Audi Financial Approval - $95k

[imstevelarry]

Hi all - first time poster here looking for some input and advice.

To make a long story short, I have a deposit on a new SQ7 that I ordered ($99k after dealer markup). Just paid off my 2018 F250 and when checking credit score, my FICO 8's are in the high 500's and auto 8 is in the low to mid 500's across the board. It took a hit from the payoff (didn't know that until recently) and I assume it is also due to a series of 30-day lates during the pandemic when my wife lost her job, as well as a number of accounts recently paid off and closed, and a recent high cc util rate. I just paid down all cards so that util is now at 7%, but they have not yet reported to the bureau. We were hoping to have time for the bureau to report and improve score, but the vehicle is arriving sooner than expected (likely this week). At best, the utilization may get updated in time since it's due to report in the next day or two.

What I'm looking for are realistic odds of approval with Audi Financial. My back-end DTI without a vehicle loan is about 17%, with an income of $201k. I'm putting $12k down on the vehicle and after tax, tag and title, I'll be financing around $94k. My previous vehicle loan was for $78k on my Ford, but that is now paid off. I'm ok with a high interest rate, knowing that I'll refinance soon after credit recovers. 

I do have one collection on my account from a year ago for $301 with a public utilities company. We moved and they didn't have a forwarding address, and apparently there was a small balance left after closing the account. This was paid off and they have agreed to remove the collection from my report, but again, most likely not before dealer is ready to run credit.

I have three paid and closed vehicle loans on my history, a number of open installment accounts, all with exceptional payment history and a recreational vehicle loan with perfect history too. No judgements, liens or repos ever.

Thanks in advance for any and all guidance you can provide.

[mross1080]

To be honest. With scores in the mid 5's I would say zero chance of Audi picking up the loan. Any company that would pick up a loan with scores in the mid 5's wouldnt lend that amount of money especially with almost 100% LTV. If you could get into the low 6's I would say the only company that may pick it up is Ally but still doubtful. And also If you do get bought and the interest rate is high you could be looking at 5 to 700 dollars a month in just interest.

Sorry not trying to be negative just honest. Im switch my cars out more then anyone basically and have been through it all with bad credit and good. 

[Harvey26]

@imstevelarry I would say this would pretty much be a decline. I would recommend waiting until everything updates on your report. You can always see if your credit cards will do an off cycle report and show a 0 balance early. But honestly are you sure this is a good move finanically not be to negative but if you could not maintain your household finances while your wife did not have a job I don't think it would be a good move to go into another 100K worth of debt for a vehicle. But if you decide to continue I would strongly suggest at least waiting unitl your credit report reflects paid off accounts and the removed collection. Best of luck! 

[imstevelarry]

Thanks for the feedback and thoughts. I'm actually going to do that with the accounts and see if they will report off-cycle. Hoping I can get the dealership to hold off a week or so for that to come through. 

In regards to the practicality, I completely understand the perspective, but our situation has evolved quite a bit. I was caring for my mother at the time financially and was making less than I do now with additional debt. At this point, we're virtually debt free with about four  months of expenses in savings, and investments. This will be a shared vehicle and we're both performance enthusiasts, so it's definitely a splurge that supports our shared interests. 

again, no offense taken and thanks for the feedback!

[mross1080]

Also just a heads up Audi is going to pull TU so thats the most important report for you.

[TattnallTrio]

I think this can be done with a higher down payment and/or your wife co-signing.  Your scores are lower right now but also every auto lender knows that the market is hot and strong for SUV's especially where used ones cost as much as and in most cases more than a new one. There's little risk for them... I think if you can put enough down where you're at 80% LTV  it'll probably go through. 
Also, dealers can accept credit cards for down payments, usually up to $3-$5k. This will help. 
Other factors like the length of time you've been on your job and at your current residence will help. Also, it's worth mentioning you paid off a $78k vehicle in 4 years and everyone understands the pandemic and the slow down during those times. 
Your finance manager will fight like heck to get this deal to go through, because remember they are in business to sell cars! If they don't sell them then they don't make money. 
I'd probably tell the finance manager that you're going to buy the extended warranty (to line their pockets) and you can cancel it within 30 days after delivery for a full refund. This will have them motivated because they get recognition and incentives off of the things they sell. 

[imstevelarry]

Thanks for your response @TattnallTrio , very helpful. As far as my wife cosigning, I'm not sure it would do much good since she does not have any income. I know when lenders look at cosigners, it's for the ability to pay back the loan, so she wouldn't be much help, haha.

You're correct - we actually paid off the truck in just under three years, so I was hoping that would work to my advantage.

I'll work with them and see where they come in at with down payment and go from there. I have the extra cash if necessary, but I have tried to put a hard rule in place to not touch savings. 

[TattnallTrio]

You're very welcome! As far as your wife being a co-signer, it could help and they might see it as a tad less risky that if you default then 2 people are going down instead of just one. And later on 2 different people can have judgments against them instead of just one. I'm not saying this as if I think you'll default this is just what I understand about auto financing. I worked in a dealer that sold New Hyundai's and had a subprime department. I could be wrong and the world is constantly changing but we're looking at all possible scenarios. 
I can understand not wanting to take money out of your savings but here's another few thoughts:

1) The APR will very likely be less if not significantly less with a larger down payment. This will save you some money even if you refinance it in 6 months. 

2) If this doesn't go through, I don't know if you put a deposit on the vehicle but we certainly don't want you to lose it. A larger down payment can make or break this few. 

3) Car dealers like to negotiate. They aren't going to give you their best offer "on the first pencil" as they say. So don't offer the maximum amount you're willing to put down on the first offer. They will and should talk to their buyer at Audi Finance and persuade them to buy the deal. I'd encourage you to make them think there will be additional profit for them. The dealer may have to "pay" the lender to

take on this type of deal. I think when you talk with your salesman/internet sales and even the finance person, be sure to mention extended warranty. You can cancel it without a penalty within 30 days. They'll see dollar signs in their pocket. If you say, "no! No! No!" To everything then there's less incentive for them. 
Lastly, "you get more flies with honey than vinegar" so kindness goes a long way. They might bend over backwards for you or "fight like heck" to advocate on your behalf to get this deal to go through, because "hey, he's a nice guy!"  They get treated like crap by a lot of people. So there's more incentive for them. Plus, on new car purchases a survey comes out. If you act like a **bleep** and they feel that you're going to skunk them on that survey, they may not work as hard for you!  Who knows, maybe you can toss in conversation that your previous salesman wanted you to buy another car from him because you gave him the best survey he ever had!  These things are small talk but that'll sound like gold to them! 

You may need Proof of Income, a few references and proof of address on this deal. I'd have that ready and let them know you don't mind sending it. This will make it easier for you and them. 

Keep us posted on how this all works out! I believe it'll go through, like I said before, with your high income and you paid Ford off on a large loan. Best Wishes! 

[imstevelarry]

All very good points @TattnallTrio - thanks again for your detailed response. I did put down a deposit, which I definitely don't want to lose. 

When they do call to start the finance process, I'll mention my scenario in detail and see if they think adding my wife would be beneficial. I'm open to either direction.

In regards to preparedness and kindness, I agree with you totally. I already have detailed documentation on every single thing from my credit report, with backup proof of payment, etc. as well as proof of residence, employment and income statements including my biannual bonuses. I'll get a reference list ready for them as well.  Hoping to make their life as easy as possible. 

Im definitely a people person, so as you mentioned, hoping that counts for something. I will definitely keep you posted on the outcome!

[MauiMan85297]

Good luck this week on that auto loan