Bad credit. Decent income !

[BM1990]

I have decent income (85k and will increase over the next couple of years). I also have bad credit scores, but I've been rebuilding over the last year or so. I was around 450 this time last year.  Now, my scores are all in the 550 range, even though they took a considerable drop this month, due to me paying a sizeable chunk of debt off. How likely am I to get approved for a car in the $40k- $50k range?  How should I go about financing a car in this price range? This will be my first auto loan.  

[dunn2500]

 cash down,  high interest rate until score improves and refinance.......if at all possible try and secure a loan thru CU, dealers will have field day, especially since its a sellers market right now.......i went thru same deal ( had no score whatsover)

[Loquat]

The positive: As I've said a many of times on this here subsection of the forum, a good down payment will overcome a multitude of financial sins.

The negative: Who knows what will be required for a down payment. Typically I would recommend that one look to a CU for auto loan approvals...and that *may* be an option but there's a good chance that with a 550 you may need the help of the F&I guy at the dealership.

Yes rates will be less than desirable but know that as your score continues to increase and your debt decreases, you may eventually be able to refinance down the road.

However with such score, if a bank, CU, or dealer hits you with a high interest rate then you're going to have to make sizable monthly payments otherwise most of your payments will go to interest thus making it hard to refi as your principle amount will decrease at a snails pace.

Best of luck to you as your navigate your purchase.

Do chime back in if you need any additional thoughts or advice.

[dunn2500]

very well said Loquat

absolutly right about finance at dealership being able to get it done vs a bank......i couldnt secure my own loan back than, so i had to go the famous " Santander route"......they will finance anyone i believe......17% interest ( 6 months later i paid truck off)