Just got rejected from BoA with 718FICO, should I try else where as a first time buyer?

[Anonymous]

I just got rejected on a used auto loan from BoA. With my current  
situatuon, do you guys believe I should try again else where or a co-signer is must(I really want to do this on my own)?

Current situation:
Requesting $27,000
23 years old, first time buyer
FICO: 718, 709, 700
Balance/total credit: 41%
total debt about $1950.00
Monthly income $1400.00(2 years at this job)
I still live with my parents in a house we moved into 14 years ago
Debt from: Macys card, Best Buy card, BoA credit card

Most debt I ever had on one account was $1500.00.
No deliquinces and 2 inquires in 24 months.


Any input provided will be a great help, thanks!!

[SCF]

I think you should look into financing through a local credit union, take this information to them, ask to speak to a loan officer and see if they will give you an indication of how likely you are to be approved.  They will eventually have to pull a report, but this sort of investigation can save you an inquiry.

It seems like your DTI (debt-to-income) ratio is not a problem, so I would imagine the issue is with a thin credit file and possibly the loan amount.  How much money are you putting down?  Could you afford a larger down payment?  That would definitely help.  Another positive action to take would be to pay down the balances on your cards to drop your utilization from 41% to between 1% and 9%, that's the ideal level and should net you a higher score in addition to further improving your DTI.

Hope this helps!

[daisyduke]

Hi mtriple

it is my understanding that there are many other factors considered when applying for an auto loan. So even though your scores are in the 700's, banks take into consideration many other things, and you probably know this.  It is not an apples to apples kind of thing when it comes to financing an auto.

How you paid your last auto loans is taken into consideration - (do you have any auto loans on your credit report)

Also I believe, and I"m no expert (but i'm shoping for a car myself right now) , if you are looking at financing $27K car, with six percent interest rate (pretty good rate) is around $516 a month for 48 months...sure you can drag it out longer and pay more interest, but you also need insurance and gas, so figure another $200 a month. The cost for you to drive that car per month is $716, which equates to less than half of  your take home pay. you do have other bills, granted they are not large.... it might have been too tight of an amount for the bank to finance and you have a thin file.

You might be better off, just a suggestion, trying to find a lower price vehicle...or you could get mom and dad to cosgin and suck up the $716 a month which is what that car will probably cost you.

[Anonymous]

Your score is high because your file is both new and thin.

You do not have the credit history to support an auto loan.

In addition you do not have the monthly income to support a car loan on your own.

[Anonymous]

Thanks for all the inputs! I'll try to talk to someone in a credit union this week, however I believe what usmc58555 said is the most likely case. I was planning at most put down $1,000 if I need to. If it is the amount and my income is the issue, I suppose I can request a few thousand less.

[Anonymous]

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@Anonymous wrote:
Thanks for all the inputs! I'll try to talk to someone in a credit union this week, however I believe what usmc58555 said is the most likely case. I was planning at most put down $1,000 if I need to. If it is the amount and my income is the issue, I suppose I can request a few thousand less.

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Hi and welcome to the forums,

Yes this is a major issue. You are buying or TRYING to buy too much of a car. Your credit file is thin and yes inorder to get THIS specific car, you WILL need a co-signer. Your income does not support the purchasing of this car and yes, there are many other factors taken into consideration for an auto loan. Try to get a more reasonable car, finish studying (if you have not done so) and try to increase your income! Furthermore, you need to understand if you do get either of your parents to co-sign and if they have a need for credit in the future, then this loan will also weigh them down in attaining future credit.

Lastly, emergencies come up and things happen, so you do not want to commit to a very large payment incase anything happens and you cannot keep up with payments and that will lead to your credit destruction - get a more reasonable car (15K and below and yes put the 1K down, more if you can) and go with a lower payment and in the future you can get the car you want!!!

Take it from me, I wanted an EVO or an STI before, I curbed my want and then I wanted a Mercedes CLS63 AMG but curbed that too, now I have 20K in the savings and possibly on my way to getting that Merc in a years time with pristine credit (after having worked on stuff).

[Anonymous]

"Your score is high because your file is both new and thin."

How does this square with credit history and mix being positive factors in FICO scoring? Wouldn't new, thin files drive down the OP's score?

[Anonymous]

MyFicoAddict,

Thanks for your input. You make a very valid point in waiting to be in a better position to get the car. I guess the banks/creditors don't see my situation how I see it. I honestly don't believe the car is too much for me, but paying for the car is all I need to really pay for since I can pay off my credit debts at anytime. Which bring me to my next question, should I pay off my Macys, BestBuy, and BoA cards for better chances at an auto loan? 

Also, lets say if I do wait until I have a better length of credit history, how would I ever be able to get over the hump of never having a large amount of debt? A friend of mine was rejected from an auto loan in a similar situation to me and it was because the most debt he had at one time was $4000.00, they couldn't trust him going from a $4000.00 debt to a $25,000 debt. How could we get over the hump without given a chance lol

[daisyduke]

mtriple,

i think it might be very helpful if you google "how much car can afford based on my salary"

 Take your NET monthly income and multiply it by .15, that will give you the monthly payment amount that you can afford.

If you applied for a loan that met the above criteria, you would probably have a much better chance at approval.

I hope this helps.

[Anonymous]

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@Anonymous wrote:

Also, lets say if I do wait until I have a better length of credit history, how would I ever be able to get over the hump of never having a large amount of debt? A friend of mine was rejected from an auto loan in a similar situation to me and it was because the most debt he had at one time was $4000.00, they couldn't trust him going from a $4000.00 debt to a $25,000 debt. How could we get over the hump without given a chance lol

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1- large downpayment.

2- realistic first purchase MSRP

3- Stable employment history

4- Goss income in excess of 1800 a month, preferably 2000.

5- DTI in a format tyhat leaves you money to pay your car obligations.

6- monthly expenses that leave you the ability to pay a car obligation. (car insurance, maintenace, gas)

There is a reason that the 15K-20k cars are called "starter" cars.

if you have 1-6 then you do nothave a problemn being a first time buyer.

if not you need a co signer.