High interest with improved credit scores

[Anonymous]

Hello,
I have went through the last few years, working vigorously to improve my credit. I’m finding it harder to purchase a new/used car with a better interest rate... as my credit scores has increased. I made one of the craziest purchases shortly after a BK7 discharged in Nov 2016. I was pregnant and desperately needed a vehicle for my family. My previous car was included in my BK7, so I was without a car. Prior to the BK7, all my car payments were on time but I was advised by my lawyer to include it in the BK7 due to the car value versus the amount owed. I purchased a Dodge Grand Caravan 2014 with 33k miles for $13.599 through the early platform of Carvana. A crazy interest of 19.9% (I was desperate and figured that was the penalty for my fresh BK7 discharge). At the time of the purchase, my credit was like the high 400s and was asked to put down $900. This purchase was made in April 2017. Thus far, I’ve made all my car payments on time. Zero collections, low DTI, students loans in excellent standing. I have 2 credit cards and 2 store cards... never missed a payment... recently I find myself unable to refinance the van, get a car loan pre approval by my credit union which is Delta Community and Carvan continues to raise my interest rates and down payment amounts, as I look into purchasing a newer car with less miles... something smaller since my older kids are graduating and are moving out. At the dealerships, they tell me I’m approved but want to choose my car for me. They refuse to tell me the approving financing company nor my interest rate and constantly states that even with my income ($45k) and improved scores, my bankruptcy is driving my high interest rates. Some will tell me I have to trade in my van and put down like $5k or less. What am I doing wrong? I do not have any available co-signers... I’m currently looking for a smaller car like a Fiat 500 Pop- used for no more than $10k... perhaps a new car, no more than $15k with $2k down. Any advice or suggestions? My van is high in miles (87k), keep receiving trade in value of $6k when I still owe like 11k on it.

As of 3/10/19
EX- 661
TU- 619
EQ-657

[Anonymous]

I would suggest possible trying to contact other credit unions like NFCU or DCU to see if they can help. The biggest part of the problem in my opinion is that you have a vehicle worth much less than you owe on it. I would highly recommend against rolling the negative equity in this van into a purchase of something like a Fiat as you will only be making the problem worse in the long run especially if the interest rate is anywhere near what you are paying now. Consider looking into vehicles that hold their value better such as Toyota and Honda. If you consider purchasing a new one the dealership will likely be more helpful in working with you on the van and you will also likely get better interes rate than buying used. You basically have 2 realistic options which are: 

1. try to refinance van with an acceptable interest rate and keep driving it

2. roll the negative equity of the van into your next purchase. If this is the option that you choose I would definitely recommend making sure it's a quality vehicle that should remain trouble free (as much as possible) for the amount of time you are financing it. You don't want to end up with a broken down Fiat 2 years from now worth $10k that you owe $22k on. You will likely need a fairly large down payment (at least a few thouseand) and will not get the best rate but should be able to do much better than 19%

[Anonymous]

This is good information. Thank you for the insight!!!

[Anonymous]

DCU will not issue a car loan until you are 2 years post discharge.

That may not be an official rule but seems to be the consensus but once you hit that 2 year mark they will.

Once I hit 2 years post discharge I refinanced 1 car with DCU @ around 7% not their best at the time but not too bad and another with Capital One through their auto navigator at 10.35% and have since refinanced the Capital One with DCU down to 4.99%.

Consider establishing yourself with a CU like DCU then after the 2 year post discharge mark apply for a car loan with them.  There are lots of benefits and most likely you will get paid earlier than if you were with any other bank.  

When I was with Capital One and got paid on Friday 3/15 the money would be available 3/15 around 6:00 AM with DCU I will have the money available Thursday 3/14 around 4:00 PM.

Also remember puchasing a used car is easier to get approved for a Certified Pre-owned cars often have great sometimes even better warranties.

DCU uses your Equifax Mortgage score for their loans so knowing that will help determine if you will get approved and at what rate.  They publish the rates by score online.

Again do not apply for the loan until 2 years after the discharge date.