I need a little help here. Any advise is GREATLY appreciated!
I recently applied for a few used auto loans from Bank of America and Capital One and got denied from both. My credit scores from all 3 bureaus ranges from 732 to 735.
Now, a little more in depth details:
I have been blessed to have good paying jobs since the age of 18. At that age , I decided to lease a nice car [new Infiniti G35] that, I will admit was way too much for me, though I had absolutely no problems affording it. Ofcourse, at that age, no one would even think about lending me a penny for such a car, and I never bothered to apply for a loan. My parents at the time had a great credit score and were easily approved.
3 years later [today], and not one single late payment [not that it affects my score since it was not under my name], I have come to an end with my lease. I absolutely love the car and want to buy it out under my name for its residual value (22k). The car itself is actually currently valued at 25k.
I have been working at my current job for about 20 months as a part time worker making about $23 dollars an hour [$8 an hour + commision] with an average shift of 24 hours per week. This has me around $2100-$2300 gross income per month.
According to MyFico.com, I have no late payments, have had credit for "One Year", and had my earliest account [school loan] opened 18 months ago. I have about 3000 in credit card limit with only $43 balances combined for both, which are always paid off in full.
As far as school loans, I have a 5,000 dollar loan showing up in good standings that will not need to be repayed until after I graduate. Besides that, I almost no debt what so ever; only a phone bill and food.
Wheew, I know some of you will be overwhelmed with reading by now, so here's the final details:
I applied for a 22,000 dollar loan for a 60 month term and got denied for both. With my good credit score, high current income to debt ratio, why was my loan denied? I know its a vague question, since it varies by lenders, buy anyone have a general idea?
My payments would only only been in the low 400's, and I make about 4 times that money in net income with no other expenses.
Ahhh, this is so frustrating! I would assume I can find a loan somewhere, I just hope its not with rediculous interest. I need to get this loan within a week.
I have an optimistic feeling that the dealer will approve me for a loan with the current lender [Infiniti Financial Services], since I highly doubt they want the car back; it's not like they're even selling a good amount of cars in this current market. But I was really wishing I had another lender to make myself more competitive to others.
Am I being too optimistic, or are the lenders just not seeing what I can afford? Again, I would have no problems what so ever with a loan like this
Thank you for anyone who took the time to read and respond,
You are asking for credit for 7 times your total limit on credit cards which you have only been showing payments on for a year. Commission is not guaranteed income (especially in today's economy) and without it you are taking home $192 a week gross - that's less than $800 a month that is income you will certainly get.
Do your parents still have good credit scores? If so would one of them be willing to cosign on the loan for you? They should have the faith in you based on your previous three years of paying for the car where the banks and lenders have no indication of you making those payments. If they act as a cosigner then it will go on your credit report and you will start to get the history reflected on there also. Just be sure that if you were not getting your commission checks you would still be able to afford the payment, gas, maintenece, insurance etc because if your parent(s) cosign and you default then you wouldn't only be hurting your own score but theirs as well.
Thanks for a quick and honest responce.
As far as commision, sure, its never guaranteed. But being in the type of job that I am in, my monthly checks for the 18 months that I have been working there have always been within $100 of each other. This is just how it is for sales associate in this company. The only way commision is not guaranteed for myself is if I go to work with the intentions of not working.
As far as my parents cosigning, unfortunately, being that my parents were involved in real estate, their credit score have plunged from high 700's to who knows where [most likely 500's]. They have missed many mortgage payments and were being foreclosed [they escaped it though]. (Fortunately, they have gotten back on their feet the last 6 months. But the credit damage has been already done). In this case, I assume they have nothing to help me with (?).
Again, thank you for your quick response. It's a frustrating experience for me. But I guess in the eyes of the lenders, they see it a completely different way. I've seen people with debt over their heads get 40k loans; yet me, being almost debtless and having flexibility with my income, gets denied.
I guess the dealership might be the best chance I have [for credit under my own name].
Any more suggestions?
Is there a local credit union you can go to? If you can show that kind of continued income for the last 20 months and, ideally, if you can show them that you are the one who has been making the payments each month for the last three years (cancelled checks or payments from your bank account) then maybe (consider opening a checking account with them also that has your monthly check deposited directly into it) they would be prepared to start building a relationship with you?
Credit Unions are a good way to go (or if you have a small local bank you already have a relatioship with)
The down and dirty is that in today's credit markets you are going to find it difficult to find anyone to approve this loan given your details.. your credit AAoA is only 12-18 months, you are a FT student and PT worker and are accruing student loan debt that is in deferment.
Best bet - get parents to consign and you will probably still have an higher interest rate.. or get them to refi the car and continue to make the payments.. worry about the financing with your next car.
Best of luck.
You probably should look into:
1. A good credit union which you can talk to the LO about your circumstance
2. You need a down payment of some sort. Don't ask for 100% financing as this shows you don't save or have reserves. You really need to pay TTL and you need to put down on purchase at least $2000. This will also avoid negative equity in the short to mid term.
4. You might ask one of your parents to co-sign (so that it is in your name also and you build credit with the payments).