General Question

[cet2062]

First off this community forum is the best thing ever! 

Okay, so I've posted on here a couple of times about needing a car and having no cosigner which seems to be very common! So I was wondering if you guys can advise me on a few things:

I've decided trying to get a car now is just going to lead to disappointment for me as I am young and get my hearts set on things and when it doesn't pan out I get very in the dumps. So my mom, whose credit is asbolutely dreadful right now told me that we will together work on OUR credit for the next 5 months and see if then maybe in August she can help either cosign for me or I can try and get a car on my own.

Currently- not sure my exact FICO score as I've not updated it since Jan 24 but then it was 610. This credit report only contains my two credit cards, one Bank of America at 600 limit (currently the balance is 480, will be at 300 after tomorrow. needless to say this will be a 0 in about a month), a Belk card with a 200 limit but currently only 16 on it. Also, I received a Capital One Journey card back last month but it has not showed up on my credit report yet (don't know why that is) that has a 300 limit and at the close with have little or nothing balance. 

My hope is to continue to keep these balances as low as possible and then after 5 months that will give me a little over a year of credit history (I'm not expecting to apply for anything else because I think the more cards I get, the more trouble I will get into as I get older!). What do you think my score will be by August? Do you think these three cards with a little over a year of good payment history and low util will help me get a car? 

Also my income is lack luster at best and the kicker is I'm self employed- a nanny for three girls. Although I can prove bank statements it will not be on my taxes because when I filed I hadn't received a 1099 and I spoke to the people that did my taxes and as long as I didn't make over a certain amount I should be okay since I paid my taxes on my other part time job. 

My mom's situation is just.. okay. She has a few good things on her report right now! She has a secured CC through our CU but it is close to the limit so we're trying ot pay that down, she has a secured loan at our CU which is in good standing (question about this, do they look at it as just another loan/obligation even though the money is backed because it is a share secured loan? Basically we're paying to use our money!), also I added her as an AU on my belk card hoping that may help. The thing that hurts her is she has the entire mortgage in her name (my dad is self-employed) and the reports say it's in a negative standing but she is current and we haven't been able to figure that one out yet! She also has some minor collections and two judgements. My question is if she can get the collections taken care of and maybe at least one of the judgements taken off (one of them is paid for and should be off but won't come off..) will her credit be SUBSTANTIALLY better or just a little. She's had credit forever and has paid off many car loans. Her income is around 40,000.

Ideally I'd like to do it on my own but since I have a low income and many banks say I can't verify it (which i can with bank statements), she might need to cosign. She has no problem with this as I'm very responsible and this will actually help her because then she'd get the car I'm driving now which is supposed to be hers! 

We wouldn't be looking for an incredibly expensive car (at most 15,000) because I want to pay it off as quickly as possible. 

So do you think that by August if we do what we say we are going to do, we'll have a chance? And also what scores increase do you think these actions will have on our scores. I want to say my mom's is around 450 (ouch!). 

Lastly, when someone cosigns for you are they the primary borrower or the secondary? Because if my credit is better than hers but her income is more stable and verifiable, which one would be the main one? 

Sorry incredibly long post! Any advice/comments greatly appreciated!! 

[nomoore]

A secured loan is looked at the same as a regular loan by the scoring systems.

If you are looking to finance it yourself and can figure out the proof of income then I would say you should take out a secured loan through someone and get some installment history. The Auto Enhanced FICO score the various car lenders like to use wants to see installment history, if not car loan history. It might help for you to do the same as your mom is doing and get a share secured loan through a CU.

[webhopper]

Sorry for the bad news. Judgements take 7 yrs to fall off from the date filed. Just because they show a paid status doesn't mean they are going to get deleted

[StartingOver10]

OP, from what I gather of your situation, you did not get a 1099 for working so you did not include that income in your tax return, is that right? Did you get a W-2 from the other job? Is it enough to show you have enough income to repay the loan on a vehicle?

When the bank says they can not verify income it means they need to see the following: paystubs, W-2's, 1099's and/or tax returns.

Bank statements are good to show current liquid balances and show a pattern of deposits, but bank statements can't substitute for your income verification.

I don't think you will be able to get a traditional loan without being able to show income.  That is why they are asking for a co-signer so that the co-signer can show actual income. [BTW, it doesn't matter who is "primary" on a loan like this because you are both responsible for repayment of the loan. There really is no primary; you have two co-borrowers if you choose to use that method.] Can you go back to your employer and get proof of income? That alone would solve your problem.

How much do you have saved to put down on the car? Since this is your first vehicle you would be much better off with putting down at least 20%.

Your credit isn't too bad and you probably will have a score boost when you reduce your balances.

As to the price, you would be best served by looking at something less expensive for your very first car loan. Maybe something in the range of $10k or less with a substantial down payment and you would be in a much better position to buy. If you can then prove you have an income large enough to repay the loan, you may not  need a co-signer.

[cet2062]

Thank you for the response I do have the W2 but it would only show making worth like 5000 for the year because I've been in high school. 

What exactly is co-borrowing? 

When you say can I go to my employer and ask for proof of income, what would be appropriate?? 

And yes, for instance I was looking around today and found a 12000 dollar car and I could reasonably put 2,000 down (cash) and have about 1000 dollar trade? Would that be sufficient? 

I really appreciate your assistance!  

[StartingOver10]

A co-signer is someone that is equally responsible for the repayment of the loan.  So they are your "co-borrower" even if you are the only one that agreed to repay the entire loan between the two co=signers. KWIM? If you make a late payment, then it reflects on your credit report and the credit report of the co-signer.

If you default, the lender can come after you AND the co-signer (co-borrower) for the loan, even if the car is just in your name only.

Once you sign the paperwork for a loan with a co-signer you have obligated yourself and the co-signer until the loan is paid. If there is a repo, the loan still needs to be paid off.  A repo does not get rid of the loan, in fact, it makes things much worse because then you have default interest rates + penalties and fees. I am mentioning that to you now because its your first car loan and you might not know that already. But then again, you seem to be on top of things because you are here doing your research right now before you buy (that's a good thing!).

[cet2062]

I just wanted to thank you for your response and clarifying the co-signing process!