Chances of loan approval?

[Anonymous]

I am planning on buying a new car between August and the end of September. Right now I am pretty set on the 2013 Ford Focus ST or the 2013 Subaru WRX. Anyways I will need some financing to buy the car. Basically I want to know my chances of being approved for an auto loan. I have never taken out a loan of any kind in my life and I really don't know what all goes into taking one out. I'm still very new to this and do not know which factors they will consider.

Some basic information about me is that I am 20 and have only had a credit history since the end of January 2013, so I do not yet have an available credit score. I should finally have one in late June though. I have two credit cards at the moment, a secured Capital One Platinum MasterCard with a limit of $251 and a Discover it Card with a $500 limit. I have been paying off the balance on both cards in full every month and do not have a balance at all. Some other information that they may take into consideration is that I have multiple income streams coming in each month and pretty much no expenses. I have a full-ride for college, a trust fund that pays living expenses, and the bulk of my income is discretionary. I will also be trading-in my current car or selling it privately, but it should provide $5000-$7000 of the downpayment on the car. I will also be putting down between $5000-$10000 cash so my overall downpayment will be in the range of $10000-17000. which will leave me with having to take out a loan of around $9000 to $16000.

So given all of that information what do you think my chances are of getting a loan? And at what possible rates. According to credit score estimators I have used my credit score should be in the upper 600s by the time I buy my car or perhaps higher. If you have any questions or need anymore information I will be happy to oblige. Thanks for any answers you guys can provide and I greatly appreciate it.

Edit: And if my discretionary income makes a difference it is around $1600 a month after all my other expenses are paid.

[webhopper]

Hi and welcome to the forum!

Have you looked at joining a credit union?

Also, have you set up investment accounts so that you can start investing in a Roth IRA?  Roths are nice because you can pay the taxes on the funds "now" and then receive the earnings and interest later on, tax free.

Since you have good income, I would look at joining a credit union, perhaps DCU or a local one? 

Also, open up a Roth IRA at some point and start investing your discretionary income so that you, and later on, your family, and even your kids can benefit from the blessings of wealth that you have.

[Anonymous]

I have considered it, but I have not joined one. I guess I should though, I'll get in touch with a few of them on Monday. Would joining a credit union improve my chances?

Edit: I also do save about $300 a month, I was going to invest that into a mutual fund once that savings account gets to about $7500, should I look at putting that into a Roth IRA instead? I haven't really put a lot of thought into retirement based stuff yet since I am still in college. I was just planning on starting once I got my first job and could take full advantage of company matching, etc. 

[SamsungHDTV]

Credit unions will improve your chances yes. They are best for rates, and are more flexible when it comes to limited or not the best credit reports. Join soon, show them your balances that you keep and the income that you make. I would for sure try to apply once you have valid credit scores. You will for sure get approved with a co-signer, but if you're like me I can understand trying to do these types of things on your own.

Regarding a roth IRA, I would also recommend starting one up. Start saving for retirement while you're in your 20s should equal a very nice retirement lifestyle. I wish I was in the position and know how to start one when I was 20. I started mine when I was 22-23 but with my company match roth 401k. You'll end up having your personally managed IRA, and then 401k when you start working your first job. Maybe ask the credit union about starting your IRA there, or if you want to self manage do etrade or scott trade. Keep in mind annual contribution limits I think its $5,500/year for roth currently.

Keep in mind, use a big bank for the convenience and access to accounts. Credit unions for best loan chances and rates. I have Chase as main bank, and local credit union for my auto loan, but I maintain a full relationship with them (checkings/savings/credit card).

[webhopper]

Your Roth IRA can hold mutual funds and like stated earlier, you can contribute up to 5500 annually.

If you do a self directed IRA with an investment firm you can choose from a mix of different mutual funds and you can change your investment strategy as you get older. The tax benefits are enormous for doing this

[Anonymous]

I will look at setting up a Roth IRA, however I may wait until the end of next semester for that so I can determine if I want to go the self-managed route or go with a financial firm. I am a finance major and some of my classes this semester will help me a lot in managing my own portfolio so I feel it would be better to have those before I go at it myself. Can you have multiple Roth IRAs? Only being able to contribute $5500 a year seems low to me and I plan on putting away a lot more than that per year. 

Also do you need a credit score to join a credit union? Would I be able to join one before I get an actual credit score or would it be better for me to wait and join one after I get one. 

Thanks again for your help guys I really appreciate it.