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Auto Loan

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Auto Loan

Hello all! My car recently broke down and I need to shop for something else. Luckily I work from home. I make about $2000 a month more or less. I have had two auto loans in the past and have no derogatory marks on my credit. The only thing I have is high balances on two cards which I'm actually about to wipe out in one lump sum next week. Right now my credit scores are not the best(around 615). I was looking to purchase a 2013 VW for about $16000. My question is, would I be able to get a loan with two credit cards maxed out and if not, how quickly would it be reflected in the eyes of a lender if I paid my cards off in one lump sum. Also, do you think I'd be able to get a 0 down loan with a decent rate? Like should I see about putting the money I would throw at my cards into a down payment or throw the money at the cards and hope to get a zero down loan? The cards will definitely be paid off by the end of next month either way but I need a car now so before I go applying for loans and lowering my score even more, I need some advice. 

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Community Leader
Valued Contributor

Re: Auto Loan


@Sim11 wrote:

Hello all! My car recently broke down and I need to shop for something else. Luckily I work from home. I make about $2000 a month more or less. I have had two auto loans in the past and have no derogatory marks on my credit. The only thing I have is high balances on two cards which I'm actually about to wipe out in one lump sum next week. Right now my credit scores are not the best(around 615). I was looking to purchase a 2013 VW for about $16000. My question is, would I be able to get a loan with two credit cards maxed out and if not, how quickly would it be reflected in the eyes of a lender if I paid my cards off in one lump sum. Also, do you think I'd be able to get a 0 down loan with a decent rate? Like should I see about putting the money I would throw at my cards into a down payment or throw the money at the cards and hope to get a zero down loan? The cards will definitely be paid off by the end of next month either way but I need a car now so before I go applying for loans and lowering my score even more, I need some advice. 


Could you get a loan with 2 maxed out cards?  Yep.  I would leave 1 card with a small balance because you will lose points if all of your revolving accounts are reporting zero.  This will certainly help your scores by paying these down but it is hard to speculate by how much due to limited info about your profile.

 

Do I think you will get a decent rate?  The chances are pretty slim.  Whenever I have read the fine print on 0% offers, many of the times it will say 740-760 to get that rate.  I have to wonder what credit scoring model will be used also.  Sometimes it isn't favorable to the customer.

 FICO 8
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Community Leader
Super Contributor

Re: Auto Loan

Also, I'd strongly suggest looking at newer vehicles in that price range. Why? 

It's much easier to get a newer vehicle financed. The older the vehicle is, the higher you finance charges. 

Just something to think about. There's a lot of newer/ used vehicles that can be had at the $16K mark.

You'll have paid more in the end for a 7 year old vehicle, than a 3 year old vehicle at the same price.



My most prized tradeline.
Message 3 of 4
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Valued Contributor

Re: Auto Loan

Agreed about the new vs used. $16,000 sounds high for a 7 year old vehicle. My initial loan for a brand new Mazda3 was $19k (after $4k down payment).

 

With that said, there are a lot of deals out there right now, so if you can pay down the cards and raise your scores, you may qualify for a really good deal on a new car. 

if you can tell us more about your profile with details, we may be able to help better. 





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