Huge Down payment requested!?

[Anonymous]

So my scores are in the mid to upper 500’s. (Not good I know but I’ve just recently been working on rebuilding my credit) I applied at Carmax for a vehicle and the salesman said I was approved with several lenders like Capital one, Santander, Westlake, but the main problem besides a big interest rate was the down payment. They were asking between $9k - $15k!! Is that normal? The vehicle was a 2017 f150 for $31k. I don’t have any previous car loans on my credit file just a few derogatory’s that I’m in the process of clearing up. Is this normal? Thanks for your help!

[Anonymous]

With scores in the 500's can you afford this car now?

Forgetting about the down and guessing intest rate of 18% or higher can you afford it.  $20K for 5 years at 18% is about $508 per month.

Now let's talk about that down payment.  $31K plus tax and fees probably puts you around $35,000 if you put 10% down $3,500 and financed at 18% even over 6 years it would be over $718 a month.

Can you afford that?

If you can then is there any way to postpone this purchase and take that $718 a month for even 5 months and put in savings towards the down payment while workign on your credit.

If you improve your credit your terms will improve.

If you cannot wait then don't buy the $31,000 truck today buy the minimum that meets yours needs and when your scores improve and your rates improve and you are right side up on that vehicle then you can get the $31,000 truck.

As far is is this normal?  The banks need to protect their invesment and since cars and trucks depreciate quickly having you put 25% down  or more makes sense.  Given your credit history with negatives and no vehicle loans it makes sense - sorry.

Now if you can wait be sure to work on your credit, get more positive tradelines and probably something like Self Lender that will help improve your auto scores.  (Loan to self make monthly payments, it reports positive tradeline, cash is yours at end).

[Shooting-For-800]

Requirement for money down in the 500s?  Yes, it is normal.

$9k-15k is probably a combo of your scores, your income, and the car itself is probably not the best deal overall.

Check directly with Cap One on a new F150 and that same exact one from CarMax (use the VIN) and see what rates you get.

When I was buying my wife's car (new) Cap One prequaled me for $40k and an interest rate between 2.49% - like 7.49% and it completely depended on the CAR ITSELF.  

I got a fantastic deal on a brand new car so my rate was indeed 2.49% (for 72 months).

The rate would literally change as I punched in different VINs.

GL!

[Shooting-For-800]

I also noticed that you did not talk about the APR.

$35k truck at a high APR is going to be a monster payment.

What was the APR?

[Anonymous]

Let's be clear he has no chance at  2.49% on a new car, his scores are low 500's, no car loan history and negatives on his report.

He also will not get approved for a new car loan without an even bigger down payment. It is a lot easier to get a used car loan as they are already partially depreciated.

Good points on trying Cap One directly and seeing what they say as it won't be a hard inquiry.

Never start this way with a dealer but start this way with us:

What can you afford as your monthly payment, give us 3 numbers:

1. Low end, means nothing to you no struggle no change in lifestyle never have to think about paying it could pay lots more
2. Middle - where you could be with your car payment comfortable no struggles
3. Max - might mean rethinking things a little - maybe you can't go out to dinner as often or need to make other change but if it was a tremendously better deal (like saving $5,000 in interest in life of loan) then you could do it if you had to.

Let's see what the numbers say then we know what you could finance at different rates and what the payment would be.

You can also do this yourself with a free loan amortization spreadseheet (just Google it) and using Excel What if Calculations.

Getting a car or truck is exciting and it's very easy to get caught up in the hype but the budget needs to come first, then the pracitaclity of it.  Even if you can afford and get approved for the truck today is it the most practical move vs minimal transportation for 6 months to a year then getting the truck you really want?

[LakeLife]

As others have indicated, that would be normal for your FICO scores.  My advice to you would be to take whatever down payment you can scrape together and buy a car outright with that money.  Preferably from a private party that you've negotiated the best possible deal from.  Pay a mechanic to check the car out before you finalize the deal. 

Then work on improving your scores and dedicate yourself to a frugal existance until you can clean your credit up.  As you see, having bad credit is very costly.  Good luck to you.

[Anonymous]

Thank you all for your advise and reply’s. I’m definitely not going to be purchasing a newer vehicle anytime soon. I basically just wanted to see where I stood. I do have 2 other vehicles that I own so I’m good with continuing to use those until I repair my credit. I make good money so I have basically been buying everything with cash for years because I knew my credit was in the dump after my divorce. As I’m getting older I realize that I can’t go on like that forever. Finding this forum has put some fire under my a$$!! Thank you all again very much!

[Anonymous]

Besides cleaning up the baddies maybe take some cash and put it into a Secured Card.  Discover, Citibank and others may not approve but there are those that will always approve and not even do a hard pull.  I think Greendot is one but check it out.  I think putting $1,000 or maybe more into a secure card will really help.  I also think that self lender or some other type of self backed installment loan will help round out the fact that you don't have any car loans showing. 

Divorce is rough I still have 3 years left of alimony - hang in there.

[Anonymous]

I’m already ahead of ya! I have Wells Fargo secured, Capital One secured, and Greendot. I just signed up for self lender last week. Reading these forums has definitely helped. I’m just going to sit back for a little bit and like u said work on the baddies.