topic Re: Preparing for auto loan? in Auto Loans

Preparing for auto loan?

sstromberg — Tue, 11 Feb 2020 02:33:34 GMT

Hey myFICO,

I'm not in the market for a car now, but I will be in about a year as I am saving up to buy a used/CPO BMW X3. I'm guestimating that I'll need a $40-45k loan on a $40-45k income. That being said, at that time I'll be in the position at that time to put up to 50-75% down.

I started building my credit pretty much from scratch in December (the only cards I had were AU cards from my parents). In the span of two months, I got an Amex Gold, Business Platinum, Wells Fargo Propel ($2k), Apple Card ($1k), and Capital One Platinum ($2k). I also got a loan from LendingClub ($14k) to pay off a business card debt (I was responsible for it but not the signatory on the card).

So, my inquiries are pretty ugly:

EX: 10/6 10/12 10/24

TU: 7/6 7/12 7/24

I'm planning on shopping for this car in January 2021. If I get a loan in January, my inquiries will be:

EX: 0/6 1/12 10/24

TU: 0/6 3/12 7/24

I'm aiming to pay the LendingClub loan down at least 70% by then (30% remaining or less). Is this a good target or be more aggressive?

I PIF all my cards. My parents carry a 10-25% balance on their cards pretty much all the time, but their limits are gigantic and they bring my AAoA way up to 8 years, the oldest being 27+ years old. No baddies.

Anything I should do in the next 12 months to get ready to apply for a loan? Do these CC inquiries count that much during the application process?

Re: Preparing for auto loan?

NimbusIII — Tue, 11 Feb 2020 06:31:31 GMT

You'll definitely need to garden till then. You'll also probably want your lending club loan below or at 25% a month prior to applying so it has time for your scores to adjust. If you can establish a relationship with a credit union then I would go that route as they tend to have the best rates and easiest approval process. Other wise everything looks good as far as a plan. Not knowing where your scores sit at.

Re: Preparing for auto loan?

sstromberg — Tue, 11 Feb 2020 18:47:30 GMT

Didn't even realize I hadn't put my scores.

Prior to all the new accounts posting this month, my EX was 742 and my TU 771. EQ early in January was 767.

Now they're at EX 721, TU 730, no idea what EQ is. So in light of that, the excessive inquiries that younger than 12 months shouldn't matter?

But I'll avoid inquiries till then, pay down the LendingClub and continue to PIF. Maybe I can get my parents to PIF the month before applying.

As to establishing a credit union relationship, what's the best way to do this? I currently bank with First Republic (just checking) and have online savings at Ally. I don't really want to move checking accounts but I would consider if I had to.

Re: Preparing for auto loan?

Harvey26 — Wed, 12 Feb 2020 00:33:09 GMT

@sstromberg wrote:
Hey myFICO,

I'm not in the market for a car now, but I will be in about a year as I am saving up to buy a used/CPO BMW X3. I'm guestimating that I'll need a $40-45k loan on a $40-45k income. That being said, at that time I'll be in the position at that time to put up to 50-75% down.

I started building my credit pretty much from scratch in December (the only cards I had were AU cards from my parents). In the span of two months, I got an Amex Gold, Business Platinum, Wells Fargo Propel ($2k), Apple Card ($1k), and Capital One Platinum ($2k). I also got a loan from LendingClub ($14k) to pay off a business card debt (I was responsible for it but not the signatory on the card).

So, my inquiries are pretty ugly:

EX: 10/6 10/12 10/24
TU: 7/6 7/12 7/24

I'm planning on shopping for this car in January 2021. If I get a loan in January, my inquiries will be:

EX: 0/6 1/12 10/24
TU: 0/6 3/12 7/24

I'm aiming to pay the LendingClub loan down at least 70% by then (30% remaining or less). Is this a good target or be more aggressive?

I PIF all my cards. My parents carry a 10-25% balance on their cards pretty much all the time, but their limits are gigantic and they bring my AAoA way up to 8 years, the oldest being 27+ years old. No baddies.

Anything I should do in the next 12 months to get ready to apply for a loan? Do these CC inquiries count that much during the application process?

I see that you have an AU card with Chase. Have you ever considered moving your deposits to Chase or Bank of America. They both have pretty good rates on car loans or even a local CU as stated.

Re: Preparing for auto loan?

sstromberg — Wed, 12 Feb 2020 01:28:10 GMT

I might consider moving my deposits to Chase if that's the case, but probably for checking only. The high APY on the Ally account is too good to leave. There's also a sweet sign up bonus right now. That being said, I do love my First Republic account and all of my cards, etc. are already linked to it, and I have a permanent fee waiver.

Re: Preparing for auto loan?

sstromberg — Fri, 14 Feb 2020 02:32:02 GMT

As a modification to the above, my EX went up to 751 this week. If anything, it will continue to go up once the inquiries wear off.

Easier to get loans in this score range?

Re: Preparing for auto loan?

donkort — Fri, 14 Feb 2020 02:36:15 GMT

I believe many auto lenders would consider a 751 score to be either Tier 0 or Tier 1 credit, which means you'll get a decent interest rate. If you get your score from MyFico, you would get "auto scores," too.

Your only drawback is your income-----but if you're putting a decent downpayment, then that shouldn't be as much of a problem.

Re: Preparing for auto loan?

donkort — Fri, 14 Feb 2020 02:39:23 GMT

Make sure you know your auto score before you go into a place to buy a car.

Many car dealers are ripoff artists, and will claim that you have a lower credit score than what you actually have.

Re: Preparing for auto loan?

sstromberg — Fri, 14 Feb 2020 03:17:03 GMT

Yeah, essentially I want to buy a $40k car and I'll have $20-35k of savings at that point to buy it. So I can put a LOT down

Re: Preparing for auto loan?

MrPepperoni — Fri, 14 Feb 2020 22:39:45 GMT

Hey guys, I am basically looking for similar info!
What is more important factor for a car loan ? AAoA or amount of credit cards you responsibly manage and total CL available?
In other words, I have 2 CC at the moment with total CL 3800$, I will be at 12 months AAoA in May2020....or if I apply for 2 more cards now, I will have 4 accounts and CL around 10k total...but will hit 12 months AAoA in october 2020. But what if I decide to get a car loan in like August and I am at 10 months with 4 cards.... which scenario is better looking loan candidate ?

Re: Preparing for auto loan?

donkort — Fri, 14 Feb 2020 23:03:45 GMT

I would say the utilization of your credit cards counts a great deal in FICO scoring and in showing financial responsibility.

Re: Preparing for auto loan?

donkort — Fri, 14 Feb 2020 23:08:14 GMT

You should find out your auto scores through MYFico.

I had about a 640 auto score, while maintaining a 680s Fico score back in 2018. A $199/month lease turned into a $400 lease as a result.