topic Re: How to get approved for $65K auto loan? in Auto Loans

How to get approved for $65K auto loan?

Anonymous — Mon, 14 Sep 2020 00:20:34 GMT

Hello,

First time poster. I'm trying to purchase a truck that retails for $65K(Ram 3500 Diesel). I've been turned down by every dealer I've tried to purchase from.

My pertinent info:

EQ: 607

EX: 588

TU: 589

My income is $130K annually. I have no debt other than two car loans--one for $30K (owe $20K) and one for $10K (owe $7K). I will trade in the $20K vehicle. I have no housing costs, either. My DTI should be very favorable, I would think.

I'm willing to put down $10K and the dealers were giving me a net trade value of $5K for my current truck--so nearly $15K towards the amount financed. With taxes and fees, my requested amount has gone between $55K and $60K. Unfortunately, I have not received a single approval. I've tried my credit union (USAA) and several subprime lenders through the dealers.

My credit took a hit due to small balance charge offs nearly six years ago. One of those showed up again last year as a new derogatory as it was purchased by a debt collector. Credit Karma and Experian's credit monitoring still lists the charge offs as pulling me down, in addition to the new collection account. I've got 3 credit cards with zero balances that I've never been late on--but they've all been open less than two years. I've also never paid late on either of my car loans.

Any ideas or strategies I could take to get myself approved? I'd like to get the truck by next Spring at the latest.

Thank you in advance for any help!

Re: How to get approved for $65K auto loan?

TC1212 — Mon, 14 Sep 2020 00:49:32 GMT

Is it possible for you to pay off the charge offs (request a written pay for deletion first)? Also, you should have one of your credit cards reporting a balance each month, no more than 5-8% (look up AZEO in the forums). Your score actually suffers when you don't use your credit cards. I think those 2 things could definitely get you approved, and your DTI seems fine. There are some more senior members that can chime if other things would help. Good luck.

Re: How to get approved for $65K auto loan?

Anonymous — Mon, 14 Sep 2020 00:50:39 GMT

Paying off the (PFD) the charge off that was purchased by the collection agency was an idea--it's about $700 so it would probably be worth it just to try.

Re: How to get approved for $65K auto loan?

ccquest — Mon, 14 Sep 2020 02:18:55 GMT

I definitely think the PFD route is the way you should go, get that "new" charge off suppressed and hopefully your score jumps back up some. If you can push off the purchase until seven years post charge offs, they should all stop affecting your score.

And with higher score comes lower rate, so the $700 PFD now could save you much more in the long run. Or just think about whether you really need the 3500 vs keeping the much cheaper vehicles.

Re: How to get approved for $65K auto loan?

CreditBones — Mon, 14 Sep 2020 17:09:54 GMT

@Anonymous wrote:

My pertinent info:
EQ: 607
EX: 588
TU: 589

Credit Karma and Experian's credit monitoring still lists the charge offs as pulling me down, in addition to the new collection account. I've got 3 credit cards with zero balances that I've never been late on--but they've all been open less than two years. I've also never paid late on either of my car loans.

Welcome to the myFICO Forums!

You cited your scores, but also mentioned Credit Karma. What is the source of your scores?

This is what I would do:

1) Know my FICO Auto Score 8, and FICO Auto Score 9. And base my strategy solely on those scores specifically.

2) Approach the case by order of credit file importance:

• 35% of the score is Payment History and Derogatory Marks (Congratulations on your positive on-time payment history! About the Derogatory Mark, first, I would try pulling the Debt Ownership Verification card on both, the collection agency, and the credit bureaus where it is reporting. If that doesn't work, I would try Pay for Delete with the collection agency. If that fails too, I wouldn't have any more options other than to simply pay it for it to show a $0 balance.)

• 30% of the score is Credit Utilization [UTIL] (The golden rule is to have a balance of 8.9% or less on all the credit lines, including credit cards [CC], auto loans [AL], personal and student loans, etc. Right now, the auto loan that owes $20k is at 67%, and the other one is at 70%... and, this is affecting that 30% section of your credit score. And even though you are planning on trading one of the cars in, the score pulled to approve your new truck will not include that consideration.)

• 15% of the score is the Average Age of Accounts [AAoA] (You mentioned you have 3 CC, but all of them are less than 2 yrs. Do you know your total AAoA? Taking in account your 2 AL balance %, and speculating they were financed at 6-7 yrs, they would be around 2 to 2-1/2 yrs old too. In your particular case, there is no other way to improve this 15% of your score other than waiting for time to age your credit lines.

• 10% of the score are Hard Inquiries (Hard inquiries or Hard Pulls [HP] expire by themselves at the 2yr mark. Your 3 CC, that are less than 2 years, have existing Hard Inquiries, as well as every time you tried applying for that vehicle. All of those are dragging this 10% of your score down.

• The remaining 10% are the amount of accounts, and the type of accounts; credit cards, personal loans, auto loans, student loans, mortgage loans, etc. The amount is as important as their diversity. You have 3 CC & 2 AL, with a great payment history, but too young. You have no mortgage loan, and no personal loan. Based on these, some credit bureaus may consider you have a thin credit file.

Maybe, using part of those $10K to open 5 or 6 strategic accounts (two $5K Secured Loans, that you will pay 82% back in the first month, but allow them to live their full life, and 3 or 4 Secured CC with the remaining $1,800), which wont include HP, could be an option that would allow you to raise the Credit Limit [CL] on your credit file, as well as diversify the type of credit lines in the next 2 years while you rehabilitate your credit file.

I would say that, other than dealing with your write off, and the Secured credit lines, the rest is about letting time run its course in order to lower your UTIL (your auto loans would be close to 33% if not less because you have made additional payments to them), and the Age of oldest Account [AoOA] become 4-5 years old.

There are many members with great strategies and real life experience in this forum. Hopefully you get more suggestions and ideas where to choose from. Good luck!

Re: How to get approved for $65K auto loan?

mrjerry — Mon, 14 Sep 2020 16:44:24 GMT

Just like the other people said, payoff the charge off and wait for it to update and try again. It should be 100%

Re: How to get approved for $65K auto loan?

ldkcivilservant — Mon, 14 Sep 2020 17:09:08 GMT

With your history of CO on your report, I'd be surprised if any auto leader would extend credit that is more than 50% of your 'experianced' level. If $30k is the most you have ever borrowed, I would think that $45k would be around your ceiling - which jives with what you are experiancing.

Re: How to get approved for $65K auto loan?

Brian_Earl_Spilner — Mon, 14 Sep 2020 17:22:29 GMT

Something feels off...chrysler and ally buy super deep, like 400 FICOs deep. The fact that they won't finance you nor sub-prime lenders, raises huge red flags. Is your income stable? How long have you been with that job and drawing that salary? Chargeoffs that are 6 years old wouldn't be a hurdle. Even one reporting as new, while causing a score drop if none of your negatives were updating, shouldn't be a huge hurdle to financing.

Re: How to get approved for $65K auto loan?

Anonymous — Mon, 14 Sep 2020 17:34:35 GMT

@ldkcivilservant wrote:
With your history of CO on your report, I'd be surprised if any auto leader would extend credit that is more than 50% of your 'experianced' level. If $30k is the most you have ever borrowed, I would think that $45k would be around your ceiling - which jives with what you are experiancing.

I've recently found this to be true in my case. No one will lend me over $45k and I also have a $30k loan and some 3 year old charge offs.

Re: How to get approved for $65K auto loan?

CreditBones — Mon, 14 Sep 2020 18:08:37 GMT

@Anonymous wrote:
@ldkcivilservant wrote:
With your history of CO on your report, I'd be surprised if any auto leader would extend credit that is more than 50% of your 'experianced' level. If $30k is the most you have ever borrowed, I would think that $45k would be around your ceiling - which jives with what you are experiancing.
I've recently found this to be true in my case. No one will lend me over $45k and I also have a $30k loan and some 3 year old charge offs.

@Anonymous did you had a mortgage loan at the time of application? DW and I are looking to buy a $45-50k SUV sometime between 2021-2023. We do have a mortgage loan. Do you (or anyone else) know if this will break that "1.5X" lending rule? Our car was $20k (on her name) when purchased back in 2015.

Re: How to get approved for $65K auto loan?

ccquest — Mon, 14 Sep 2020 18:15:53 GMT

Any idea on how this goes with no bads on file? Just asking because I plan on holding my current car for another 3-5 years and moving into a Corvette, possibly used as low as $40-45k but also possibly new up to like $70k. My highest loan has been $28k so if they only go 50% higher I might be stuck on the low end of used.

Re: How to get approved for $65K auto loan?

Anonymous — Mon, 14 Sep 2020 18:19:13 GMT

Not yet. Closed on it recently so it should show up any day now. Didn't help that my previous mortgage was in my wife's name so regardless of income, $45k seems to be my ceiling for now.

Re: How to get approved for $65K auto loan?

CreditBones — Mon, 14 Sep 2020 18:25:40 GMT

@Anonymous wrote:
Not yet. Closed on it recently so it should show up any day now. Didn't help that my previous mortgage was in my wife's name so regardless of income, $45k seems to be my ceiling for now.

Got it! Thanx.

Anyone else *with* a mortgage loan that can provide feedback, or that can point me towards a thread discussing this matter?

TIA!

Re: How to get approved for $65K auto loan?

importxpresions — Mon, 14 Sep 2020 18:51:07 GMT

I've often found with expensive cars and trucks if they won't lend to you you'll have to pony up a large down payment. You have time so if possible put down 20-25k.

Re: How to get approved for $65K auto loan?

Gladius — Mon, 14 Sep 2020 19:11:10 GMT

@Brian_Earl_Spilner wrote:
Something feels off...chrysler and ally buy super deep, like 400 FICOs deep. The fact that they won't finance you nor sub-prime lenders, raises huge red flags. Is your income stable? How long have you been with that job and drawing that salary? Chargeoffs that are 6 years old wouldn't be a hurdle. Even one reporting as new, while causing a score drop if none of your negatives were updating, shouldn't be a huge hurdle to financing.

I was thinking the same thing. Gone are the days where the dealership flat out "denied" you. I have heard of people with credit scores in the mid to lower 500s getting financed, at an increased interest rate of course (+10%) and a huge down payment and maybe proof of income.

Re: How to get approved for $65K auto loan?

TGG_1976 — Mon, 14 Sep 2020 19:44:09 GMT

Not to offend you, but think about it. You currently have 2 car loans and you are asking to get a 3rd loan that is half your annual income. All this with fairly low scores. I can see why lenders are looking the other way here. Unless you can put down at least 40% to reduce the financed amount, you will have a hard time. On a different note ... maybe review that idea, in general, taking out a 65k car note with a 130k annual income sounds "imbalanced". Depending on the monthly payment plan and financing terms, you will pay off this car forever. Again, you do you, but I'd take a hard look to see if this is really want you want.

Re: How to get approved for $65K auto loan?

Anonymous — Mon, 14 Sep 2020 19:57:18 GMT

Wow--what a response--appreciate you taking the time to write that post! I'll try to respond to your questions with my answers in bold--one by one...

@CreditBones wrote:
@Anonymous wrote:

My pertinent info:
EQ: 607
EX: 588
TU: 589

Credit Karma and Experian's credit monitoring still lists the charge offs as pulling me down, in addition to the new collection account. I've got 3 credit cards with zero balances that I've never been late on--but they've all been open less than two years. I've also never paid late on either of my car loans.

Welcome to the myFICO Forums!

You cited your scores, but also mentioned Credit Karma. What is the source of your scores?
Credit Karma & Experian Monitoring

This is what I would do:

1) Know my FICO Auto Score 8, and FICO Auto Score 9. And base my strategy solely on those scores specifically.
According to Experian--FICO Auto Score 8 is 567. They didn't have an Auto Score 9 listed

2) Approach the case by order of credit file importance:

• 35% of the score is Payment History and Derogatory Marks (Congratulations on your positive on-time payment history! About the Derogatory Mark, first, I would try pulling the Debt Ownership Verification card on both, the collection agency, and the credit bureaus where it is reporting. If that doesn't work, I would try Pay for Delete with the collection agency. If that fails too, I wouldn't have any more options other than to simply pay it for it to show a $0 balance.)

• 30% of the score is Credit Utilization [UTIL] (The golden rule is to have a balance of 8.9% or less on all the credit lines, including credit cards [CC], auto loans [AL], personal and student loans, etc. Right now, the auto loan that owes $20k is at 67%, and the other one is at 70%... and, this is affecting that 30% section of your credit score. And even though you are planning on trading one of the cars in, the score pulled to approve your new truck will not include that consideration.)

• 15% of the score is the Average Age of Accounts [AAoA] (You mentioned you have 3 CC, but all of them are less than 2 yrs. Do you know your total AAoA? Taking in account your 2 AL balance %, and speculating they were financed at 6-7 yrs, they would be around 2 to 2-1/2 yrs old too. In your particular case, there is no other way to improve this 15% of your score other than waiting for time to age your credit lines.

• 10% of the score are Hard Inquiries (Hard inquiries or Hard Pulls [HP] expire by themselves at the 2yr mark. Your 3 CC, that are less than 2 years, have existing Hard Inquiries, as well as every time you tried applying for that vehicle. All of those are dragging this 10% of your score down.

• The remaining 10% are the amount of accounts, and the type of accounts; credit cards, personal loans, auto loans, student loans, mortgage loans, etc. The amount is as important as their diversity. You have 3 CC & 2 AL, with a great payment history, but too young. You have no mortgage loan, and no personal loan. Based on these, some credit bureaus may consider you have a thin credit file.

Maybe, using part of those $10K to open 5 or 6 strategic accounts (two $5K Secured Loans, that you will pay 82% back in the first month, but allow them to live their full life, and 3 or 4 Secured CC with the remaining $1,800), which wont include HP, could be an option that would allow you to raise the Credit Limit [CL] on your credit file, as well as diversify the type of credit lines in the next 2 years while you rehabilitate your credit file.

I would say that, other than dealing with your write off, and the Secured credit lines, the rest is about letting time run its course in order to lower your UTIL (your auto loans would be close to 33% if not less because you have made additional payments to them), and the Age of oldest Account [AoOA] become 4-5 years old.

There are many members with great strategies and real life experience in this forum. Hopefully you get more suggestions and ideas where to choose from. Good luck!

Thank you again for the info--I've never had anyone explain the components of the score that clearly, before! Much appreciated!

Re: How to get approved for $65K auto loan?

Anonymous — Mon, 14 Sep 2020 19:59:14 GMT

@ldkcivilservant wrote:
With your history of CO on your report, I'd be surprised if any auto leader would extend credit that is more than 50% of your 'experianced' level. If $30k is the most you have ever borrowed, I would think that $45k would be around your ceiling - which jives with what you are experiancing.

That seems to be right in line with what I'm experiencing...several of the dealers have asked about me upping my down payment to $25K, which would put me in the $40K-$45K amount financed.

Re: How to get approved for $65K auto loan?

Anonymous — Mon, 14 Sep 2020 20:06:53 GMT

@Brian_Earl_Spilner wrote:
Something feels off...chrysler and ally buy super deep, like 400 FICOs deep. The fact that they won't finance you nor sub-prime lenders, raises huge red flags. Is your income stable? How long have you been with that job and drawing that salary? Chargeoffs that are 6 years old wouldn't be a hurdle. Even one reporting as new, while causing a score drop if none of your negatives were updating, shouldn't be a huge hurdle to financing.

Chrysler and Ally both approved me--but only up to $30K. The highest I've seen an offer go was for $45K through a subprime. Think the issue is the amount I'm requesting is much higher than anything I've ever had on my credit before.

Income is stable--I've been at that salary with just minor cost of living increases for three years now. I've been with my company 19 years, so that should be fine. I've offered up proof of income (pay stubs and W2s) to the dealers, but they never come back asking for it.

Re: How to get approved for $65K auto loan?

Anonymous — Mon, 14 Sep 2020 20:09:15 GMT

@Gladius wrote:
@Brian_Earl_Spilner wrote:
Something feels off...chrysler and ally buy super deep, like 400 FICOs deep. The fact that they won't finance you nor sub-prime lenders, raises huge red flags. Is your income stable? How long have you been with that job and drawing that salary? Chargeoffs that are 6 years old wouldn't be a hurdle. Even one reporting as new, while causing a score drop if none of your negatives were updating, shouldn't be a huge hurdle to financing.
I was thinking the same thing. Gone are the days where the dealership flat out "denied" you. I have heard of people with credit scores in the mid to lower 500s getting financed, at an increased interest rate of course (+10%) and a huge down payment and maybe proof of income.

You're right--none of flat out denying me--they're just asking for a very high down payment ($25K+).