First Time Auto Purchase

[Anonymous]

Greetings myFICO forum members,

I have used this site many times and found the information here and members to be knowledgable and forthright.

I am looking to apply for an auto loan. I would like to get 35k and I can put 10% down. I have a 703 Fico. I have no negative or derogatory marks. I have only had a credit card for one year. I am employed and work full-time. My base salary is 34.5k but I also frequently work overtime and get a bonus - so my yearly salary is 40k. I tried applying for credit online with a nissan dealer and was denied, also tried applying with light stream and was denied. I have a meeting to speak with a local credit union today. What is going wrong? Is length of credit history going to prevent me from borrowing even though I have made on time payments and have a modestly good score?

I'm looking for suggestions. Thank you.

[Anonymous]

Welcome to the forums!

I would start by asking - do you have the recommended 3 CCs ?

The Fico scoring system looks for at least 3  CCs.  That would help you establish a credit history, and if you manage the credit well, it will show current usage and credit mix.

Payment history is             35%

The UTI (amount owed) is 30%

Length of history is            15%

Inquiries is                         10%

Credit Mix is                       10%

If you dont have 3 CCs, each time you add one you will get a score bump until you get to 3.

A good CCC to start with is Cap1 and you can get two CCs for building at the same time.  You can check their pre-qual site to see, but I recommend doing an app anyway, and then even a second one if approved.

GL

[Anonymous]

I have a Capital One with 3,300 CL, REI Mastercard 3,000 CL, Discover 1k CL. Never utilize more than 10 percent. Credit Union said Fico was 706 and will only extend me 10k car loan due to length of credit history (longest cc i've had is 13 months, next is 6 months, discover 3 months. So they are telling me the credit is great but won't loan more. They countered with a 15 and some strange conditions about value and 20% down. I'm not worried about the down. I would like to buy a newer car with low miles instead of an older car with more miles.

[Anonymous]

Your credit history is the impeding factor.  No prior auto loan history (I assume);  short history;  thin file...  The lenders aren't able to pull enough info to determine whether or not they should lend you more, if anything at all - currently.  Online applications are going to be automatically rejected due to the way the system is set up (little history - reject).  Your best bet is to apply in person.  And while your credit score is relatively good, you can't expect the lowest rates to be given to you due to credit history.  I had the same issue - VW and Honda both automatically denied my online application even though I had a 780 credit score at the time and I've had my oldest credit card for about 6 years.  I had no prior auto loans - that was the issue.  My credit union offered me a $15k loan at nearly 9% even though they go as low as 2-3% for my score.  I just wanted to see if I qualified for a $20k auto... My income wasn't an issue.

If you're determined to buy a car brand new, you can either save up for a larger downpayment or apply for financing (in person) at a dealership.  A few dealerships have offers for first time car buyers (so I've read) and are willing to finance people with little or no credit - typically graduates.   You'll have to inquire and research more about this.

Sidenote;  a $35k car seems a bit much for your income.  Have you calculated all your monthly expenses?  DTI?  Paying rent?  Plan to buy a house?  Insurance & registration?  Gas/repairs/maintenance?  Retirement?  I don't think lenders will qualify you for that much, but I've seen some members reporting their success.  You may have to find a cheaper alternative (or used), or once again, provide a larger downpayment.

[Dj4Money]

 Ford has a First Time Buyer Program.

 They will give you an additional $500 on top of any eligible rebates they offer. If your not in a hurry you can request a brochure from Ford for the car/truck your interested in and possibly get a $500 private cash offer. You can also apply to be a civilian member of the IPO Police Union. One of your benefits if a $500 rebate only available to members.

 All these offers can be stacked. You could save thousands of dollars and still get the car below invoice without trying to hard.

 The other First Time Buyer Program  - 

 https://www.hughesfcu.org/borrowing/vehicle-loans/first-time-buyer/default.aspx

 Some Credit Unions in your area may also offer first time buyer programs.

 You'll likely to limited to about $20,000 new or used.

[creditgambler2018]

35k loan on 40 grand income is really asking for trouble.... 40 grand a year income for a 35k loan is not a realistic smart idea... look for a cheaper car 14 max out the door or get more income.... get a better job or get promoted or something.

[Anonymous]

UPDATE: I went to local credit union and got approved for a 10k loan at 3.49% 60 months. I was happy and countered that they give me 15, they initially said no but after verifying income agreed to the 15 at 3.49. Then loan agent at the credit union told me to go through a dealership as well to see if I could get something better.

I went to a local Nissan Dealer and he approved me through the same credit union for 25k on a car less than 3 years old 72 months at 3.49.

Now I have a few options :-)

Thanks for the advice.

[Dj4Money]

 Good luck and be sure to share and post a picture.

[Anonymous]

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@Anonymous wrote:

UPDATE: I went to local credit union and got approved for a 10k loan at 3.49% 60 months. I was happy and countered that they give me 15, they initially said no but after verifying income agreed to the 15 at 3.49. Then loan agent at the credit union told me to go through a dealership as well to see if I could get something better.

I went to a local Nissan Dealer and he approved me through the same credit union for 25k on a car less than 3 years old 72 months at 3.49.

Now I have a few options :-)

Thanks for the advice.

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I would think thats unusual that the same CU will have better terms at the dealer than in the office, but CONGRATS!

Hope you can find a car that fits their terms and also fits your needs.

GL