HELP!First-Time Car & Car Loan at 18!

[Anonymous]

Ok, this may be a long post and I'm in desperate need of advice so please bear with me!

I am 18 years old and a current full-time college student, as well as a long-time lurker on this forum!  I have had my license for a little over a year and have NEVER had a car  . I opened up a secured CapOne card in December and have made all of my payments on time, still currently at a $200 limit, hopefully CapOne will increase to $500 in May. That is my only source of credit at the moment, will have only 5 months of credit history when I plan to apply for a car loan the first couple weeks of May. I have 3-4 inquiries on my credit report from Nov-Dec of last year. Should I apply for more credit cards or would the additional inquiries hurt me a ton? I have received several pre-approvals for credit cards.

I am in DESPERATE need of a car. i will be working during the summer 30 minutes from home and let's be real: I'm almost 19, I need my own reliable source of transportation !I work only part time at the moment since I'm finishing up my spring semester, making around 1k a month. I will be at my current job for 6 months when I plan to apply for an auto loan & I'm currently looking for a second job. I will immediately transition to working full-time during the summer with both jobs, so my income is looking to be around 2700/month before taxes. Can I report that transition to the financing companies, and would it make a difference? I know many require proof of income, so if I secure another job will they count that as additional income?

My credit scores are in the 650's range ,according to CreditKarma (though I hear they are FAKO scores?). I have yet to pull my official scores from all 3 bureaus. I have absolutely nobody to co-sign for me. My utilization is 29%.

As you can see, I have a LOT of things stacked against me but I really want to see if I can do this on my own and finally drive myself around for once!

The car I'm looking to get into would be used, a 2014 Hyundai Elantra , going for 13599 at CarMax. I could put up to 1500 down. 

There are credit unions around me that have first-time buyer programs (Patelco for example) and I have been banking with Chase for around 2.5 years. I've been considering RoadLoans as my best bet, though I REALLY don't want to go that route (but I will if I need to)

Can any of you knowledgeable people provide any advice ? I would appreciate it immensely !

[Appleman]

Welcome to myFICO!

First, for the most cost effective way to obtain your FICO8 scores join Credit Check Total for the $1 deal. Cancel BEFORE day 7 and you are good to go. When you do call in (all automated) they will offer to give you half off of their service for the next 5 years. (You can always circle back later and grab this deal I have heard).

If you want to see your current Auto scores it will cost you on this site, for me worth it every so often.

Log into the Capital One Auto pre-qualify site. this allows you to see if you can get a pre-qualification from them. I am not sure if you need to be 21 but the site is a Soft Pull (SP) so it does not affect your credit. If you move forward with a full application you will get a Hard Pull (HP). This site may give you an idea of what might be available.

A few manufactures do have first time buyers programs but they often are looking for college graduates.

The last thing you want to do is walk into a car dealer unprepared, remember the salesman is not your friend, he has to sell to eat, even if the sale is not in your best interest.

A few final thoughts:

Do you have the ability to get a Co-signer? My guess is with your limited credit file most dealers are going to want a co-signer.

How much cash do you have? Could you find a used beater that you could afford. Trust me I completely understand the reliable transportation but if you can pay cash for a cheap car you will have a ton more options. Put the money you would be spending on a car payment in your savings and you will further ahead.

I was 18 once (long ago) and I would have likely signed my life away to get into a car. I did public transportation and my bike for quite awhile, I simply could not afford a car.

I wish you luck and please check back in, I am sure other helpful members will chime in as well. Really glad to see you are doing research about the options.

[Anonymous]

Wow, there's a lot there so hopefully I hit everything.

1. Your Cap1 is secured, it will not graduate to unsecured. You might get a CLI on it, but honestly not anytime soon

2. Ideally, you want 3 CC's to maximize your fico scores. However, I wouldn't open anything else up until you decide on the car situation. After that is settled, then work on that.

3. You cannot apply with projected income. Only what you have at the moment of application.

4. Before applying, get that utilization under 10% - you can pay down the balance before the CC reports. It will maximize your scores.

5. I would check with a couple of Credit Unions and see if they have any first time buyer programs - try and get your financing before purchase

6. NEVER, EVER, NEVER let Carmax run your credit, NEVER, EVER, NEVER. Am I clear - they will shotgun it out to 10+ banks and you'll end up with 10 or more inquiries on you reports for two years. These inquiries will be harmful when you start building.

7. Even when Carmax tells you it will only count as "one" inquiry, it will not, it may score as one but the individual inquiries count. Again, please never, ever, never let them run your credit.

8. My opinion, I would look into an older, cheaper car (aka a beater). Old doesn't mean unreliable. Finance as little as possible, you've got to add title and tax to the price plus monthly insurance. Insurance at your age is NOT cheap. I'd look around and see if you can find something to just pay cash for, I know it may seem yucky, but you don't have to carry as much insurance and you'll be able to save and get the nice, shiny car when you graduate.

Hoped my two cents is a little helpful. Others will be along, I'm positive :-)

[lincar66]

I have to agree with them if you buy the car your insurance is going to be as much as your car payment go out and look for a 93-97 Corolla/prism and drive that for another 6 months while at the same time putting the money for a car payment in the bank.

Then once you have a year worth of credit history with a couple more cards you will have cash down with good credit and you will be only 1 year away from your insurance dropping at least a little bit

[Anonymous]

My advice

1. Apply for another Cap One card if you received a preapproval for the Cap One Plat [unsecured] QS One or something along though lines. 

2. Preshop with lenders, like trying Cap One's Auto Navigator. My fiance and I got our cars and we utilized the Cap One Auto Navigator; it's frickin' awesome...seriously. Its a soft pull and its accurate!!

3. I got financed for a 2011 Ford Fiesta in 2014 with only $800/mo reported income and no cosigner. My APR was 13.99% but b/c of my $3k DP my payments were $209/mo.

[Anonymous]

Thanks for the reply!
Aren't there dealers/finance companies that do not require proof of income? I'm thinking with my procurement of a new full-time job, I could claim that projected income (RoadLoans perhaps?)

And I understand the sensibility about getting a beater. But honeslty, I will need a newer, more reliable car since I will be commuting to school 35 minutes away this upcoming school year and don't want to risk an older car breaking down on me .

do you think i have a chance with RoadLoans ? CapOne could not pre-approve me :/

[Anonymous]

Thanks for your input!

Will adding on another 1 or 2 inquiries before I apply for financing really hurt my score?

& regarding inquiries, I heard that if you apply for auto financing all within 30 days it will generate just one hard inquiry. Is that a myth?

& how did you manage to do that?? Did they require proof of income (pay stubs,etc)? Are there any finance companies you would recommend who would be more generous with a college kid like myself? 

Thanks !

[Anonymous]

---

@Anonymous wrote:

Thanks for your input!

Will adding on another 1 or 2 inquiries before I apply for financing really hurt my score?

& regarding inquiries, I heard that if you apply for auto financing all within 30 days it will generate just one hard inquiry. Is that a myth?

& how did you manage to do that?? Did they require proof of income (pay stubs,etc)? Are there any finance companies you would recommend who would be more generous with a college kid like myself? 

Thanks !

---

More thoughts based on how this thread is going........

1.  Since you are under 21, you most likely won't be able to pre-qualify for anything online

2.  As I mentioned above, the inquiries "may" (they have to all be coded properly, many are not) count as 1 for SCORING purpose BUT ALL of the inquiries will appear on your credit report.  If they are not coded properly, the inquiries will most likely impact your score.  When I last went to carmax, I got pelted with 12 HP's and only 2 were coded "properly"

3. What are your current fico 08 scores and your auto enhanced scores?  Do not look at any fako scores - buy your 3b report from here so that you can look at real numbers.  You need to look at the numbers that potential lenders are going to be looking at - that will determine your APR (we can also help point you towards lenders that work with your scores if you/we know them)

4.  Yes, you are going to have to furnish pay statements.  Lenders are going to want you to prove you can pay the loan back.  They want to verify that you are not lying about your income.  You have no installment history on your reports - they have no history of you being able to pay back anything over the long term. 

5.  To your post at 1:16 pm, NO, NO and NO - you cannot use projected income on an application for a car.  It is going to ask your CURRENT income, that is what you list or your are committing (willful) FRAUD!!!  I do not know how to say this any plainer.  If you want to use that income, don't apply until you have pay statements from the second/full-time job

Can I be honest, you are going to be very hard pressed to find a lender that is going to approve you without a co-signer.  There are very few 18 year olds with only 4-6 months of a secured card that lenders are willing to take a risk on.  Your DTI is going to be through the roof with just a car payment (currently you make $1K a month you said).  Then add in insurance - car companies know this, that's why many of them require a co-signer.  Your rates are going to most likely be very high as well for your first car.  Once get over the hurdle of getting this first car, making all monthly payments on-time, it will get easier to finance cars later.

[Anonymous]

I don't know exactly how its monitored but I've been asked for a pay stub once, and no pay stubs twice. I believe the income proof is required by the lenders dealerships run thru and not the dealership itself.

[Anonymous]

Also, I know from THREE car buying experiences that they show up an individual inquiries and the hit that your credit score takes all depends on how they're "coded." But I believe that secretly dealerships are out there to screw up your life and don't code the damn inquiries correctly :/ but when look thru a magnifying glass and manual reviewing, they're viewed as once. I try to get them in a 14 day instead of 30 day span personally.