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Getting auto loan with bad payment history?


Getting auto loan with bad payment history?

Hi there! New member here even though I've been browsing for awhile and have learned alot from this forum! I've been working on rebuilding my credit after a few rough years. Was at 560ish a year ago, and currently my scores are from 620-660. I have one capital one credit card with $1K limit that is at a balance of 20%, paid on time each month, $10K in student loans which is a payment of $105 per month, always paid on time. And one auto loan that is 4 years old with a balance of $1500. I had a great job a few years ago but unfortunately got laid off and decided to go to college. Times were tough for 3 years trying to pay for most of my school out of pocket, and I was late about every other month on my truck payment. Not good, I know, but can't change that now. I've been out of school since fall and the account is now current as of the end of March, but the late dates are obviously still listed on my credit report.
I started a new job at the end of February in the field I studied in. I have been in the same field for 3 years, but just started with this company for a 35% pay increase from my former employer. I understand some lenders require 90 days at the same company, so I intend to wait that out. I'm on hourly pay, but it equates to 52,000 a year salary, not including overtime. I've really improved on my credit in the past year and feel that I'm in a position where I can live comfortably and get ahead again.
It's time for a newer truck as mine is getting rough, and I need a good reliable one for work. I can easily pay mine off now, but not sure if paying it off at once will hurt my score and affect my chances at a new loan.

I'm looking for a loan of about 25k for a 2014 or newer truck. While I know I can most likely find a lender for my mid 600 scores, I'm worried that my late auto payments may put me in a bad position for another auto loan if they run auto based scores.
I moved to a new town once I started this job and plan to join a credit union here, but am nervous about having them put a hard pull on my account with my spotty payment history.
Any decent options for my situation and any advice on what to expect? Also, would I be better off paying my loan off now and having a closed auto loan account dropping my score, or apply for a new loan first?

Thank you in advance for the advice!
Message 1 of 5
Valued Contributor

Re: Getting auto loan with bad payment history?

Welcome to myFICO.

First, try CapitalOne Auto Navigator where you can see if you pre-qualify for auto financing with only a soft pull.


On your Cap1 card pay that down to 9% or less. This should help give you a boost on your score. (I would do this over paying off the truck (assume you want to trade in or sell?)). The truck loan will keep your score boosted for the time being.


Are you able to come up with some down payment money? This will help / may be neccesary.


A credit union is a great idea but I would wait until you are ready to buy to go through the process. I am not sure how PenFed will look at all of your late payments. Do some research on PenFed here, the benefit of using them is that it is only one Equifax Hard Pull for all the products you apply for in the first 90 days (YMMV).


Good luck and glad to hear life is heading in the right direction for you.

Message 2 of 5
Frequent Contributor

Re: Getting auto loan with bad payment history?

I agree with the above comment, pay down your card still and try to have some down payment/equity in your trade to help with financing. I know this sounds crazy but in some lender's eyes, the slow payment's can sometimes entice them (as long as they aren't 60 or 90 day lates) because they look at that as added revenue due to late fee's. Now obviously if every payment was late for 2 year's straight that might be a different story. Another issue you may run into is job time, many lender's don't like thin files with short job time as there isn't much comparable credit to base their decision off of and your stability/ability might be limited, so keep that in mind.

AMEX BCE ($39,500) CITI AAdvantage ($18,500) Region's Platinum Card ($14,400) Discover IT ($18,000) Macy's ($7,000) Chase FU ($10,000) TU:788 EX: 767
Message 3 of 5

Re: Getting auto loan with bad payment history?

Thanks for the replies! I do plan on getting the card down to 9% or less by the end of this month. I also plan on making just over the minimum payment on time for my current truck which will keep the account open. I was a little concerned about my time on the job to, but it is in the exact same field, so hopefully that helps. My employer allows us to work unlimited overtime currently so I've been taking advantage of that to save up a down payment. I don't plan to get real serious about buying until I hit 90 days at my job in mid June, so I can easily save $3-4K up for a down payment by then while still having enough to put in regular savings. I also plan to sell or trade in my current vehicle, I owe $1500 still but value is around $5,000.
Message 4 of 5
Frequent Contributor

Re: Getting auto loan with bad payment history?

Many finance companies will not consider overtime as income until you've been on the job for awhile...Although you have been in a certain "field" for quite some time, they still generally only consider your current employment time. Stability is a key factor in decisioning for underwriter's when credit isn't stellar. They care that you stay at a job for a long period of time and don't hop around from job to job. With money down and getting that utilization down and possibly waiting until you've been on the job for 6+ months I think you should be fine.

AMEX BCE ($39,500) CITI AAdvantage ($18,500) Region's Platinum Card ($14,400) Discover IT ($18,000) Macy's ($7,000) Chase FU ($10,000) TU:788 EX: 767
Message 5 of 5