Applying for a second auto loan

[Anonymous]

Hello,

I have a few things going on. My husband crashed his old car and now we need a new one. His credit really sucks and I know he won't get approval for a loan so I have to buy the vehicle myself and treat it as my second vehicle until he can improve his finanical situation. I've kept my maiden name and everything is separate including our bank accounts.  However, I already do have an installment loan with my credit union. I was in a wreck last July and was able to completely pay off my re-finance loan for my wrecked car and they approved me for an installment loan on my new vehicle. I have not missed any payments and am happy with the loan. However, when I bought the car I didn't go straight to my credit union for a loan and the dealership ran a few inquiries on my credit (last July), how does that affect my chances for approval now? I have a score range from 660-700 and my DTI ratio is 25% - about 60 percent of my credit is being used. I would definitely wait as long as I can to apply for this loan by paying down the debt more BUT sharing the car has been such a pain in the ass. I am hoping that my credit union will approve me for a second installment loan. We do not rent or own because we live with family for now, so home payments aren't a factor for me. My student loans are paid every month and are never missed.  How do you think my chances are looking? Please let me know before I jump into another inquiry! Any words of wisdom are appreciated! Thanks!

[Remember0]

It'd really help if you could pay down some of that cc debt to lower DTI and increase fico. Calculate this and tell me what it is:

(Total min payments of all credit cards + rent/mortgage + current car pmt. + new car pmt. estimated @ 5%) / (your monthly pre-tax income) = ?

You may have to apply joint with your husband to be honest so you can use his income. But if you are primary and he's secondary, some banks/CUs won't raise the apr. The trick is finding that bank/cu.

[Anonymous]

Thank you so much for the response.

As it is right now:

Credit card monthly payments:

Discover $61

Master Card Diamond $51

Master Card Thankyou Preferred $270

Amex $61

**two cards were recently paid off, not sure if they will show as such on the credit report but I can provide proof that they are paid off

Wells Fargo Retail - min payment was $35 a month

Nordstroms - min payment was $25 a month

Current car payment is $372 for the 2010 Camaro with my credit union, Truliant FCU

My monthly income is $4,160

**I didn't figure out the new car loan details yet, but I'm shooting for it not to be over the amount I am paying right now.

2010 Chevy Silverado price is $23,500 - we are going to try and negotiate the price so that my monthy payments won't be over $800 (including my current car payment)

**My husbands credit score is below 600, I would rather not include him as a joint on the loan application.

Thanks again!

[Remember0]

I'm sorry, but I don't think you'll be able to go it alone with that particular stated income. Here's what a lender is looking at...though you didn't tell me the rent/mortgage, so I assumed 1k, let me know if it's lower. And if for privacy reasons you don't feel okay giving me the exact amount, round it up/down $50 or something. It being higher only makes the DTI worse:

(1000 (imputed rent) + 61 + 51 + 270 + 61 + 60 (paid off cards) + 372 + 350 (new car @ 20k+ttl @ 5% for 72 months)) / 4160 = 53%

Especially with it being a second car in your name, it's going to be very hard to pull that off imo. Keep in mind lenders hate giving subprime borrowers (generally <720 or <680 depending on lender) two cars in the first place if not joint on the second, so that also works against you depending on the lender.

If we were talking mortgage, that proof of payoff for CC might have worked. But I doubt an auto lender works with that. When do your next statements (that reflect 0 balance) cut on those cards? It'll update as 0 to your CR shortly after the next payment. Still that just lowers DTI by 1-2% ish, which won't make this deal work in and of itself.

The biggest thing we might be able to work on here is rent/mortgage. Obviously your DH also shares that burden. If you have a joint mortgage, many lenders will only take half the amount into consideration. Not sure about how rent works personally, but I bet there's a bank/cu out there that's willing to take half if you have a joint lease. Could any of this maybe apply in your case?

[Anonymous]

I don't have rent to pay or a mortgage. We live with some relatives at the moment until we decide where we want to live.

[Remember0]

Well that definitely helps. Some lenders impute rent, but that's typically <$500. Even if I impute 500 which is on the high side, the DTI comes down to 40% (or 41% if those paid off cards don't report). Make sure to note the 0 rent down and explain the situation (just live w/ relatives) if asked.

40% is definitely workable imo. I'd try to apply with a local CU/a place like DCU just to see if you can't get an approval. That way when the dealer tries to finance you you won't get ripped off with APR. I do definitely think a dealer will be able to work out the financing so you'll be approved, though.

EDIT: Something else to keep in mind is if you guys decide to buy down the road, it'll be harder to get financed for you alone due to your debt load (the car loans). Your husband would have to go onto any mortgage probably making the APR higher.

[Anonymous]

We did discuss what comes next after the vehicle purchase.  While we don't have to pay rent or a mortgage we are taking advantage of paying off these CCs and my student loans. (unfortunately the wreck has had bad timing) By the time we move out the cars should be the only things we are paying on. We may have to rent one more time until we get the vehicles paid off. My husbands financial situation should be resolved by the time we leave here in order to get approved to live in a lower cost apartment. We had rented previously but we bought out the lease and moved out because the money was wasted on a crappy apartment instead of going to our debts.

[Anonymous]

I think it will be extremely hard for you to get a second auto loan. Regardless if you say you don't pay rent or mortgage they factor that in anyway. The only option I see is for you to apply joint. Most banks only use the second applicant for income and dti purposes. In fact, the primary applicant is used for the apr. 

[Anonymous]

Thank you for your input. I know that his income would help, but he has a few things in collections and some medical bills. I am just weary of having him on the application for those reasons.

[Remember0]

I'm not good with how approval on two simultaneous autos works, but I think it might be passable.

I did impute rent into your DTI and 500 seems like a decent number esp. since lenders assume you'll be splitting with DH. I honestly do think a dealer can get you financed and don't think that 1 app to a local CU/DCU would hurt to see if you are okay individually (just 1 INQ and if they deny, you can ask them about adding DH w/o increasing rate).