and the car literally lunges forward.

Your money, your choice, but have you thought the Porsche through?

EDIT: took too long writting did not see OPs latest post.

Re: First Auto Loan - Higher End Car - Porsche

Anonymous — Fri, 22 Dec 2017 16:39:00 GMT

You seem like a pretty smart and responsible individual from what I read in your posts.

80k Porsche? Macan Turbo optioned out or 718 specced out? If you are planning to buy new, don't do it. You work from home which means you don't have a commute, leasing is your best option. This advice is coming from a super car fan to another.

To answer your question, you will have no problem getting a 80k car loan with your income and credit.

Re: First Auto Loan - Higher End Car - Porsche

Anonymous — Fri, 22 Dec 2017 16:47:22 GMT

Arclite6 You guessed it, 718 Cayman S with a bunch of options. My goal is to buy certified pre-owned if the dealer can find a low millage (under 7k miles) current model year. Idk though, it isn't looking promising. If I can get "my dream car" I would consider buying for life. Once this car is paid off and has pretty low millage, I would lease another Audi and use that as my daily and keep the 718 in perfect condition until I die lol.

Idk if I would want to lease a Porsche, unless I am getting base models all my quotes were up around the financing monthly cost. ($1000/month).

Re: First Auto Loan - Higher End Car - Porsche

Anonymous — Fri, 22 Dec 2017 17:01:25 GMT

I honestly prefer the older generation of the Cayman, not fan of their 4 cyclinder sounds ehh..

Between my wife and I, we spend about 2500 a month in car leases. We enjoy having newest and greastest every 3 years. Mercedes and Porsche both have pull ahead programs so you can trade your car in earlier. I love to lease because I drive my cars hard and pretty much I drive it like it's stolen or a rental car. Make sure the Certified Pre Own isn't an off lease model.

We splurge on our cars, however we are frugal in other aspects of our lives. Do what you love, don't wait until you are retired and in your 60s to enjoy your Porsche. This is true with someone who has no kids and making 180k a year.

Re: First Auto Loan - Higher End Car - Porsche

pipeguy — Fri, 22 Dec 2017 17:45:52 GMT

This type of post shows up every couple of months on these forums and I'm not "busting" on you or your post. However, speaking of someone who has spent well over a million dollars on cars and toys in my lifetime, the shine fades on new toys, but the cash outlay is still an obligation. I don't expect you to listen to me, I know my wife certainly doesn't, but even with a strong income today true wealth is not built on depreciable assets. Today that million plus I spent on cars, trucks, bikes, boats is just a memory and not anywhere as valued as an alternative investment portfolio with $2-3 million sitting in it.

Enjoy the Porsche

Re: First Auto Loan - Higher End Car - Porsche

Anonymous — Fri, 22 Dec 2017 20:00:32 GMT

@kree I dont know where you live , but 180 k a year does not get you into much anywhere near NYC. And no job requires a nice car - if you disagree ask Warren Buffet what he drives - or better yet read The Millionaire Next Door. You will see that mostly working slubs buy low to mid range luxury cars.

Also I assume the OP has his own business or else the numbers he is stating do not make sense.

Re: First Auto Loan - Higher End Car - Porsche

Kree — Fri, 22 Dec 2017 20:14:53 GMT

@Anonymous wrote:
@Kree I dont know where you live , but 180 k a year does not get you into much anywhere near NYC. And no job requires a nice car - if you disagree ask Warren Buffet what he drives - or better yet read The Millionaire Next Door. You will see that mostly working slubs buy low to mid range luxury cars.

Also I assume the OP has his own business or else the numbers he is stating do not make sense.

D.C. So we are right up there with NY in price. I know warren buffet has only ever bought used cars. Buffet is my investment guru. But, certain fields require flash. I made an assumption with the 180k at 21. Which proved false when OP mentioned he works from home. But I was working along the lines of an investment banker, or some other model and bottle type of professional.

Re: First Auto Loan - Higher End Car - Porsche

Anonymous — Fri, 22 Dec 2017 20:28:51 GMT

@nursemanit and @kree I work full time for a software development company and also consult on the side. Definitely, no need for a flashy car, it isn't about the flash for me, I just don't drive very much so I like to enjoy the drive when I get to, I am pretty into cars.

I live in NJ (suburbs), there are plenty of 4 bedroom $400k houses around here in great neighborhoods.

Re: First Auto Loan - Higher End Car - Porsche

Anonymous — Fri, 22 Dec 2017 21:08:24 GMT

I know NJ pretty well and 400 K is going to be a average home in a town like Wayne or similar. Your DTI will limit you to about 435,000 if you get the car and a 15 year mortgage vs 500,000 plus if you dont. So you are close.

Re: First Auto Loan - Higher End Car - Porsche

Anonymous — Sat, 23 Dec 2017 15:42:51 GMT

When purchasing the home, it would be with my girlfriend, who at that time will be my wife, so combined income will be $250k. So it won't be too bad, but I get what you mean. I am like 3 years out before buying a home though, so at that point, a good percentage of the car will be paid when we start loan shopping.

Re: First Auto Loan - Higher End Car - Porsche

iced — Sat, 23 Dec 2017 19:14:20 GMT

@Kree wrote:
@Anonymous wrote:

Get the house first or you will kick yourself . You mortgage will factor in that car payment and reduce your approval amount. I have the same income and credit score range as you do ( and I am single.) I still would never spend 80k on a car when there are much more fun places to put your money. You will be kicking yourself when you realize you could have bought a house in that slightly better neighborhood , or a vacation home which will appreciate in value.

Once you have the house and are married with a temporary ( before kids) second income you can get whatever car you want.

Also - good that you are doing the IRS limit - but that is only 10% for your income. Up that another 5- 10 percent in investments when you can. The more you make the more you need to retire without feeling a drop in lifestyle. Dont count on the current rate of return it will not last.

Also - what is with the " waiting for her to save her half " you do realize that that can be fixed with a pre-nup. Don’t let the historically low interest rates get away from you.
Dude is making 180k. He can afford a nice neighborhood house even with the car. I don't know what OP does, but a Porche is probably an unofficial job requirement.

Although OP, if it is status, Tesla might be a better choice for a hip professional, or a Masseratti. If it is driving fun, Carerras are not actually that much fun. I'd take a Miata over cheaper 911s. A lotus could be nice. Or again the Teslas are amazing(too bad about the waiting lists).

A well upkept 65 mustang doesn't do much in the corners, but they look amazing, and there is something about 60s pony car acceleration. You push your foot down and the car literally lunges forward.

Your money, your choice, but have you thought the Porsche through?

EDIT: took too long writting did not see OPs latest post.

The idea of the wealthy deserving/unofficially requiring a luxury car is wrong on so many levels. I make more than 180k and I can’t afford a nice neighborhood house around here without a $80k car loan, never mind with one.

The only people at my workplace driving expensive cars are the 20-something bros who think it makes them look cool and the midlife crisis crowd. Even some SVPs are driving Toyotas or Hondas. There’s also a growing culture of walking/taking public transit.