@scrubboy wrote:Hey Fico Family,
I was recently denied credit from Capitol one, bank of America , navy federal, and pen federal yesterday. I currently make about 45,000 grand annually and have an Fico equifax score of 640. I currently have 2 car loans one with navy federal for 590 a month with a balance of 6200 and another with with Columbia Credit Union for 540 a month. I was trying to trade the Columbia Credit union loan in om a new car for 32000 grand but got denied by every bank I applied.. I need help why and thanks again
This would be a tough sell. Without knowing the payment history for your other two loans, the income alone would not qualify you for a loan on a $32,000 vehicle + any balance remaining after trade in value if there is an.
Say the car you want to trade in is valued at $6,000 and your remaining balance on that loan is $5,000. That leaves you a total of $1,000 for a trade in value. So you would finance $31,000 for the new car. At 6% on 72 month loan your payments would be $513.76 (I am using 6% as a logical possibility based on your current monthly payments - assuming they aren't the most favorite terms. You could be getting a higher rate). Plus your other car in the amount of $590/month you are looking at $1,103.76/month in just car payments. Let's say conservatively another $250 in insurance for both vehicles, we are looking at $1,353.76/mo just the vehicles.
At your current income level you make about $3750 before taxes. At 15% tax rate, you are looking at take home pay of $3,188. Your car payments alone would be 34% of your take home pay. (42% of your take home pay if you count insurance estimation).
Needless to say, this does not account for gas, any potential mechanical issues which need to be addressed down the road etc.
Also, these figures could go up if the balance on the loan is greater than the value of the car.
I know wanting the newest car is a want, and sometimes we want what we want. I just got a new car. My income is similar to yours (slightly less at $42K), and I was really concerned financing more than $17,000 on a car. I negotiated the price down to where the financed amount ended up being $17,200. At these income levels, I would never consider financing a car at $32,000. Needless to say, if I were a bank, I would not be willing to take that chance.
Just my opinion. Hope that helps.
lamB2, is right on the money. I have been working as a car salesman for the last 3 years, it seems that you currently do not debt for a payment of that many cars in your credit profile. Banks take your total gross income and times that number by 15%. So for example, if you gross $4000 a month you would debt for a payment of $600. That is just for a single car. If you want to add another car to your profile it would be a tough deal without some serious cash down, and or a strong co signer. You would have to debt for all payments to have two larger auto payments monthly for a bank to approve you.
This is just my experience, but of course not fact, so hey maybe you could get lucky. But I hope this helps. 
