topic Re: Chances of being approved for a $40,000 auto loan? in Auto Loans

Chances of being approved for a $40,000 auto loan?

Anonymous — Mon, 15 Feb 2021 17:22:37 GMT

Im currently looking to purchase my first car which is priced at around $40,000. I am 20 years old my annual gross income is $62,400 and I will make a year with my job in April. I have thin credit with 2 credit cards and its total amount is $1800. I was thinking of putting around 20-25% down towards the vehicle (No more than $10,000 down). My DTI ratio is 1% due to the fact I still live with parents ( Been living at my current address for my whole life). I've spoke with a few salesman and they've told me I have a good chance of being approved. I just would like more reassurance, what are my chances of being approved of a $40,000 auto loan?
Thank you.

Re: Chances of being approved for a $40,000 auto loan?

FICOlearner123 — Mon, 15 Feb 2021 17:34:27 GMT

Try https://www.capitalone.com/cars/prequalify, it will only be a soft pull and not impact your credit score and give you an idea.

Re: Chances of being approved for a $40,000 auto loan?

Anonymous — Mon, 15 Feb 2021 17:56:08 GMT

Well there are a lot of factors here. First off, have you financed a vehicle before? Or is this your first auto loan?

Also are you looking at a $50,000 car to put $10K down and now finance around $40K? Or will you be closer to $30K financed?

If this is your first auto loan you *may* get approved with enough money down but odds are not in your favor and be prepared for a high APR if approved.

Re: Chances of being approved for a $40,000 auto loan?

Anonymous — Mon, 15 Feb 2021 18:00:54 GMT

This will be my first auto loan. And either or, with that being $40k financed or even $30k financed.

Re: Chances of being approved for a $40,000 auto loan?

Brian_Earl_Spilner — Mon, 15 Feb 2021 18:12:48 GMT

Honestly, at your age, I wish I had gotten a cheaper car and thrown that excess money I was willing to burn into a brokerage account.

That being said, you can definitely be approved. Only question is with who and what the rate will be.

Re: Chances of being approved for a $40,000 auto loan?

Anonymous — Mon, 15 Feb 2021 19:30:35 GMT

Yeah I would listen to Brian and get something less expensive. Put less money down and invest or save the rest.

you'll also be less stressed with high payments on your first car plus the other expenses you may not be considering (full coverage insurance, gas, etc.)

Re: Chances of being approved for a $40,000 auto loan?

Anonymous — Mon, 15 Feb 2021 22:03:33 GMT

One of the biggest mistake I have made in my life was being car obsessed.

By Age 19-20 I already had 3 new cars.

The first 2 maybe made sense as I was moving across country and it might not have paid to take my car then.

The 3rd was a big mistake. I was in college and made OK money working as a waiter and traded in m y 1985 Mustang GT for a 1987 Mustang GT. This was so stupid with money burning a hole in my pocket.

I am sure you have thought about things and can afford the car but please do yourself a favor and consider a few more things.

It will take a very long time until you have so much disposable income again since you are able to live with family now and don't pay rent.
What is it about the 40,000 car that makes it worth it to you vs a cheaper one?
What car are you looking at? Many manufacturers have first time buyer programs or recent college grad programs
Check out a credit union and get pre-approved before you head to the dealer. For example DCU pulls your Equifax Mortgage score. Know the score and if it's above 660 maybe let them do the hard pull and have a solid pre-approval so you know where you stand.
Capital One Auto navigator will give you an idea but may not be the best rate.
Carvana will also prequalify you but typically very high rates (was 12% versus 5% or less for 7 years with my local credit union when I looked last)
Figure out a budget and stick to it. If you can pay $500 a month for the car and an extra $100 a month for the insurance prove it. Save $600 a month for at least 3-4 months then you have both proved you can afford the payment and saved a little more for the down payment.
Think about your short and mid term goals - do you want to move out in the next 2 years? Can you afford rent plus the car? What if you got a car that was half the price and put the other half in savings to come up with 5% down on a small condo?
Do not settle for a high interest rate thinking you can always refinance. If you are indeed putting down $10K then maybe that is a possability but with a higher rate it's very hard to stay right side up and if you are not right side up you cannot refinance without paying it down until you are right side up.

Learn from m y mistakes and think things through but if I could go back to my 20 year old self I would have kicked my butt for trading a perfectly good 1985 Mustang GT for a 1987 one because it was faster and nicer looking.

Re: Chances of being approved for a $40,000 auto loan?

Anonymous — Mon, 15 Feb 2021 22:06:33 GMT

Nothing I love better than when inquiring at the butcher shop, "Might you recommend a good cut of beef?" being told I would be better off going to the fish market across town. "Beef isn't good for you, sonny."

Re: Chances of being approved for a $40,000 auto loan?

Anonymous — Mon, 15 Feb 2021 22:11:29 GMT

@Anonymous wrote:
Im currently looking to purchase my first car which is priced at around $40,000. I am 20 years old my annual gross income is $62,400 and I will make a year with my job in April. I have thin credit with 2 credit cards and its total amount is $1800. I was thinking of putting around 20-25% down towards the vehicle (No more than $10,000 down). My DTI ratio is 1% due to the fact I still live with parents ( Been living at my current address for my whole life). I've spoke with a few salesman and they've told me I have a good chance of being approved. I just would like more reassurance, what are my chances of being approved of a $40,000 auto loan?
Thank you.

Assuming your credit is pristine you should be okay. Good luck!

Re: Chances of being approved for a $40,000 auto loan?

Jrl1vin2 — Mon, 15 Feb 2021 22:33:57 GMT

1. The answer to your question is that you will almost certainly be approved for the loan.

2. The answer to the question you are not asking is that this is a terrible idea.

Re: Chances of being approved for a $40,000 auto loan?

DeadSpider — Thu, 18 Feb 2021 08:22:48 GMT

Just buy a 10K car and start paying yourself $500 a month for 1-2 year and sell your 10K car for 7K and buy another car for 20K.

Can you afford car + rent ? or are you NEVER moving out?

Re: Chances of being approved for a $40,000 auto loan?

bigfoot98 — Thu, 18 Feb 2021 16:45:42 GMT

You probably have a pretty good chance. Try your bank or credit union to see what rate you get. NEVER LET THE DEALER SHOP FOR YOU!!!!!!!!!!!!!!!!!!!!!!! Their captive lender is fine or 1 of their preferred institutions but NEVER let them fire off applications.

Don't be afraid to get a new vehicle, if you want it get it, drive what makes you happy!

Also research EXACTLY WHAT MAKE AND MODEL YOU WANT before even showing up at a dealer, use their online tools to browse and the manufacturer website and car/truck forums.

Checkout "the Chevy dude" on YouTube, he has a lot of great advice on how to buy a car. If you don't have a dealer doing things the way he says they should, they are scamming you and leave.

Just an overview on how it should be:

Never tell them how you are going to pay before getting in the finance office

Never tell them what you can afford monthly

Never tell them what your income or credit is unless it is going on the credit

application

Never pay sticker on non-unique or rare vehicles

Never pay for overpriced warranties, add ons you don't want like flashing brake light

and floor mats, hood deflectors and others (they will say we already installed them

but news flash if they want a sale they will take them off without a stink),

accessories like pin stripes or clear coat or services like paint protection and wheel

protection, credit life insurance and the rest of the "rip offs"

Never pay detail, destination (other than factory or shipping directly to you via

transport truck), gas, or other dealer made up fees, EXCEPT doc and license fees

Always ask for an itemized quote for the vehicle, never a 4 square or hand written one

Always be ready to walk away

Get gap insurance but shop around for it from the insurance, bank, or dealer

Watch his videos 9 fees never to pay, 5 questions to ask, 5 questions to never answer, how you make car buying difficult, 5 mistakes you make, how to work you car deal and SEVERAL OTHERS.

Here is how my silverado deal went:

Went to dealers to look at trucks, decided on Chevy silverado rest over the ram. Ford is crap so they bought it back and I wouldn't drive another if they payed me.

Side note, 1 ram dealer refused to let me look at trucks if I did not agree to buy that day, so I told them to shove it where the sun don't shine and left.

Once I had a build sheetfed what I wanted:

Went to several dealers, none wanted a deal bad enough, one even said, nobody is buying cars right now due to the pandemic so I don't have to discount it because we need money.

Then called another dealer, talked price before getting there, agreed, test drove, wrote auto draft check and wired down payment, had new truck.

Dealer discounted, first responder discount, competitive brand owner, and then added NJ tax, state tire fee(NJ sucks), NJ registration, NJ title fee, and PA state temp tag fee and doc prep and mail fee (mail price for plates to my home due to distance from dealer). Got almost 11k off before the government theft got added in. Quick and painless. So if you are in the PA or nj area Patriot Chevrolet is the place to go.

Good luck

Re: Chances of being approved for a $40,000 auto loan?

dunn2500 — Thu, 18 Feb 2021 18:46:17 GMT

yeah man what bigfoot said....

dealers arent working for you they are working for them and they will see you coming a mile away

do your homework and secure your own financing, i went thru this and now on my 3rd truck in 3 yrs, i have done way way better on my own than letting them do it for me....use credit unions and negotiate pricing thru emails/text, watch youtube videos

dealers arent all bad but chances are you will deal with some shady ones, so good luck and dont just believe what they tell you......verify everything.....

in 2019 i had no credit and got screwed on interest rate.....pissed me off so 4 months later i sold it and bought another for 7% ( credit union) dealer wanted 13%.....I never set foot in the dealership i did it all online with home delievery.....just this past monday i flew to AZ and picked up new truck and saved about 5k from buying locally .....lots of research, patience, and negotiating.....I am extremely confident at purchasing vehicles now....using my best fico auto score and matching that with lenders that use them has really benefitted me extremely well.....cant stress how important this has helped my interest rates......

2nd truck i never set foot in the dealership they delivered it to me and signed papers on porch ( secured my own financing)

this last truck deal was all done by emails....when i got off plane they had a driver waiting...i spent 45 min in the dealership (my own financing again) and was out the door.....very painless and no bs, great deal all the way around......

anything the dealer is trying to sell you you can buy in free world.....they dont have anything you cant get on your own

assume they are working against you until otherwise proven they arent, always be polite (i have not always done this, lol) but firm...

Re: Chances of being approved for a $40,000 auto loan?

Girlzilla88 — Thu, 18 Feb 2021 19:22:16 GMT

@Anonymous What are your Scores?!

Re: Chances of being approved for a $40,000 auto loan?

Anonymous — Sat, 20 Feb 2021 04:26:34 GMT

I think it is best to look for an used car. Buying new will automatically depreciate rapidly especially when you wanted to trade in in the future while still paying the loan payment. Unless you want to pay it off to the end, it is alright but still buying an used car is not a bad idea. Usually it is easier to get auto loan approved especially when you able to show them your pastub for months. The APR however is a different story. Just make sure you are getting the lowest APR. If you want to know what to pay in advance or have some idea how the APR would affect use this calculator.

http://auto.bizcalcs.com/

My first car was a honda civic 88 hatchback. I bought it for just $3000 and I put at least 240K miles on it. The car had already around 260k miles.

2nd one, is also a used Honda CRV 97 and I bought it in 2000 for $17K. It had 32K miles and I drove near 400K miles for 15 years. Before I sold it I purchased my first new vehicle.

3rd Vehicle New. 2014 RAM 2500 laramie, $72K (3.29% apr). Using it for full time rving. I paid it down to below $40K and there was when I made a mistake.

I traded it for my 4th vehicle, a new 2017 RAM 3500 longhorn dually, 86K (3.49% apr but now refinanced to 4.09% Apr). By now I could paid off RAM 2500 and traded it with cash back for a newer truck. The moral of the story is, buying used vehicle doesn't cost you much. If buying a new vehicle make sure you paid it off or maybe down to just few thousands left before getting a new vehicle. That way you wouldn't loose much to depreciation.

5th vehicle as my 2nd drive. Ford Energyi Titanium 2015. I am using it for daily drive to work but since I am working remotely for home I am not using it much. I am paying it off in a year plus from now by making extra payment since APR is 6.39%.

@Anonymous wrote:
Im currently looking to purchase my first car which is priced at around $40,000. I am 20 years old my annual gross income is $62,400 and I will make a year with my job in April. I have thin credit with 2 credit cards and its total amount is $1800. I was thinking of putting around 20-25% down towards the vehicle (No more than $10,000 down). My DTI ratio is 1% due to the fact I still live with parents ( Been living at my current address for my whole life). I've spoke with a few salesman and they've told me I have a good chance of being approved. I just would like more reassurance, what are my chances of being approved of a $40,000 auto loan?
Thank you.

Re: Chances of being approved for a $40,000 auto loan?

dunn2500 — Sat, 20 Feb 2021 23:01:44 GMT

used car prices are insane right now......I just went through this and it was cheaper for me to buy new, and i just sold my used one for almost what i paid new 1 yr ago and carvana will mark it up again to sell it and will be higher than MSRP....used market is crazy, when dust settles and prices get back to normal used cars that sold will take huge hit in AMV.....just a thought

Re: Chances of being approved for a $40,000 auto loan?

incognitony — Sun, 21 Feb 2021 14:47:38 GMT

I didn't know if mentioning YouTube people was allowed but you can look up Your Auto Advocate on there and they have website where you can run market reports by VIN and they have a lot of tips on making a deal on a vehicle purchase. There are so many resources to get a better deal these days.

Re: Chances of being approved for a $40,000 auto loan?

CA4Closure — Tue, 23 Feb 2021 04:44:23 GMT

You are 20 years old. At 20, I was in my last year of college. Then I went to the US Navy and served 30 years but a few years into my Navy career I bought a brand new Ford Mustang GT but at the time these cars were $23,000. I was spending more time on aircraft carriers than driving my Mustang! In highsight I should have just saved my money and bought a Toyota truck which was $18,000 brand new.

I tell people your age to buy a good, clean used vehicle that is reliable and can get you from point A to point B without costing you an arm and a leg. Auto insurance is probably high at your age too.

Look for 100% interest free financing from the vehicle manufacturer.

Re: Chances of being approved for a $40,000 auto loan?

dunn2500 — Tue, 23 Feb 2021 05:07:19 GMT

@CA4Closure wrote:
You are 20 years old. At 20, I was in my last year of college. Then I went to the US Navy and served 30 years but a few years into my Navy career I bought a brand new Ford Mustang GT but at the time these cars were $23,000. I was spending more time on aircraft carriers than driving my Mustang! In highsight I should have just saved my money and bought a Toyota truck which was $18,000 brand new.

I tell people your age to buy a good, clean used vehicle that is reliable and can get you from point A to point B without costing you an arm and a leg. Auto insurance is probably high at your age too.

Look for 100% interest free financing from the vehicle manufacturer.

you wont get 0% on used a used car

Re: Chances of being approved for a $40,000 auto loan?

disdreamin — Fri, 26 Feb 2021 17:43:41 GMT

I'm usually an advocate for buying less car (ie: used) but with current prices and financing being what they are, new might make sense. As others have mentioned, used car prices are sky-high right now. That, combined with the typically higher interest rates associated with financing a used vehicle, may make a new car a better deal.

That said, I'd encourage the OP to shop carefully and really consider whether a $40k new car is necessary. If you plan on moving out in the not-too-distant future, make sure whatever car payment you've committed to works with the additional monthly overhead of rent, utilities, etc.

Bottom line, I LOVE cars. I love, love, LOVE driving, I adore a well-built, ground-hugging, responsive vehicle. I drive a decent but economical vehicle because it makes the most financial sense. If I were you, I'd buy a cheaper car. Take $500-1k of what you save and do a few laps on a racetrack with a Ferrari, Porsche, Lambo, etc. $40k isn't really going to get you much that $25-30k can't provide for a daily driver, imo.

P.S. If it's a curvy track, do the Porsche GT3 RS - it's WAY more fun that the Lambo Huracán or Ferrari 488 ;^)