Approval Chances

[koalas123]

Hi,

I'm planning to apply for an auto loan in the fall and would like your opinion on it.  I plan to trade in my current car for a 2014 Mazda6 GT model (~30K MSRP).  At the time of the trade, I think I'll be ~2k in negative equity.  I also plan to put down around 6-8K in down payment.  When I brought my current car about a year and a half ago, the dealer pulled  a Transunion and Experian score of 756 for me.  As far as I know, the score should be about the same or better. 

IMHO my credit history is pretty solid, and I manage my credit lines pretty well (1% used on 45k in available credit), but I'm still young by a lot of lenders' perspective.  I'm 23 and currently in school, but I will finish by the end of this year.  I worked at the same place now for three years and just got promoted to full-time.  Are my chances of getting approved good or will my age discourage any potential lenders?

Thanks!

[sccredit]

I would think items like AAoA, Income, Housing, etc are more important to a lender than your age.  Hell, I bought an Infiniti when I was 22, had the income to support it.  Focus on those, not on your age.  If those are all in line you should be fine, the down cover more than the negative equity so you should be good there as well.

[koalas123]

Hmm... Well my AAoA is about 3 1/2 years and I only pay $400 for housing since I help my parents with the mortgage.  I currently make about 45k a year and that should go up when I graduate as well.  Based on those numbers, do things look okay?

Thanks for the quick response btw.

[dabrian]

As long as your scores are still in that range with your income where it's at and with your debts being so low it will be an easy approval.

[koalas123]

Just have one last question involving the length of the auto loan...  Would it be a good idea to app for a 72 month loan instead of a 60 month loan if I wanted to get lower monthly payments?  I can definitely afford the higher payments of the 60 month auto loan, but would like the option of paying less each month if I was ever tight on cash. 

Even if I were to get a 72 month loan, I would still pay extra each month to pay off the car earlier.  Is the convenience of a longer term loan justified in this case?

[MovingForward_2012]

Not really, no. I have never made it through a 72 month loan and I had several. It just created more negative equity for me when I traded it in. If you do a 72 mo installment, try to pay the amount you would pay if it were a 60 month loan. If you get in a pickle, you can pay the required amount for that month.

I am now leasing after financing 5 vehicles over my lifetime. I have a lower monthly payment, very little maintenance/repair costs, and zero negative equity when the lease is up. I noticed I rarely keep a car past 3 years and if I do, the increase in repair bills after 100K miles smokes me out of the car anyways. But you need to be well established for leasing.

[Dustink]

Get the shortest term you can easily afford. 72 months is way too long. You are just wasting money paying interest on that kind of loan.

I am younger, have a lower score, lower income, my oldest account is about half your AAoA, and I was a first time buyer. Yet I got approved at 0% for 36 months. Or 1.9% for a long term loan.

I would recommend you pay off most of your car, leave $500 or so before you trade it in. That will give a slight score boost, although it isn't really needed.