Auto Loan Advice

[Anonymous]

I'm about to buy a new car. My credit score is ok but could be better. I have a new job that pays me much more than I did in the past and I recently was able to pay off a chunk of debt with my signing bonus. Here are the details: I make $115k a year. I had about $43,000 in credit card debt and fortunately I've been able to pay a bit of that off in one lump sum (about $12,000 just so now I owe about $31,000 total). My credit utilization will be about 66% after that payment (it was 91% before). I checked my credit scores about a month ago and they were about 665 for two of them but one had me at 620 for some reason. I've had a couple of 30-day late payments but those were all more than two years ago. I recently paid off a 5 year used car loan (in January) and I've paid off a car lease (many years ago). My first concern is that I'm hoping that $12,000 of debt I've paid off will boost my score up into the 670's or maybe even to 680 so I can get a good rate on car loan. How long will this take to happen? I'd like to start applying for car loans in the next 2-3 weeks if possible but I literally just paid off the debt (it was credited to my account today) so I'm worried the payment won't be reflected on my credit report. Also what kind of rate can I expect assuming my score makes it into the 670s? Is that one low score going to hurt me? I know I won't qualify for the 4% loans my credit union offers but I'm hoping I can get somewhere around 6.0% if possible. Is this unrealistic? I'm prepared to accept up to 8.0% if necessary. I'm looking to borrow about $34,000 on a 5 year loan. Thanks so much for all your advice.

[marty56]

If you can get you CC debt below 10% you could seet a 30 or more point increase.  As far as how long it takjes to report, best case the next time your CCCs report to the CRAs which is ususally monthly.  Worst case could be 2 months.  You could always ask the CCCs.

Ttry the score simulator to get an estiamte on what your score might be if you pay down to 10% of your debt.  Dont take it on gospel though.

Another thing is that you may get a beter rate with the dealer if they are trying to push cars and dont forget you have an auto-enhanced FICO score which could be highe then your normal FICO score.

Good luck and let us know what happens.

[amexblack]

the easiset thing to do is to find out the closing date on your accts from the CCC's any cust serv. rep will give you the info. Ask them when they report to the credit bureaus and they will tell you, make sure you make a small payment on the accounts before they report, because they report your last payment, fico looks at your latest payment as well, if they see you made such a huge payment wont do much, but if you make the small payment afterwards will help a little more and from then, wait about a week, and get your own fico(soft hit) and then contact your local loan officer(cu) and a few dealerships, and lay it all out for them, your ficos, inquiries, all your info, and they should be able to tell you if they can help, rather then taking several hard hits on the report, and if one gives you an almost definate approval, then shop some more, get a few more off the record approvals without hard hits, and go to the one you have the best gut feeling about, and if you get approved, then you are done!!!!

GOOD LUCK

[amexblack]

i forgot the most important, make sure to let them know, you make $115k a year, if they approve you on nothing else it will be the income, as long as your previous job you were making somewhat close to the same with substantial job historyy

[MattH]

With that kind of income and that much credit card debt, why not settle for a late-model used car now so you can pay down that debt and start saving? With that much income, you won't even need to tighten the belt terribly hard to get yourself where you need to be, then in a few years you'll be able to pay cash for your next car.

http://articles.moneycentral.msn.com/SavingandDebt/SaveonaCar/TheRealReasonYoureBroke.aspx

http://www.daveramsey.com/etc/lms/drive_free/?ictid=sptlt

[biturbomunkie]

---

@amexblack wrote:

make sure you make a small payment on the accounts before they report, because they report your last payment, fico looks at your latest payment as well, if they see you made such a huge payment wont do much, but if you make the small payment afterwards will help a little more

can you elaborate? while i've read that the actual amount of monthly payment is reported, wouldn't it make more sense if larger payment = higher score since it means you've got the cash?

amexblack wrote: rather then taking several hard hits on the report, and if one gives you an almost definate approval, then shop some more, get a few more off the record approvals without hard hits, and go to the one you have the best gut feeling about, and if you get approved, then you are done!!!!

i'm considering getting an auto loan as well. and i've read that regardless of how many hard pulls are conducted, only one hard pull is counted against one's credit during a 60-day period when shopping for auto/mortgage loans. maybe someone can clarify this?

thanks for the wisdom, MattH. i've learned a lot from your postings. =)

Message Edited by biturbomunkie on 05-10-2008 10:36 PM