Approval

[Anonymous]

My husband and I are looking to purchase a used vehicle from a friend.  It bluebooks for 9500.00.  We are trading our vehicle in to our friend (he owns an auto shop) and will be purchasing the new (used) vehicle for 6700.00.  We will have $3000.00 for a down payment.  We have been working on rebuilding our credit for the last couple of years and right now have been paying things on time.  We have a lot of items that will be falling off our CR within the next 2 years.  My question is, will we get a loan even with credit scores in the low 600's with such a large down-payment and also based on the fact that the vehicle blue books for so much higher than we are getting it for.

Thanks

[Anonymous]

I am sorry.

Most banks will not finance under about $6K.

At low interest rates its simply not profitable to lend $6K at 6.9% for 3 years.

[Anonymous]

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@Anonymous wrote:

I am sorry.

Most banks will not finance under about $6K.

At low interest rates its simply not profitable to lend $6K at 6.9% for 3 years.

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If that were the case, then CC's at 5.24% to 8.5% wouldn't be around with CL's at $2.5k to $10k.

I suggest the OP speak to a CU or a couple CU's about the circumstance.   Also, if USMC theory were correct, but possibly the CU would finance the higher value (before cash down), then you could pay the $3000 toward loan after closing, thus having the same affect for avoiding accrued interest.

The thing to remember is that a big part of the CU mission is to provide Financial Products, loans and services at low rates.  They don't attempt to maximize profits (in the same manner as a private/public owned bank).  They do want to make a profit in order to give reasonable returns to their member depositors, but they also want those same member depositors to enjoy a range of well priced loan and credit services.  If you find that your CU is not meeting this description, it is time to look for another.

I would be more concerned with the possible mileage and age limitations that many lenders have.  Sometimes the value is not the issue, its the age or too many miles.

Don't make a decision without talking to some CU's, such as some locals, then possibly some national depending on membership qualifications.

[Takunda1]

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@Anonymous wrote:

I am sorry.

Most banks will not finance under about $6K.

At low interest rates its simply not profitable to lend $6K at 6.9% for 3 years.

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Agreed. we won't finance anything below 7k.

[Anonymous]

The mentioned loan limits ONLY apply to SOME lenders.

Do not be closed minded or discouraged. My wife and I recently bought a "used" car. We were looking for a van. A local dealership had a 2004 Ford Freestar that we liked. It was $9995. We were looking to put about $2000 down because of our troubled credit. (I have three CO's and some lates with a 609 equifax, she has 2 charge offs with a collection and a 578 equifax). We talked to the lender and they checked with their banks. They came back to us with two options. They had a 2001 Ford Windstar for $4995 that the bank would finance us the $2995 with the $2000 down over 24 months or we could bump our down payment up to $3000 and they would get us in the 2004 Freestar we wanted. SO we did. We got the 2004 Ford Freestar for $9995 with $3000 down and they financed us @42 months with a 14.9% interest. Now I know there arent a lot of banks that finance that low but their bank was going to finance $2999 over 2 years so its not impossible. Keep your head up and talk to the dealers. We talked to about 10 different dealers until we dound one that could work with us. Out of those 10 this dealer was the fourth that we let try to get us approved (by providing all information) the others all said they couldnt help us just by talking about our situation. So what I suggest talk to different banks and lenders, explain your current situation, and ask what they can do for you? Just try not to give them your info to run a credit app if they dont think there is a chance. Good luck and hope you find someone to work with you like we did.

[Anonymous]

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@Anonymous wrote:

The mentioned loan limits ONLY apply to SOME lenders.

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thats MOST lenders actually.

And we will amend that to CONVENTIONAL LENDERS.

Your situation proves my point actually

The car you bought was sticker $9995.

You put down $3000 (about 25% of the transaction)

How much did you finance? Cause I am willing to bet that you financed, once Tax, Title and fees were included, and your $3000 downpayment was subtracted: Yep over $7,000.

For the alternative offered: 2999 over 24 months I am sure, had you accepted and contracted the offer, you were paying an uncollateralized signature style loan with a two digit interest rate that started with a 2.

no conventional finance company would finance real money on a 10 year old vehicle, no longer in production.

(unless you had bill gates credit and bill gates cash)

txjohn:

I highly respect you. But please do not compare a collateralized term car loan with CC policies.

A car loan involves liens and titling, records maintained and released and a heck uva lot more hoops then a simple credit card.

3000 for 24 months at 6.9% makes about $220 in interest.

You could invest that 3K in a 2% CD and make $120 and not have to worry about the value of the property, disposition of the title, late payments and repossession.

[Lyythine]

USMC is totally correct.  One of the businesses my father is a partner in is a large dealership and their policy is that they will not offer financing for any new or used vehicle under 9k because it is simply more work than they make in profit from the loan.  Your best bet, if anything, is a local CU or a personal loan for the difference in price and downpayment.  

TxJohn,

Like usmc said, CC debt and collateral debt are not even comparable, its apples and oranges.