Auto Loan Advice

[EaglesFan2006]

Ugh, I’m the unfortunate position where I need a new car, probably by fall. It stinks because I bought a house 10 months ago and was trying to focus on paying down high credit card debt, which I only just started.

Been a long time since I had a car loan... is the DTI less stringent than mortgages? My scores are mid-upper mid 600s (Fico 8, not sure what auto score I need). Income including OT is about 90k. Credit card minimums total around 1750, though I have a bonus coming in that will eliminate a card next month and bring that down to about 1500. mortgage is 1600. I also have a student loan that is 130.

Ideally I’d like to hold off until October to do this, so I want to start mentally preparing now. Thanks in advance.

[Brian_Earl_Spilner]

Figure 30-40% DTI, max. Ideally 30 and below.

[EaglesFan2006]

Really? So more stringent than mortgage? Ha by that logic I guess I can afford about a $1 a month payment

[Brian_Earl_Spilner]

The usual cutoff is about 35% for most banks, but it can vary. 

[EaglesFan2006]

Or is that 40% including what the new auto loan would be?

[EaglesFan2006]

Also, can I include spousal income even if it’s just me on the loan? I know with mortgages they only counted my income. Basically it’s the same trade off now... DWs credit is lower but my solo income is higher, which is why we have the mortgage in my name only... do auto loans view that any differently?

EDIT —— I know i can’t use DW income, what I’m seeking clarity on is if they consider the joint account payments going toward the mortgage and “reducing” that burden from a DTI perspective.

Also, the DTI thresholds mentioned above... is that including what would be the new auto loan?

Sorry for the multiple posts just wanted to clarify.

[Shooting-For-800]

Here is my take...

Use household income.

It is not fair to include all expenses without all income.

Car loans are much easier that home loans.

Any down payment or trade in with equity?  

if so, you should have no issues.

Look at credit unions and Cap One (sp) for prequal before stepping foot in a dealership.

GL!

[EaglesFan2006]

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@Shooting-For-800 wrote:

Here is my take...

Use household income.

It is not fair to include all expenses without all income.

Car loans are much easier that home loans.

Any down payment or trade in with equity?  

if so, you should have no issues.

Look at credit unions and Cap One (sp) for prequal before stepping foot in a dealership.

GL!

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Thanks,  I didn't think you could use household income...I know you can on credit cards but I didn't think you could for Auto Loans.  I agree that it should be fair to count it. 

yeah i have a trade in, though probably not too much for that...all told probably about 10% down.  And I do have relationships with two CUs so that was my plan.

How long does an auto loan pre-qual or approval last?  30 days?

[DaveInAZ]

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@EaglesFan2006 wrote:
Really? So more stringent than mortgage? Ha by that logic I guess I can afford about a $1 a month payment

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No, mortgage is much more stringent on DTI. I got a $15k car loan in Sept. 2017 with about $3k down and the conservative local credit union didn't even ask for proof of income and I know they didn't look closely at my DTI because I have no housing expense on my credit report - I didn't reaffirm my mortgage in my 2010 BK7, so while I've never been late there's no record of my mortgage except between me & the bank.

Try Capital One Auto Navigator to see what it looks for a car loan, it's a soft pull and useful as a guide, but you can usually do much better - in my 2017 car purchase they offered around 6%, the local CU approved me for 2.99%.