I need advice. I'm looking to get a new car on a loan soon. I'm post chapter 7 bankruptcy discharge, and I'm planning on getting a new Ford Focus for about 20,000 with taxes included. I have about a 8,000 down payment and was wondering what my approval odds may be. I did include two vehicle loans in my bankruptcy (one was totaled in an accident which the insurance company did not pay the full payoff amount, causing me to owe 6,000 on the loan, long story) Any advice would be very helpful. I understand I could buy a used car cash with the money I have, but I would like the peace of mind of the new car, and I plan on keeping it for a long time.
Re: Auto loan with high down payment post discharge
Ford will not buy this. However there are some other banks that as long as the BK is discharged, will pick this up and give you a pretty insane rate.
Money down doesn’t mean better rates or approvals like everyone thinks. I. short it does but it’s very dependent on the structure of the loan. Banks look at one thing. LTV: Loan to value. I say this because if you had $10k down on a car that was $20k retail price but only booked for $5k, you would be instantly declined. $20k plus 6% tax and $300 tags is $21500 minus $10k down is $11500 line 3 over the book of $5k gives you a LTV of over 200 percent. A 900 credit score can’t finance 200 percent LTV. After a BK you want to be under 100 percent LTV. If you can get under 75/80 percent LTV you will get some pretty stellar rates. The difference between 75% LTV and 100% LTV can be more than 10% APR.
The new vehicles value is invoice. Used cars value is NADA Trade for banks, NADA Retail for credit unions. The total amount financed over the value of the car is your loan to value. So sale price plus tax and tags, minus down money, is your line 3, or Amt financed. Divide that by the cars value and that’s your LTV.
Here is an example of a car we sold this weekend to someone in your exact situation. 2018 Toyota Corolla LE. Sales price of $19,100. Invoice is $19,392. Rebate of $1500. Customer had $7000 cash down. So $19,100 minus the rebate of $1500, is $17,600. plus 6% tax ($1056)and $300 tags is $18,955. Minus $7000 cash down is $11,955. $11,955 divided by the invoice of $19,392 is 61% LTV. This customer was approved for a 72 month loan at rates between 5.79% and 11.31% depending on the lender. 4 banks bought the deal.
If you need help getting a vehicle let me know! We deal with this all the time and are excellent at any credit situation. Or if you need more help picking a car wherever you live I would be more than happy to help you. In general, you want to stay on a new vehicle around $18k to $25k with good rebates. Ford motor credit will not buy that deep though. Toyota Financial will.