1st time auto buyer, thin credit file

AlwaysUp · ‎05-02-2012

Hi

I currently have one secured CC open with WF, $1500 limit. My Fico are : 688EQ, 680TU, 730EX VS. I opened an LLC last month and I'm making 5K a month. I get 3-4K from my parents. So that's around 70K / Year. I need to get a new car, I'd like to buy a 2009 Mercedes C63 AMG that costs around $45K. I can put around $15K as a down payment. What are my chances to get approved? How do I proceed and where do I need to apply? What is the interest rate that I should expect? I can wait another month or two, maybe my scores will get a little bit better.

BTW, I applied for an unsecured new CC with WF, I'm waiting for a response, and for another one for my business that should report to my personal report. My banker said I was pre-approved for that one since I opened a new business, but I don't trust him that much, he doesn't seem to know what he's talking about but I don't care anyway, I don't have that much to lose in case of a denial.

Thank you all for your advices, this forum has been very helpful to me!

StartingOver10 · ‎05-03-2012

You actually have two issues: a thin credit file and no verifiable employment (because you have a new business).

The issue I see is you have a brand new business with no history of income to provide to any lender to show the ability to repay. One month is not long enough to show the lender - even two or three months. Now, if you had a couple of years of history with your company to show - then its possible. Remember, self-employed and commission type incomes are reviewed more stringently than W-2 type incomes.

The large down payment helps - usually 30% down is a real help, but with no employment, you have no method of repayment (that's how it looks to a lender with a new business)

AlwaysUp · ‎05-03-2012

I understand. Thing is, I've been in this business for a while. I had my company in France and I was paying my taxes there. (We make websites so it didn't really matter for me). Would my bank statements for the past 6-12 months help? I'd like to avoid a denial as much as possible and I don't want to pay an outrageous interest rate, that's why I'm willing to put 30% down.

Had anyone had experience with MB Financial before?

AlwaysUp · ‎05-03-2012

I was approved today for a loan for a CL63 AMG 2008, they gave me an interest rate of 9,99% and the amount financed is $39058,70. I will put 20K down, my monthly payment will be $700 for 72 months.. Does this sound like a good deal or should I keep looking?

Anonymous · ‎05-04-2012

I have no idea on the price of the vehicle but being it is a used car loan and your credit challenges the terms are excellent. With a solid payment record you can look to refinance it to a possibly lower rate in a year or two. Of course none of us has a crystal ball to predict where rates are going but with excellent credit there are amazing finance offers out there right now, especially with credit unions.

Creditaddict · ‎05-05-2012

@AlwaysUp wrote:
I was approved today for a loan for a CL63 AMG 2008, they gave me an interest rate of 9,99% and the amount financed is $39058,70. I will put 20K down, my monthly payment will be $700 for 72 months.. Does this sound like a good deal or should I keep looking?

A few things:

1. You started this thread off saying you were looking at a 2009 for about $45k.

2. Now you post 2008 for almost $60k??

The math is right for the payment on $38k over 72 months at 9.9% HOWEVER I once did a 72 month term and that was on brand new and I would still say never do it unless the rate is like 0 or maybe 1.9,2.9... you are never going to keep that car for 72 months AND you are now talking about a 5 year old car that you are now going to purchase over 6 years and you will be upside down in that thing for at least 4 years IF you take very good care of it and don't pile on the miles.

Wait... Okay popped over to our local Mercedes website, not sure where you live.

2012-2013 what ever it is right now C63 is $60k BRAND NEW

Also Pre-Owned has this sweet deal:1.99 percent APR for up to 66 months at $ 16.01 per month, per $ 1,000 financed applies to Mercedes-Benz Model year 2008, 2009 and 2010 Certified Pre-Owned C Class vehicles.

So back to where this rate is being approved from and what the total price of the car is and year and mileage... otherwise I think you need to walk away.

AlwaysUp · ‎05-06-2012

I was looking for an 09 C63 but then I found a 08 CL63 and I got approved for it for 72 months. I'm gonna go back to the dealer next week and try to work out a better deal.

Also put in mind that since I'm putting 20K down, it will be hard to get a negative equity. I'm planning to refinance in 12 months though when my credit will go up to 750-780. When I will refinance I will put more 10K down and then get a 36 months deals. After another 12 months, I will trade-in the car and get a newer one. I'm going to keep the car for 24 months max. It's a CL, maintenance is ridiculously expensive for that car so it's better to trade in before it starts to get old.

I litterally fall in love with the car, my initial budget was 45K but when I saw this one, I couldn't resist. It's a piece of art. A really bossy car. I always dreamt about owning it and now I have a chance to get it, so I'm gonna pull the trigger and buy it.. We only live once, don't we?

Creditaddict · ‎05-06-2012

@AlwaysUp wrote:
I was looking for an 09 C63 but then I found a 08 CL63 and I got approved for it for 72 months. I'm gonna go back to the dealer next week and try to work out a better deal.

Also put in mind that since I'm putting 20K down, it will be hard to get a negative equity. I'm planning to refinance in 12 months though when my credit will go up to 750-780. When I will refinance I will put more 10K down and then get a 36 months deals. After another 12 months, I will trade-in the car and get a newer one. I'm going to keep the car for 24 months max. It's a CL, maintenance is ridiculously expensive for that car so it's better to trade in before it starts to get old.

I litterally fall in love with the car, my initial budget was 45K but when I saw this one, I couldn't resist. It's a piece of art. A really bossy car. I always dreamt about owning it and now I have a chance to get it, so I'm gonna pull the trigger and buy it.. We only live once, don't we?

Well we are still not addressing why this 2008 is $60k, when a 2012 starts around $60k... I understand starting at $60k for Mercedes means you can go up probably another $10-$30k depending. and who this approval is with? MBF?

and now a whole new statement of when my credit is 750-780 in less than a year, how do you come to that conclusion?

AlwaysUp · ‎05-06-2012

My current scores are around 700 with only one CC after I had a fraud collection removed from my report. When I will have an auto-loan, it's going to help me build my credit so my guess is that I'll be around 750 by the end of the year. I'm planning to only keep using one CC anyway. I might be wrong though.

About the car, I think you're a bit confused. When I started the thread, I was talking about a 2009 C63 that costs around 45K, but then I found a CL63. Does it make more sense?

Creditaddict · ‎05-06-2012

@AlwaysUp wrote:
My current scores are around 700-720 with only one CC after I had a fraud collection removed from my report.

I think you're a bit confused. When I started the thread, I was talking about a 2009 C63 that costs around 45K, but then I found a CL63. Does it make more sense?

OH... SURE DOES.... Excuse me while I wipe the drool off my face!

Are you making the $5k off new company plus the parents money or they are paying you for the company or just in general?

I assume you are not expecting that money from them to change over the next 5 years?

I have to say not sure it's relaly a great "Financial" choice but with 1 tiny credit card and assuming since you don't have mortgage or other car payment, you really do have plenty of cash to do it... and I probably would too but still feel like i should still say no! haha

but assume you are younger so if you are going to fall for a bad money choice, now is the time to do it!