Auto Loan after Settlement and low score?

[firemartinez1980]

I went through a nasty divorce years back and went into debt due to attorney fees and court cost. I had a car financed by Capital One and defaulted on the payments, but the car was never a repo. Last week I sold the car and did a settlement with Capital One. I also did 2 settlements on credit cards I had with Capital One trying to pay everything and close the accounts.

My Current Fico 8 score is 580, but now I have No debt and the only other negative on my credit report is a Chapter 7 BK from 2012.

When would I be able to apply for an auto loan and what chance do I have to be approved?

My credit report won't update for a month probably to show the credit cards and auto loan paid off..

[Anonymous]

What are the negatives showing on your report and how do they appear.

Forget about the Bankruptcy that's old enough right now to no be a problem for a car loan.

I know many credit unions like to see 2 years post discharge - you have that more than covered but other factors like time since late matter too.

I belive if you go to a dealer you will get approved for a used car it just might not be a good rate, but if it's a good dealer and they work with you they may be able to guide you by telling you if you put $X down we can get a better rate...  Normally I say bring your own financing unless you qualify for captive special financing like Ford 0%...But in this case if you can get the dealer to work for your business and they have good relationships with various lenders they may be a good choice.

Beware if you do have a high interest rate don't fall for the trap thinking "oh OK so what I'll refinance in 6 months or a year when my scores improve."  Download an Excel Amortization template and play with it.  You will likely find that the car is depreciating much faster than you are paying it off at first so you may find yourself too far upside down for years to refinance.  Remember minimal downpayment + high interest means you are likely stuck with the loan for a long time, but if you need a car you need a car.

Now since you mentioned you had a Chapter 7 take a look at your report is everything reporting correctly on all 3 reports?  Are things reporting negative past the Chapter 7 filing date?  If so dispute those.  You might be suprised how much you can improve your score by just that.  I had a bunch of collections removed because they were simply reporting wrong as negative past filing date.

Good luck and keep us posted.

Also maybe invest in a subscription to MyFICO so you can see your tripple report with all of the different FICO scores (Mortgage, Auto, 8, 9...)

When we find out more about your negatives, time since late and other scores we might be able to recommend a credit union.  For example I know DCU uses Equifax Fico Mortgage Score and Visions FCU uses Experian FICO Mortgage.  If one of those is much better than they might be worth a shot.  Visions is local to NY/NJ/PA I think so you may not qualify for them just using as an example.

[firemartinez1980]

Thanks for all the info....So here is my full report.

Chapter 7 BK discharged April 2012 (It reports correctly)

Defaulted Auto Loan that I recently sold and paid a Settlement on.

2 "Charged-off" Credit Cards that I just did a settlement on and Paid.

Defaulted Auto Loan from 2012 that will be deleted from my credit in Oct of this year.

Those are the only Negatives left and I just paid the 2 cards and 1 auto loan, but nothing will update on my credit report for a few weeks probably.

I just want to know if I should wait a little longer or will it make a difference? Capital One told me they would do a "Conference Call" with a dealership to confirm I paid the auto loan and credit cards if needed, but not sure it would help or not since the Credit score isn't updated.

Last question.....Do I have the same chance of getting approved for $20,000 as I would $35,000 or does it matter? 

[Anonymous]

That seems like a very low score for what's on your report.

I would start adding positive trade lines with responsible usage.

• Comenity Shopping Cart trick
• Check Discover for pre-approved offers
• Just in case your Experian is much higher check Amex for pre-approved offers
• Worst case get a secured card that will graduate like Discover
• Is there anyone in your family (parents) that will add you as an authorized user.  That can make a huge difference.   When I did that my 18 year olds score shot up tons.

I think you should be approved but still the more you know the better.

Buy a myFico tripple report with all the scores and see what your Equifax Mortgage score is.  If it's > 620 hopefully better than 640 then apply at DCU and see what they say.  Then maximize your hard pulls.  Credit Unions like DCU will use 1 pull for all inquiries within a period of time (i think 30 days).   

They have a 24 hour auto loan hotline do it that way not online and you will get answers right away.

20K vs 35K  depends on income, scores, history and other factors.  It could affect interest rate as well.  Many places will counter rather than flat out decline so if you ask for $35K they may come back with 28K max, it depends.  Credit Unions are good that way.

Don't forget to get GAP!