Buy now or wait?

[beachdudede]

I'm looking to purchase a used car with two goals in mind:

1. Get a good used car without a high teens or low 20s interest rate
2. Re-build my credit with a short-term goal of moving out of sub-prime

I've seen a car I'm interested in now, in the $10,000 range that I can put 15% - 20% down on, but my credit score is 598 with Equifax and 586 with TransUnion and Experian.

I'd like to move on this car, but I'm wondering if I should wait. I didn't expect my credit score to even be that high. I thought it was still in the upper 400s to low 500s. Now I see I'm not that far from moving out of sub-prime.

I paid off a two-year, $5,000 loan on a car in October 2013, a month early, but it was at a buy-here / pay-here lot that doesn't report to the credit agencies. I have $0 in credit card debt or any long-term debts. I have been self-employed for the past 10 years with steady income growth since the recession. I'm a renter, not a home owner.

My report has a state tax lien that has been paid off. I've requested the credit agencies to correct this on their reports.

So my questions are:

1. If I move now, what's the likelihood of being able to get an interest rate that is at most 11-13%?

2. If I wait, how long would it take to get my credit score out of sub-prime and into non-prime?

3. Is there much of a savings to be realized with a credit score of say, 620-640, versus my current scores?

4. Where am I likely to find a lender who will consider my recently paid-off car loan even though it's not on my credit report?

5. What kinds of experiences have those of you who have gone the lendingtree.com route, or with other lending aggregators, had?

Thanks for any help and if there's something I'm missing that would be helpful in my situation, I'd appreciate the advice.

[Remember0]

1. Depends. With a tax lien that shows as unpaid, it might be hard to be honest. If it updates, you might be able to get <15%, maybe even <10%.

2) Depends on what's on it to be honest. Is the only baddie the tax lien? What's on it and when is that stuff falling off? Also do you have credit cards with good history? What's your util on those cards?

3) There probably is. I'm guessing with 640+, you can probably squeeze in under 7%. Tell me, is this your first car loan? Aka do you have another car loan that reports as paid or unpaid to the bureaus?

4) Not going to happen at any lender generally.

5) I haven't heard of many people using lendingtree or aggregators, to be honest. I'd honestly discourage that route. Let's start with if this is your first auto loan (as far as credit bureaus are concerned)?

[beachdudede]

Thanks for the response. I have no credit cards and no long-term debts. The report does show an old Capital One credit card that was opened in 2002 as "paid as agreed". There are some old medical bills from when we lost our health insurance back in 2006-2007 that were long ago charged off. When I tried to pay the bills a couple years after they were incurred, the doctor's office didn't have a record of them to pay so I don't know what I can do about that.

The report did show two other state tax liens. I wasn't sure what they  were and just talked to the state. I just paid off one and will pay off the other in the next week.

I have paid off at least a half-dozen auto loans, on time, over the years, but other than the buy here/pay here that the dealer didn't report to the CRAs, my report doesn't show any auto loans. The report does show a Wells Fargo loan of nearly $10,000 that was opened in 2000 and reports as "paid satisfactorily in 71 months", but I don't remember taking out a six-year car loan. I think that might have been for something else.

The one thing I noticed that I didn't notice before is I'm rated in the bottom 25% of all U.S. consumers by all three agencies. I guess I could take a higher rate now as some have suggested and re-finance in a year, but I'm skeptical of how well that works. I don't want to get stuck with a high interest loan for three of four years.

[beachdudede]

Just to clarify, none of the three CRAs reports the buy here/pay here auto loan.

[aubie1kenobie2]

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@beachdudede wrote:

Thanks for the response. I have no credit cards and no long-term debts. The report does show an old Capital One credit card that was opened in 2002 as "paid as agreed". There are some old medical bills from when we lost our health insurance back in 2006-2007 that were long ago charged off. When I tried to pay the bills a couple years after they were incurred, the doctor's office didn't have a record of them to pay so I don't know what I can do about that.

The report did show two other state tax liens. I wasn't sure what they  were and just talked to the state. I just paid off one and will pay off the other in the next week.

I have paid off at least a half-dozen auto loans, on time, over the years, but other than the buy here/pay here that the dealer didn't report to the CRAs, my report doesn't show any auto loans. The report does show a Wells Fargo loan of nearly $10,000 that was opened in 2000 and reports as "paid satisfactorily in 71 months", but I don't remember taking out a six-year car loan. I think that might have been for something else.

The one thing I noticed that I didn't notice before is I'm rated in the bottom 25% of all U.S. consumers by all three agencies. I guess I could take a higher rate now as some have suggested and re-finance in a year, but I'm skeptical of how well that works. I don't want to get stuck with a high interest loan for three of four years.

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With a car costing $10,000, I'm guessing that it must be about 4-5 years old at least, which means you might have trouble refinancing later on since it is an older car.

[Remember0]

Since you have no auto loans reporting, can I suggest you start by looking at Hughes FCU? Another member has reported that you only need a 580+ FICO (when they pull) to qualify for like their ~4.5% rate. https://www.hughesfcu.org/borrowing/vehicle-loans/first-time-buyer/

It requires 15% down, but you said you have that.

Since you have no auto loans reporting, don't mention anything when you are calling them. Don't even mention the buy here pay here unless they explicitly ask you "did you have a buy here pay here auto loan?" IMO as far as everyone is concerned, you are trying to get your first auto loan...leave it at that when applying and everything. If they ask about that personal loan you have no idea about, it's fair to say exactly what you told us...no idea + never had a 6 year auto loan!