Approval chances

[beanie7132]

My husband and I are looking to get a car loan. It would be put in my name only, as his credit is way worse than mine at this time.

I would like your opinion on my chances and what you think the interest rates could/would be.

My info:

TU score = 636

EQ score = 638

Annual gross income - 50K

DTI - 0% currently

I have two unpaid charge offs on both reports falling off the end of this year.

I have one collection on TU for an old medical bill for 252.00 from october 2008.

I have three collections on EQ - all are medical - 252.00, 70.00 and 112.00 - most recent one was july 2009.

I have a closed car loan from 2008 - never late, joint account.

I have a recent (as in today) closed car loan - 10 lates with the most recent late being 03/2012.

I think the closing of the recent car loan will lower my score a few points when it updates myfico. This is my only active installment account.

I have a recently reported (this month) capital one card. 300.00 limit, 0.00 balance.

We are looking for a loan around 15K - 20K with no particular car in mind yet. My last loan had an interest rate of 11% I think and it killed us. We would not be trading in our current car nor will we have money for a downpayment since we just paid off the car loan. I understand depreciation value and becoming upside down in a car loan. If we can get a reasonable rate, then we would over pay each month up to 500.00 with two extra full payments per year to help cancel out negative equity.

What are your thoughts? I looked in the recent car loans thread, but there are not many people posting in my score range...... Can people in my score range get a decent auto loan with a decent rate? We are looking to buy now so in the next few years our DTI would be managable for a home loan. I am a recent member of DCU and I bank with a local credit union here in town also - this CU seems to be a bit stingy though with loans. These would be my first two options, then let the dealer try to match or beat.

Thank you in advance.

[sccredit]

I have no doubt someone will finance you.  However, with your credit picture and coming off of an auto loan with 10 late pays as recently as March, you won't get below 11%.  Your lack of down payment will also hurt you.  I would plan on being closer to 15%-20%

[Dustink]

I think you should give those baddies some time to heal and save up a down payment. If you start saving now, you can still get the car paid off before  the mortgage app. You need a down payment to offset your high risk to the lender.

[StartingOver10]

When you haven't been able to make timely payments (per your post) it is best to do as the others said: let time heal the late pays and save, save, save for a decent down payment on the new purchase.  This way you can show you have the capacity to make a new payment. If you go in now, you wouldn't be able to show you have the ability to pay, especially since you have recently paid off one car loan and yet you don't have any savings to show. I am not trying to be cruel, but you need to stack the deck in your favor in order to get a good rate. You do have the right idea about using a CU loan. I wouldn't even have the dealership try to beat it. Stick with going to the CU for financing, but prepare your file first. Good luck.

[beanie7132]

How long should we wait? I know there is no set answer, but my last 30 day late pay was 13 months ago. How long will those late pays keep me from good rates?

We dont NEED a car right now, I work from home and DH works a mile from home. I will though take everyones advice and begin saving for a hefty downpayment. DH and I talked about it last night and right now we have the mindset that we would literally rather ride our bicycles than pay 11% or more.

Thank you all for the advice!

[StartingOver10]

the collections are hurting you badly too.

Don't pay them as they are medical. It would be better to go to the original creditor if you can to have them pull back the accounts from collections in exchange for payment to the original creditor. The rebuilding forum might have more detail on how to do this. Collections really tank a score. If the OC won't cooperate you might just leave them alone since they are so old.

By far your best bet is to wait until you have at least a 10% to 20% down payment. You can overcome baddies with more down payment. You are wise to wait.

[beanie7132]

I have gotten 3 collections deleted from my reports so far. Still working on those medical ones. I cant go to the original creditor as they are the local hospital. I recently had it out with thier accounting department over some other bills, so I highly doubt they will work with me on removals. I might try the PFD route with the collection agencies on those and see how it goes.

Just to clarify, we do have savings. I dont want you to think that we have nothing in savings. We just are not willing to dig into those savings at this time. Its more or less only for emergencies such as major medical or job loss, etc.

Thank you for your advice. We will begin stashing money for downpayment while I continue to work on my credit reports.

[Dustink]

Set a goal for yourself. That can be when you get the new car. The goal could be something like over 700 credit score, $5000 for the down payment, anything along those lines.

Also see if the rebuilding section has any help on the lates. Maybe GW letters, I'm not sure.

Though, by the sounds of it. You don't seem to need a car. Why not just get something with cash for a few thousand dollars? Why spend money on a depreciating asset if you don't need to.

[beanie7132]

The rebuilding section has been my life line - without it I would have never gotten 3 collection accounts removed, or even knew how to do it. I have been GWing the lates for 2 months now, 4 letters so far with the 5th going out the end of the week. I will send them a letter every two weeks until they either cave or threaten me with a restraining order. lol. The lates were due to a home fire and DH ending up with 3rd degree burns on 30% of his body. So, it wasnt like we were neglecting our obligations at the time. This is the reason for the savings account money that we will not touch.

You are correct, we do not have to have a car now. My reasoning for seeking advice was because I was thinking we would do the car loan now and have it paid off in 36 months - this way it wouldnt count in DTI during a future home purchase. But, after reading the suggestions, we could work on aging the credit and saving for a down payment for a year or 2 and technically either pay cash for a car then, or finance the remaining after a down payment and have it paid off in a year or so. So DTI wouldnt be a problem. Aha! I think we have just found our solution!

I have done the "pay a couple thousand" for a used car to save on money in the past. Twice. Both cars lasted from 12-18 months and ended up costing me more than what the car was worth in the long run. I am not against used cars - every future car purchase of mine will be used.

[Dustink]

Yup, instead of doing a 36 month loan now. Just put away what your payment would be, then take that to get the car. You will have such a small loan it won't take long to get it paid off. Plus the large down payment will get you a lower rate. The car loan will be a positive tradeline with no lates. A good thing before the mortgage.