For a friend - best car loan options with credit in 600s

[lanakane]

My friend needs a car.  He's self employed.  He only has a couple hundred dollars to put toward a down payment.  Looking for the best loan options for him - dealer, or...?  Have already ruled out a bank or CU due to his inability to provide 2 years of tax returns.

Credit profile looks like this:  Thin file.  Two Sallie Mae student loans, ten years old.  Balances are still close to the loan balance, and there is a string of lates from 2012.  No collections (got the one he had removed), and no revolving accounts on his official record currently.  However just got him approved yesterday for an Amazon GE store card ($600) and a Cap One Platinum card ($500).  Two hard inquiries.  Suddenly EQ FAKO score shot up from 615 Friday to 692 today/Monday.  What?!  Not sure how that's possible since the accounts aren't reflected there yet.  CK score has also jumped from the 590s to 646.

So assuming conservatively that his FICO score is around 650 now... what are his best options for loans?  Should he just go to the dealer and try to negotiate the interest rate down?  Are there dealers that are offering great rates right now or being extra lenient with people with low credit?  Open to any ideas.

Oh also which score do the car deslerships look at?  Should I have him soft pull that in advance to take in with him?

Thanks in advance!

[Creditaddict]

the problem is most dealerships are going to pull auto enhanced ficos which he can't get himself and if he has no auto history may not be that bad but his lack of other credit history won't really help.

scores in the 650 isn't that bad though when it comes to auto.

Do you have carmax?

1. What is "stated income"

2. does his company report as his current employer on his credit report?

3. does he have an idea of "what kind of car he wants"

4. what kind of payments he can handle?

[lanakane]

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@Creditaddict wrote:

Do you have carmax?

1. What is "stated income"

2. does his company report as his current employer on his credit report?

3. does he have an idea of "what kind of car he wants"

4. what kind of payments he can handle?

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I just heard about Carmax today and don't fully understand what it is - definitely don't have it.

Stated income will likely be around $45k.

We just updated his credit so his company name lists as his current employer.  

He wants a wagon probably, something like a VW Golf maybe, that has headroom - he's 6'2.

I'd expect he can swing payments somewhere in the $200s.

TY!

[Creditaddict]

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@lanakane wrote:

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@Creditaddict wrote:

Do you have carmax?

1. What is "stated income"

2. does his company report as his current employer on his credit report?

3. does he have an idea of "what kind of car he wants"

4. what kind of payments he can handle?

---

I just heard about Carmax today and don't fully understand what it is - definitely don't have it.

Stated income will likely be around $45k.

We just updated his credit so his company name lists as his current employer.  

He wants a wagon probably, something like a VW Golf maybe, that has headroom - he's 6'2.

I'd expect he can swing payments somewhere in the $200s.

TY!

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carmax is just a big used car dealership (a few have new too) but they basically get approvals automated through the computer in minutes usually and i don't think I have ever seen income verification done (they can be terrible rates but when you need to get a car and a loan!)

1. he needs to list the company as his employer and himself as manager or something, don't state self employed.

2. if paying used higher miles, I wouldn't suggest a VW, they can be VERy expensive to repair!

3. if he can only do $200ish, he needs to be looking at cars under $10k!!

maybe consider a ford focus or chevy cobalt or something... he could probably buy brand new or near and get pushed through financing with one of those companies pretty easy i bet and because of new, could stretch payments out a bit more to achieve the lower payments and no issues with repairs in near future!

[Remember0]

Pull his reports imo. Scores don't jump like that by themselves...

Can he provide 3 months' bank statements showing deposits of his salary?

If so, definitely look to the dealer. They should be able to get him though with those. If there's a carmax nearby, you could try there. Else, big chain dealers (AutoNation, MileOne) are also good places to try. Just make sure you shop around even the APR of the loans you are being offered (as long as he doesn't care too much about inquiries or is planning to buy a home soon).

[black_citi]

I wouldn't recommend a Chevy Cobalt. Those cars have ignition problems. To be honest I wouldn't recommend any GM vehicle 2010 or older.

[lanakane]

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@Remember0 wrote:

Pull his reports imo. Scores don't jump like that by themselves...

Can he provide 3 months' bank statements showing deposits of his salary?

If so, definitely look to the dealer. They should be able to get him though with those. If there's a carmax nearby, you could try there. Else, big chain dealers (AutoNation, MileOne) are also good places to try. Just make sure you shop around even the APR of the loans you are being offered (as long as he doesn't care too much about inquiries or is planning to buy a home soon).

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I looked more closely at his new report today... turns out a $10K chargeoff fell off!  I had forgotten about it... I recall disputing it and I think it fell off due to the time period.  That explains the score surge.  Fortunate timing!

I think he can provide bank statements but I'm not sure all of his clients pay with check... the cash he probably doesn't deposit, so the bank statements might not show all of his income and would certainly reveal that he's self employed.

[Creditaddict]

if questions start being asked about income then you are going to have a new set of issues that you probably can't resolve with that place and will just have to move onto the next... but there are plenty of places that never ask for income verification (Infiniti never has for me, Kia, and Carmax also have never asked for me or others I have known to go through them)

[lanakane]

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@black_citi wrote:
I wouldn't recommend a Chevy Cobalt. Those cars have ignition problems. To be honest I wouldn't recommend any GM vehicle 2010 or older.

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Oh good to know!  Now that I think of it *I* have a GM vehicle 2010 or older... a 2009 Pontiac Vibe to be exact!  Love that car though.  Still, all this discussion has me thinking of trading in... maybe in the fall...