First time buyer - what are my options?

[pen_nyc]

I'm looking to get a car by end of month and am wondering what to expect. It would be my first car financed under my own name (prior to this I either paid cash for a car or had it under my mother's name) and my first financed car.
 
I'm 37, make $ 72K/year (verifiable with pay stubs), live with my girlfriend and our rent is $880.00 per month (my share being $ 440.00). Up until December of 08 I paid everything in cash and did not have any credit cards. Realizing that if I ever wanted to get a house or a new car I would need to establish some sort of credit I went ahead and got 2 secured cards - each with a $ 300.00 limit and both have been paid in full the past 6 months. I just finished rehabing an outstanding student loan I had but the loan nor its default is on any of my 3 credit reports (they are over 15 years old). The remaining amount on the loan ($ 2800) is now being handled by the DOE and they tell me that it should show up on my report in the next 45-60 days as a positive trade line but am not holding my breath on that. My monthly minimum payments on that will be $ 50.00 per month which I can easily afford. Other than the 2 small credit cards there is nothing else on my reports. My Experian score is 722, my Equifax is 754 and my Transunion is 697.
 
I am looking to get a car now as taking mass transit is getting a bit old (I haven't owned a car in over 5 years. I live in NYC where mass transit is pretty good). My question is what can I expect in regards to financing? I can put down $2500 on a car and am interested in getting a 2006 Lexus IS250 (based on autotrader.com searches the average price is $ 23K) or if possible a 2009 model. Based on my salary, my very limited credit history and my small debt to income ratio what are my chances of getting a car loan? I can easily pay a $ 500-600 a month on a car payment and still have money left over. Any suggestions on what lenders may be able to approve me?

Thanks for any input.

-P.

[Anonymous]

A large down payment 30%-45% of the transaction should get you a good ratre and a loan.

But the fact that you have no credit, actually I should say BIG CREDIT even with your income is KILLING you.

And lets be honest, $72K a year in NYC is Cost of living less then 50K in Cleveland, Ohio.

Your best approach? Do you have any familial relation in the military or who are members of Navy Federal Credit Union. If so get  them to sponsor you. That would be your best fast track.

Otherwise consider what area credit unions you may qualify for, I would also recommend you joining Alliant Credit Union. Start a relationship with NFCU or Alliant and you may be able to qualify quickly for credit cards, loans and a car loan.

[pen_nyc]

Thanks for the reply USMC.

Unfortunatley do not have any family in the miltary so that is a no go. I do see where there are others out there who used their military status to get loans and such and have to say I am a bit jealous. 

One question though: What did you mean by " actually I should say BIG CREDIT even with your income is KILLING you."?

As for $ 72K/yr and the NYC standard of living. Luckily my girlfriend and I live in a rent controlled apartment and what someone would normally pay $1500/month in rent we pay less than $900 total. That for us is a big plus and we certainly dont plan on giving up our place any time soon.

Thanks again.

-P.

[Anonymous]

Big credit means a Large trade line payment history.

A history with 2 $300 cards is not enough of a credit history to satisfy many typicla lenders to suddently give you a car loan. Think about it, you will be getting  a car commitment greater each month then your current credit lines combined. (IE car payment, plus insurance, plus gas, plus maintenace)

GO join ALLIANT NOW!!!!!!!!!!!!!!!!!!!!!!

I once had to tell a 34 yo friend of mine who made over 50K a year, provable, with a great job history that he needed his dad to co sign on a New 23K car as he had no active credit line history. he had made college mistake so he had paid them all off and had never ran credit since, they all had fallen off his bureau.

[pen_nyc]

I know exactly where your friend is coming from. I was pretty much in the same boat - got caught up in debt on credit cards while in college. Paid those off and then "went off the grid" and decided I wanted nothing to do with credit (i know...i know).

As for Alliant - seems I do not meet their requirements. Don't qualify for NFCU either. I work for a small business (we do logistics for trade shows) so no union involved nor do I work for a big name company. Am googling now to see if there are any credit unions for NY residents.

-P.

[Anonymous]

STOP!!!

Sometimes you have to pay to play.

You can easily create a sponsorship eligibility fro Alliant by becoming a member of the National PTA. Yep that costs you 25.00 but you do get to join Alliant. And you do not have to continue membership.

So you pay 25.00 join the National PTA get an Alliant Credit union membership and well....destiny is yours.

[pen_nyc]

Thank you very much USMC!!! Went ahead and joined the National PTA and also opened up my Alliant savings account. I'll wait a few weeks - deposit $ 25.00 or so every other day into that savings account and then see about applying for the car loan with them.

Question - When I submitted my application a screen came up saying "because of my good credit I am pre-approved for a car loan of $20K, a Visa of $7K and a checking account. I bypassed that though. Is that standard? 

P.S. Also, one of the questions that came up to verify my identity through my credit report was about my student loan. It asked who my studen loan was with and what my monthly payment was. Funny thing is - the student loan does not show up on my report - yet. I just completed rehab and just made my first 2 payments to the Department of Education / ACS. On my report nothing shows up about it but would love to get that trade line as it would date back to 1989 and be my only installment account.

 -P.

[pen_nyc]

Forget my last line. After typing this I checked my Equifax report and today my student loan showed up! It has a  date opened of 09/89 and a current status as paid as agreed. High credit shows $ 2,926 and total balance of $ 2712.

Curious - how does that help with my car loan mission?

-P.

[Anonymous]

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@pen_nyc wrote:

Question - When I submitted my application a screen came up saying "because of my good credit I am pre-approved for a car loan of $20K, a Visa of $7K and a checking account. I bypassed that though. Is that standard? 

 -P.

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No that is not "standard". You actually could have gotten yourself a 7 K limit card and a car loan today. Call them tomorrow, ask to speak to a loan officer, tell them you want the card and the loan, see if they will get you the few thousand $$$ higher car loan you need and you have your car loan.

Wasn't that easy?

Many people do not qualify for that pre approval screen.

Message Edited by usmc58555 on 06-14-2009 03:37 PM

[Anonymous]

Oh and when you get the credit card, dump your secured cards-it seems you don't really need them anymore.

Just make great credit decisions from now on, it can be a heady feeling getting approved and that can start you on the road to ruin.