Auto Payment History Required for New Auto Loan?

[FLLGuy]

Do banks or dealers require a healthy auto payment history before you ask for a new auto loan?

Targeting to buy a new truck (if possible) by late 2023 after BK13 falls off my reports coupled with new accounts aging and low utilization.  Thinking captive lender would be the best route considering the rising high interest rates I'm seeing across the board from CU's to other major banks.  Unfortunately, due to the bankruptcy I don't have an auto payment history even though I was paying monthly payments until the car was paid off.  Funny thing is, my wife has every car she's paid off in her credit history and had no problems getting new auto loans during and after BK13 - not so much for me though.  I was thinking (still debating) if auto history is important to help my chances in the future with a captive lender, I'm considering on getting an affordable economical small sized car for my daughter in college for less than $10K.  She gets the car and I get the payment history to my credit reports a year worth then i pay off the car after 12 timely payments.

Does my plan make any sense open to thoughts, suggestions, or recommendations ?    Anything else I may be overlooking or didn't consider? 

[pizzadude]

---

@FLLGuy wrote:

Do banks or dealers require a healthy auto payment history before you ask for a new auto loan?

Targeting to buy a new truck (if possible) by late 2023 after BK13 falls off my reports coupled with new accounts aging and low utilization.  Thinking captive lender would be the best route considering the rising high interest rates I'm seeing across the board from CU's to other major banks.  Unfortunately, due to the bankruptcy I don't have an auto payment history even though I was paying monthly payments until the car was paid off.  Funny thing is, my wife has every car she's paid off in her credit history and had no problems getting new auto loans during and after BK13 - not so much for me though.  I was thinking (still debating) if auto history is important to help my chances in the future with a captive lender, I'm considering on getting an affordable economical small sized car for my daughter in college for less than $10K.  She gets the car and I get the payment history to my credit reports a year worth then i pay off the car after 12 timely payments.

Does my plan make any sense open to thoughts, suggestions, or recommendations ?    Anything else I may be overlooking or didn't consider? 

---

To answer your question, is it required ?  No, you can get approved without auto loan history but it will likely make the terms less favorable, meaning they may ask for a higher downpayment, offer higher interest rates, etc. 

One option you can consider also is having your spouse co-sign, that would very likely help in this situation. 

[pizzadude]

---

@Anonymous wrote:

I would just add that for installment loans to give the best positive impact on Credit Score, they need to be kept for 3 years prior to being paid off.  

---

This is not accurate - the amount of time a loan is open before being paid off is not a factor in FICO scoring.  

[elixerin]

---

@pizzadude wrote:

---

@Anonymous wrote:

I would just add that for installment loans to give the best positive impact on Credit Score, they need to be kept for 3 years prior to being paid off.  

---

This is not accurate - the amount of time a loan is open before being paid off is not a factor in FICO scoring.  

---

basically any amount of time just under 8.9%? balance i think correct? i read on here somewhere

[FLLGuy]

thank you for the feedback.  In summary, it's helpful to have in order to look more attractive to the lenders with better interest rates but, not required.  Things to consider looking 2years out - thank you community.

[morethan20yaks]

Payment history may not have a huge impact on FICO scores, but past a certain theshold, FICO scores are not important.

Most (if not all) auto lender's proprietary software ABSOLUTELY takes your auto payment history into account. Manual underwriters, as well. Not all loans are created equal, and folks are savvy in the year 20 and 22. "Doesn't matter bcuz FICO" is terrible advice here. Don't believe me? Try and go finance a new truck with zero auto loan history & only a $3,200 SSL that you "paid off" in 6 months. They'll see right through you.

And as for "amount of time under 8.9%" - Time doesn't matter here. You will get a boost as long as you have an installment loan reporting <9%. Doesn't matter if it's for 1 month or 10 years, the moment you pay it off, you lose 100% of the points you gained.

OP -- Your plan sounds solid. If you're already keen on helping your daughter w/ a car, and a couple of bucks of interest isn't going to kill you, I don't see any downside. You'll thank yourself for the next 10 years because your squeeky-clean new scorecard will be anchored down by a successfully paid/closed auto loan.

[FLLGuy]

@morethan20yaks- thank you for the response and apologize i'm now coming around to reading it.  Quick update - starting small i was approved by both PenFed and NFCU for $15K, NFCU came in with the lower interest rate @ 6.19% beating out CAP1 auto navi.  Sticking to my plan I was surprised to find cars around the $10K price range (most aren't that great) but there's some decent Toyota Prius and Subaru's that fit the bill with high mileage but nothing too scary.  The worst part is dealing with these dealers in the used market jacking up the price with these nonsense fees - almost forgot how much fun this was.   Let you guys know where I land

[disdreamin]

---

@morethan20yaks wrote:

Most (if not all) auto lender's proprietary software ABSOLUTELY takes your auto payment history into account. Manual underwriters, as well. Not all loans are created equal, and folks are savvy in the year 20 and 22. "Doesn't matter bcuz FICO" is terrible advice here. Don't believe me? Try and go finance a new truck with zero auto loan history & only a $3,200 SSL that you "paid off" in 6 months. They'll see right through you.

---

My SO purchased a truck last summer that was pretty much 100% financed (0% so why not, we put $1k down to place the special order and everything else was financed) with only one new-ish credit card and a PIF mortgage to their name. No auto payment history whatsoever, since the previous vehicles were either purchased outright or financed solely in my name. This was last summer, and the loan amount was just north of $50k, so it can happen, but I am sure it's very profile-dependent.

Agreed that OP's plan seems solid, although we ended up going with a new vehicle for our college student as the price on late-model used cars was ridiculous when we were shopping for one last summer.