Best place to apply?

[Anonymous]

Hey everyone! I've never used credit before, I'm currently looking for an auto loan. I am hoping to secure a $24,000 (after taxes and such) auto loan on a $30,000 car. The cars NADA value and what not is there, and I'm hoping to get with a credit union because it seems most are willing to loan 110%. Where I'm stumped is where to apply? My cousin has agreed to cosign with me, he has a 650ish score, but has never missed a payment on his credit and his dti is extremely low. I should also mention that I was approved for up to 20k at carmax on an application on my own, not sure if that could help anyone with my question or is even a big deal. He makes about 52k a year and I make 55k. Where do I best have a shot at? I plan to pay the car off within a year or 18 months as well. Any help would be appreciated.

Best - Floats.

[Anonymous]

I would join DCU and apply there.  Also most communities have good local credit unions.  You should share your full credit information as well as his if you want an indepth answer.  All credit unions have online application processes so that part is very easy.  

[Anonymous]

I have literally no credit. Never had a student loan, auto loan, anything. Always lived by the "pay cash" rule but now i'm trying to build my score to purchase a house within the next couple of years. He has a 650-660 credit score. Has had auto and student loans but both have never missed a payment and his dti is 10% if that.

[Anonymous]

You should establish credit asap, apply for a credit card, even if you have to do a secured card.  Capital One is a great first card to go after.  Establish a couple of cards and use them and pay in full each month.  Everyone needs a credit score.  Establishing yourself for just a few months will put you in a good place for a car loan as well as a mortgage.  Failng to establish a credit history will make you a liability not an asset for a car or a mortgage.  Many times one partner or the other becomes reliant on the others credit, this isnt a great idea.  We work hard to build both of our profiles so when we are going to get qualified our case is stronger than if it was just me or my wife who had established credit.  Currently hers is better than mine because I have some student loan lates so her credit history has helped us quite a bit these last couple of years.

[Anonymous]

i appreciate the advice. i should have also mentioned i have the amount of the car in liquid funds as well. i'm not worried about becoming reliant and neither is my friend. i will definitely look into credit cards, but in the mean time why not get an auto loan that's an easy repayment for me and build credit multiple ways?

[Anonymous]

OK here's the deal, as I see it😎

1) You claim to be a 'cash buyer' that actually has the dough to actual pay for this car in cash, if you wanted.
But your GOAL is to use this transaction to help you build credit, so why not kill two birds one stone, correct?

That being the case....

2) Forget about involving the cousin/friend or whomever the person is to you, just a BAD idea, period.
My Econ professor (20 years ago) warned us on the 1st day of class NEVER Co-sign, not for your kids etc just Don't do it.....He was right!
Never co-sign ( and don't put ppl in the awkward position of having to say NO, to your request to co-sign FOR them) It's just to dangerous for both parties, anybody could get sick, hurt, gamble, married, divorced, jailed, tax issues...
Just too many variables that 'could' go wrong that RUIN too many families, friendships and relationships to even gamble with the issue over a few bucks.

3) Also, being as your GOAL is credit profile building...
It isn't even nessary
You have CASH, friend!!!!

Put down 40-50% ( you've got the $$, right?)
You can get financing with HALF that size down payment ....You've got PLENTY, enough to qualify for a car loan ( remember you may not have credit but your seeking a SECURED loan) the car is the security, it's the collateral and by you putting UP a great down payment a lender WILL approve you for a car loan NO DOUBT ( car loans aren't hard to get, your a 1st time buyer...There plenty of programs, just for 1st timers and most ppl won't have nearly the down you can put.
30%, a good income source and decent DTI ratio
You do not need a co-sign

Even, if the rate is a little higher than you desired..So what you control the % rate paid easily by simply adding to few bucks extra to your required monthly payment ( you claim to want you pay it off in 18 months anyway, so 'buying' down your rate with $30-$50 extra per month... Wouldn't be a biggie for you anyway.

4) So you're not in this situation again....
And since you have a little cash anyway just go ahead and build your profile RIGHT NOW

Before you may 'need' it....

Take a simple $1000
Open
A) $500 secured CC
B) $300 secured CC &
C) $200 secured CC. (Discover minimum)

So your profile would show
1) A car loan (install account)
2) 3 revolvers (3 is optimal)
3) Credit mix and multiple accounts managed
4) All 3 cards can be zero annual fee cards that graduate

5) You can put a token amount on one of the cards per month to show some but low usage ( so don't don't appear totally abandoned, you want the computer to score it as "well-managed" not dormant)
But only one needs to show small reported use per month.
Once the 'usage' is reported
You may go ahead and make your payment, no need to use the 25 day grace, so of course there won't be a PENNY in % ever paid for use of any CC
( You could even make the car payment using the CC
That way there's less thinking involved, no special spending required
Just pay the car note with the CC
Then pay the CC ....No fuss no muss)

* Play the video game, using your secured CCs for say
8-10 months and you'll see all kinds of 'offended' for credit coming your way...You won't NEED them

After, say 12 months 2 of the 3 secured CCs will unsecure (send you back your funds) the 3rd 'might' take another few months at worse

Either way your score and overall profile would be 'ok' at the 8-10 month mark but after 12 months
You'd have 3 one year vetted revolving accounts,with low debt ratios + a one year aged installment loan
All with perfect payment history....That's 48/48 on the internal RISK model + no HP credit inquiries, coupled with the one year HPs from getting the car loan and CCs etc falling out of importance

Your score and profile would = freaking GREAT

Most likely again, 2 of those 3 cards could be in your wallet for LIFE, as your oldest account and again by aging aspect only works in your favor, all 3 may be keepers

That's why I like the idea of securing with good solid companies upfront, not just grabbing some garbage starter cards just because
Remember, these could be long term financial partners for your use for LIFE

Credit Unions, Discover, BoA, Citi, US Bank etc all may be around to provide checking, savings, car loans, mortgages, refis, IRA's, lines of credit, etc

Start with the end in mind

Good Luck

[Anonymous]

Gemini, thank you so much for responses. I'll number my reply as well to keep confusion at bay.

1 - yes, you are correct. i am 25, never used credit in my life. (hard to believe i know)

2 - i never asked, i was offered due to my situation. i have to disagree with your professor in some aspects but i'd rather not debate. so we'll just agree to disagree.

3 - yes my goal is credit profile building. and although i'm a cash buyer 100% of the time, i'm beginning to learn that without credit you can not do much of anything. especially buy a house. i don't care what my interest rate is, as i would more than likely double or even triple payments for the exact reason you mentioned. i'd rather not be forced to put down 50% if i didn't have to. i'd hate to put down that sort of coin and have missed an investment opportunity because of that. why not use the banks money if i had the shot as i see it.

4 & 5 - that's exactly what i had in mind, and plan on doing! and i am stoked to see you say that as well because it shows me i'm not crazy for my ideas haha.

finally, i have decided against the used car loan. i believe as you said, 30% down and a good dti (which i should have because i virtually have no debt) and they'll give me just about anything. so i'm probably going to use the cash i have to negotiate a new vehicle loan which, from what i'm understanding, should be a lot easier to secure. (is that correct?)

i appreciate you all taking time out of your day to help me, best of luck and if you're ever in nashville there's a barstool with our names on it!

[Anonymous]

Used versus new is always a debate.  You can finance either pretty easily if the loan to value ratio and other credit indicators are acceptable.  Cars that are the current or previous model year are generally treated as new even if they are previously owned.   The key here is buying smart, dealers love to pile on all kinds of add ons that you mostly don't need like an extended warranty on a car that already has a great warranty and face it cars these days are extremely reliable. All new cars have at least 3 yrs 36,000 miles bumper to bumper and 6 year 60,000 miles powertrain covered so paying 3-4k upfront for a warranty doesn't make much sense for most.  If you can avoid having that stuff piled on the deal and buy at a fair price (between invoice and MSRP, closer to invoice or below is best) then you will be fine for your loan to value.

I agree with the post above, avoiding a co-signer is ideal but if you need to establish credit and you can get a much better APR it is probably worth it for this first purchase.

I too have plenty of cash and have lived for many years purely on cash but most of us don't have enough to pay for a house with cash and frankly even if you do it might not be the best place to put that cash.  Building credit provides you with options and having a totally fresh start puts you in a perfect position to have perfect credit which means finacing cars at zero percent so you can put that cash to work in an investment that pays you instead of in a depreciating asset.

You'll do great with credit because you have learned to live without it.  Those who get in trouble are generally those who become too reliant on it for day to day expenses.