Chance of approval?

[sccredit]

Apply with your wife as first applicant and you as second.  Benefit of her credit and your income.

[Appleman]

A lender will still look at the Debt to Income ratio for an auto loan. In talking with loan officers over the years, they say that below a DTI of 40% (including the projected car payment), they can get a loan approved without much of an issue (given a good FICO). When a lender pulls your credit they will get your score as well as your current monthly payments. They plug in your stated income and come up with a DTI ratio. So true, you can take stated income and not need proof of income but, they will look at the ratio.

POI does have something to do with DTI if the lender needs to verify what the consumer stated. In your example, the lender is going to plug in the $800 Ferrari payment (don't we wish) plus current debt payments ($50) coming up with a monthly obligation of $850 on a $500 income. In this example the DTI would be 170% and not the 10% you stated when considering if one were to qualify for the loan. Just like in a mortgage, the DTI needs to be below a certain percentage to gain approval, the back end in your terms.

I do not believe I am confusing POI with DTI. I understand the difference in the terms. To obtain a DTI ratio an income is needed, either stated income or POI. And, I would say DTI is not a term that is exclusive to mortgages.

When does this really matter? If a person applies for an auto loan with a great FICO score and they inflate their income. The loan gets initial approval at the dealership and everything looks great. They drive the car home but the loan still need to be finalized at the bank. The final person decides, we better verify the income. If this happens and the income will not support the debt the loan will most likely be denied or the terms altered. 

Respectfully, Appleman

[Anonymous]

I used to sell cars. Had hard luck (disabled) customer, had 2ndary financing in place, week later lender wanted her unrolled from car. Income disability for her and her son. Mortgage paid by family trust. Very bad credit, and most recent car hit by drunk driver, she had bought gap ins, so car got paid off. No trade in, 400 down.

I kept her in car with a close friend cosigning for her. Friend retired, Social security/pension 1500 mo, 50k in bank (inheritance & proceeds from home sale). No mortgage/rent (inheited current house, recently moved to another state). Score 780 across board. Bank could give two f's she was retired, with low income. Score good, no housing costs, good credit risk. No documentation of any income etc required. Fed ex papers to her, she signed and sent back. She trusted hard luck friend would make payments, cosigned, good enough for bank.

Hard luck customer never missed a payment. Stopped by to thank me at xmas for working so hard for her. Moral of story, with the right score & looks good on paper, bank happy with little to no POI

[nmk94]

Overdue update to this thread I started.

At the end of 2018 we went to the dealer with whom we already had a history and applied to purchase a new car. It was more expensive than I'd expected, closer to $30K than $20K () Because my wife isn't working they needed me to cosign. My score is in the lower half of the 600s (was probably 620 or so at the time). My wife's was high 700s. We didn't need to provide any POI. We just had to state our income and I had to cosign (since I am the one currently earning). We were approved with a good rate, no problems at all, and drove off the lot with a new car that day.

My total debt is now higher, but I now have another auto loan that is being paid on time, so I suppose it all balances out.