@Anonymous wrote:Currently in the market for a new car (lease or finance but leaning towards finance). I recently applied for pre-approval from my local credit union and was a bit surprised by the total amount I was approved for. Details below:
Annual Income: $137k
Fico 8: 762
Fico Auto 2: 789
Fico Auto 8: 783
DTI: 36% (with new estimated $1300 monthly car payment included)
- Debt Calculation (monthly payments): $1,495 rent, $40 credit card (found this by looking at min. amount due on each of my 3 cards), student loan ($1,183 on REPAYE starting 1/1/21, currently $0 but this is what it will be when the current deferment period lapses), auto loan ($1,300, currently $0 but this is the estimated amount)
- On the student loan piece, my balance is large (i.e., ~$272k).
Auto loan request: $94k over 72 months, 2.24% APR advertised by the credit union.
Previous auto loan: $675/month on a lease (had someone else take over my lease July 2020 and haven't had a car payment since)
Credit union told me I was approved for an auto loan up to $50k, which I obviously didn't expect (asked for $94k).
My questions for you:
(1) Does the $50k loan approval seem right? Is it because of my high student loan debt (really my DTI) that I was only approved for $50k?
(2) I've been in my current apartment and job for about 4 months (both of which I was asked to report on my application). Could these short durations have something to do with the decision?
(3) Would I have better luck at a different credit union?
(4) Would I have better luck at a dealership?
(5) Is there anything else I can do to secure the $94k loan?
(6) Does this mean I also wouldn't be approved for a lease payment around $1200-1400 if I decide to go away from the finance option?
Thanks in advance!
You'd likely get approved through a dealership... your interest rate likely won't be as low as the credit union advertised (unless the manufacturer is really looking to move THAT vehicle).
I would imagine the short length of time at current address and employer would put the brakes on high dollar deals, especially in the current climate.
If you've been in the same line of work for 5 year's with income in the stated range, the short time with current employer holds less weight.
Unless you need the vehicle now, I'd suggest waiting until you've been with your current employer more than six month's and possibly until your student loan deferral stops (not sure if auto loans do as mortgages do, and assume 1% of student loan as minimum payment... a $2,700 monthly payment would definitely raise your DTI).
@Anonymous wrote:Thanks for the response! Given that I already have the hard credit pull from the credit union, is there any downside to having the dealership do a hard pull as well (assuming it happens within 14 days of the credit union hard pull)?
Possible downsides could include HP's on other reports, having a lender the dealer sends it to code as a mortgage or credit card thus adding a new inquiry instead of ignoring the auto... or potentially the credit union coded the pull as mortgage or credit card thus not providing the 14 days to shop.
If you are worried about a bunch of HP's, you'll want to figure your own financing... most (not all) dealers seem to use the shotgun approach and send out 10+ applications. After all, they want to sell you a vehicle and the more lenders that approve you the more likely you'll sign on the dotted line.
@Anonymous Does your credit union go up that high? I know some credit unions may not go that high. Is your lease still on your credit report?
