Help! First Time Car Buyer Securing Financing

[KAISMOM]

My credit scores are decent, averaging 763 across all 3 bureaus. I had one 30 day late 13 months ago, something I contested ($10 charge, an oversight, I was in the hospital but that's another story) but they were being jerks so it was never removed. Probably won't be a big deal, though. My question pertains to the fact I'm self-employed, so no paystubs, so it'll likely be bank statements to prove income.

I haven't found the car yet, but I'm leaning towards buying a newish used car from a private seller and securing financing versus a lease or buying off a lot. So my question is what's my best route, credit unions (currently not a member of any) or through my bank? Or is it easier to buy through a dealership and pay the markup difference? Lastly, do I secure financing before I find the car, either from the private seller or a dealership? Note: I'm looking to buy in the next 60 days. Thanks for everyone's help in advance!

Credit Score:763

AAoA: 6 years 3 months

# of positive trade lines: 21

# of negative trade lines: 0

Income: $45,000

Length of Employment: self-employed

Previous Loan Experience: None

Debt-to-Income (DTI): ???? (9k in debts, student loans & CC's)

Purchase/Refinance: ??? (looking for 2010-2016 12k max

Requested loan term (XX Months): 36

Down payment amount: 

Co-borrower/Co-Signer: None

[Anonymous]

With rare, very rare exceptions Credit Unions are the best way to go.  Credit unions offer great rates and generally want to help their members to for first time borrowers they tend to be easy to work with.  I only finance with credit unions.  If you have the ability join NFCU they are excellent to work with.  Penfed and DCU are also very good.  You have good scores, a long credit history and plenty of tradelines so I would think you will have no problem getting an approval.

I would get preapproved before you do any shopping. Do this always! Dealerships love to mark up interest rates on deals they arrange for you and having a preapproval eliminates that, they may be able to even beat the preapproved rate but with your scores if you go to a credit union that is not likely.  If you buy through a dealership they will want to sell you every protection package and warranty under the sun because that has become a major source of profit.  I would encourage you to say no to all of that stuff.  Rarely will any of it pay off and it will cost you a ton of money.

I would suggest considering a facory certified pre owned car.  They have been throuroughly inspected and brought up to facotry standards and then have warranties that come with them to protect you.  I recently bought my daughter a 2014 Mazda 3 touring with 46,000 miles that is certified preowned for a little over $13,500.  My point is you can find a nice reliable car for not much that has warranty coverage if you shop around for a while.  

Let us know how it works out.

[Appleman]

I see for DTI you have ???

I recommend signing up for the free version of Credit Sesame as they will list your actual DTI according to what a dealer is likely to see.

I agree abour being pre-approved prior to shopping. I would say this is really true in your case where you are self employed.

Check out Cargurus.com to see car prices in your area.

Good luck

[KAISMOM]

Fantastic advice thanks!! I was a mystery shopper for a credit union near me (California Credit Union) I shall check them out since their reviews look good and I'd qualify through my alumni. Plus I like to sit down and have that one on one. Though because my father is a veteran, it seems like I would qualify for NFCU, all online I assume?

Hopefully, they are flexible with those that are self-employed! I can see where going to a dealer and getting a certified pre-owned w/ warranty may be better than a private seller. The price for your daughter's car isn't too far off from what my top dollar. I waited for my score to bump up after my unfortunate 30 day late (one year later). I thought I'd try a newer car w/ warranty versus what I've always done, paying cash, 4K and under from a private seller. I shall update when I'm approved and buy

[Anonymous]

I am a veteran and because I wasn't retired or active duty I had to have my dad who is retired military join and invite me in that way.  They have since allowed veterans with a honorable discharge to join.  It is easy enough to join and the deposit is like 5 bucks, my dad even got 50 bucks for reffering me.  Anyway NFCU is well worth the enrollment hassles because they have amazing customer service and very generous CC limits and rates as well as great car loans.  We live 100 miles from the nearest branch and use them as our primary bank.  They make it very easy to do business online because they serve folks all over the world, also they are the largest credit union in the USA.

Best of luck. 

[Anonymous]

I think you should do the canvass on at least 5 credit unions or dealerships to send your request quotes as well as financing. I agree with your idea here about the mystery shopping in a credit union. Anyway, about the dealerships, I think you will consider sending online quotations on the top dealerships too, on that case you can compare the difference as well as choose the best for you. Hope you will update here just in case you will be approved or buy your new car. Uploading pictures would be great! Good luck to you!