@Anonymous wrote:
I have never applied for an auto loan, or any kind of loan for that matter, so I am asking what is the process for determining whether or not you are approved. I've read through messages on here about auto financing and it makes it seem like your credit score is the only thing taken into account when determining credit worthiness. Do auto lenders also look at what is in your report? I have a half-way decent credit score but a lot of negative info on my reports from over 4 years ago. Is this going to be taken into account when I apply for financing? I have rebuilt my credit significantly in the past 2 years and have never been late on anything and my current cards are at about 10% utilization. I have never had an auto loan or any installment loan.
I have also read that some of the variables considered are down payment and income. Right now I have both of those covered. I make enough money and I have the 20% down payment for the new vehicle I want. I went pre-shopping 2 weeks ago and the general sales manager told me that if I could make the cut off for tier 4 that he would boost me to get me the tier 1 incentive rate of 2.9%. So, another thing I am wondering, does anyone know the tier levels for Mazda financing?!?
Thanks in advance for any helpful info. I am so NERVOUS!!
There are a lot of factors that determine approval and it is way more than just your score. Your score is counted obviously. Usually with an auto loan, they use a special "Auto Enhanced" FICO score. This weighs past auto loans more heavily (both good and bad marks), and penalizes you if you have never had one. They will also look at the cost of the car, how well that particular car holds value (in case they need to repo), the down payment, your income, and your credit history, beyond just the score.
One thing that might help just a tiny bit is paying your CC utilization down a certain way. Ideally, you want to pay off all but one card. On that last card, you want to leave between 5-9% of your total available credit. You should do this before your CC statements cut, so it will be reported to the bureaus with these balances. Depending on how long until you apply for your car loan, you may not have time as this could take up to a month or so, depending on when your next statement dates are. Either way, your utilization is pretty good, so shouldn't be a major problem.
Do you know any of your FICO scores right now? Did you tell the dealer that you have no auto loan history? Often the promotional rates require a past auto loan and first time buyers get significantly higher rates. Perhaps first time buyers can be considered tier D though, I'm not sure. Hopefully those more knowledgable in this area will chime in. Good luck.
