Lender For Older Vehicle

[incognitony]

Probably have to be a finance company like One Main. That's what I had to do for my first auto loan, paid on it for 3 years and owed more than what I originally borrowed. They kept letting me refinance it and pay 30%.

[Mdowning30]

You can try Lightstream, they finance older vehicles, you can use a personal loan.

[Zosimus]

We got an adverse action letter from Capital One Auto Finance.

Score: 790

Range: 253 to 893

Source: TransUnion

Reason for denial: "There are excessive obligations in relation to income."

Specific FICO reasons:

Length of time accounts have been established.

Lack of recent installment loan information.

Number of established accounts.
Lack of recent auto loan information.

I'm pleased because that's secretly what I was hoping to get — an independent entity telling my son he's not making enough money. I'm stoked because now I get to sit him down and seriously talk to him about the necessity of working full time.

What scoring system has a range from 253 to 893? 

[pizzadude]

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@Zosimus wrote:

Score: 790

Range: 253 to 893

Source: TransUnion

What scoring system has a range from 253 to 893? 

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Per this thread it's the TU FICO 04 Auto score

[Harvey26]

@Zosimus A thought. Cosign for you son to get a personal loan with CU for full amount and then have him pay 1000 on the loan up front. Do it for 36 months or less. Thus building him credit and also the way that allows him to keep some savings. Payment will be very afforable for him and teaching him the important of working full time which will allow him to get things he needs. 

[IsambardPrince]

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@Zosimus wrote:

So, my 18-year-old son needs a car. We found this nice 2004 Lexis for sale for $4,500, but our local credit union doesn't want to finance a car that old.

Should we try for a newer car or find a different lender?

Here's my son's credit profile.

3 tradelines

AAoA 4y3m

100% on time payment

1% utilization

AZEO

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If you can't pay $4500 for a 20 year old Lexus, you certainly can't afford a 20 year old Lexus. $4500 is just not a lot of money, and it is attention-raising that he doesn't have $4500 in his pocket today, so he's going to finance a 20 year old problem vehicle with interest which he may be ill-prepared to maintain.

Unless your son's an 18 year old Lexus mechanic, expect everything at the shop to cost four or five times what a normal car costs and expect a bunch of broken luxury car quirks to pile up that you can't afford to fix.

The guy wants to sell it because it's probably a stone's throw away from becoming a lawn ornament.

People think they get good deals on old luxury cars and then they find out what they cost to fix and how many things are on them that weren't made right and didn't age well over 10 or 20 years.

In the luxury automobile market, there are some long term survivors from the 70s and 80s when they just made better stuff and the owner was meticulous and lived outside of the rust belt, but those are few and far between. Most people take awful care of their vehicles and sell their problem to someone else.

Realize that money paid for a really old luxury car is just money you can prepare to write off. If you're asking about a loan, it means you aren't prepared to write it off.

[IsambardPrince]

"There are excessive obligations in relation to income."

See my last post. Specifically the part about needing to borrow $4500 to finance an old luxury car that could become a lawn planter, when $4500 is chump change. If you need to go to a loan shark for $4500 for a car and you're 18 and probably living at home with no rent, go flip burgers until you have $4500 then buy a car.

The excessive obligation is a potential lawn ornament and the lender is also saying that your son doesn't make any money and frankly they're just not going to put it the way I did.

They expect it to break down and have him walk away from the loan, and they realize that if they repossess it, it will cost them more to do that than the car is worth, so they're not going for it.

I frankly don't see where an 18 year old from this generation is going to be out there with the car on jackstands with power tools working on it every Saturday until it quits going crazy, so who are you going to pay to fix it?

20 years old we're talking probably yellow headlamps, blown brake lines, fluid leaks from rotten rubber, has anyone even changed the transmission fluid or the antifreeze in twenty years. Guessing no.

You have no idea how bad a 20 year old car can treat you but I do. I fix it them all the time in my driveway.

Did you take it to a good mechanic and ask him to inspect it and write down what's wrong with it, or will you finance it at 28% and figure that out later when it's costing you $1,000 at the shop every couple of weeks for a while?

[IsambardPrince]

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@pizzadude wrote:

Two questions here - first around older vehicle financing, I agree with the above post, you may need to pursue a personal / unsecured loan.   And given the relatively low price of the car even with higher interest rates it hopefully won't be too bad but you'll likely need to co-sign.

Second question, around your son being able to get a loan and establish credit -  in this thread you mentioned your son was offered a 28% interest rate on a car loan, this was for a newer vehicle ?   Also the scores you posted above aren't relevant as I'm not aware of any lenders who pull Vantage for secured loans.   Does your son have FICO scores ?

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28% on a car is well past usury. It's loan sharking.

Even if I bought something like this on my Discover Card and couldn't pay for it, I'd be charged 23. 28% means you hit up "the mafia" for a car loan.

3% Outstanding.

5% Great.

10% Subprime.

20%+ Usury for Bad Credit.

25%+ "The Mafia"

https://www.youtube.com/watch?v=HWqKPWO5T4o

Leave the car, take the cannoli.

You're only obligated to fix someone else's old problem car if you buy it, and you're only obligated to pay the bank if you sign the paperwork.

A "lender" is a noun. It means "The guy who has the money when you don't have money for that thing you want, but don't want to work for the money first, so you go see him, and then you have to work twice as much to pay him."

A credit score doesn't mean jack squat other than how much extra work you're going to have to do to buy the thing you can't pay for.

If you have to finance the entire thing or something approaching that amount, it means you need to back off. Nobody is holding you at gunpoint and forcing you to borrow money at 28% APR. So I wouldn't do it personally, I'd just go flip some burgers. Been there. Done that.

Too many parents don't train up their children to appreciate a hard day's work and the value of a dollar. That's why we have so many 27 year olds that are in half a million dollars debt wondering if they'll still be able to work when they're 87.

That's why we have people financing vehicles that are old and essentially worth nothing, at 28% interest. Because they didn't save up cash and now the lender is going to take everything they make for several years and the fillings out of their teeth.

Responsible people generally don't finance a vehicle, especially not near these rates, and especially not the full cost of one that's so old it's basically shot.

Financing an entire house if interest rates are low, can make sense. Even financing a house doesn't make sense right now.

"you'll likely need to co-sign."

NOOOOOOOOOOOOOOOOOOOOOOO!!!!!!!!!!!!!

The favorite thing banks like to do is lend money. A lot of them have a severe appetite for risk. My in-laws make over half a million a year and have over a million in debt. Some of that is 12 credit cards they make minimum payments on, three ridiculous car loans, and a mortgage on  a house that's about level with inflation after two decades of interest and property tax. We make a tenth of what they do and we have no debts.

When banks require a co-signer it means even they can't do it. They require a co-signer because they know the buyer isn't going to pay. They want another person to pay when that happens. If you co-sign a loan it means eventually, you're going to pay.

The only thing worse than having your son buy a worthless 20 year old clunker that's older than the 18 year old that wants it at 28% is when he doesn't pay the bank and they say "You're next, bubbles!"

Co-signing is such a bad idea that it's even in the Book of Proverbs that nobody should co-sign. (Proverbs 6:1-7)

People didn't just start having bad ideas about what to do regarding their finances yesterday. This has been going on for a while.

[Thomas_Thumb]

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@Zosimus wrote:

So, my 18-year-old son needs a car. We found this nice 2004 Lexis for sale for $4,500, but our local credit union doesn't want to finance a car that old.

Should we try for a newer car or find a different lender?

Here's my son's credit profile.

3 tradelines

AAoA 4y3m

100% on time payment

1% utilization

AZEO

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Yes, 20 years is too old. As mentioned above, the vehicle will have reliability issues. Also, being a "luxury" model, high maintenance costs. A 10 year old Toyota Corolla/Camry or Honda Civic/Accord would be a better option.

Your 18 year old son has no account payment history of his own and brand new AU accounts. So, no Fico score. However, the AU status on 3 cards yielded some fairly high, artifically inflated, VS3 scores.

Limited income plus lack of credit history translates to predatory interest rates. Not a good way to start a credit journey or car ownership.

[IsambardPrince]

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@Thomas_Thumb wrote:

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Yes, 20 years is too old. As mentioned above, the vehicle will have reliability issues. Also, being a "luxury" model, high maintenance costs. A 10 year old Toyota Corolla/Camry or Honda Civic/Accord would be a better option.

Your 18 year old son has no account payment history of his own and brand new AU accounts. So, no Fico score. However, the AU status on 3 cards yielded some fairly high, artifically inflated, VS3 scores.

Limited income plus lack of credit history translates to predatory interest rates. Not a good way to start a credit journey or car ownership.

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Yeah, one thing I hate about Vantage is alongside being rarely used in actual credit decisions, it pops up for people 6 months before they may have a FICO score.

As to buying older cars? Cash. If you're in $7,000 or less territory, you bring the cash, they bring the title, and they trade hands at the same time or no cash. I've known people who bought cars with cash and the guy said he'd get them the title, then they got pulled over by the cops and the car was actually stolen, or it turned out the van was cheap because a mechanic had a lien on the title.

People are unscrupulous and the number one thing people will cheat you on is a car that's going crazy on them, and then it goes crazy on you.

Sometimes they even list it and say "lots of new parts". That means they couldn't make it work and now they're selling it.

I drive an old mid-luxury car (Buick is in the middle of Chevy and Cadillac) and I love it. They made the Buick so much nicer than the Impala, and even the "same" engine is nicer in the Buick (more metal, less plastic), and I've had to do a lot of work but it rides like a dream now.

Even at that, I paid the guy $7,000 for it because it had good bones but it's been odd stuff that most people wouldn't know how to do but I can grab junkyard and auto store parts and turn a wrench for most of it. It's got a totally new suspension, KYB struts, new brakes, new ABS module, several new sensors, upgraded aftermarket parts that correct a lot of known issues. You have to flush and flush the brake lines, but those seem okay, and flush the crap out of the coolant with chemicals and drill through clogs and back flush the heater, and it's just been what would be a nightmare car for anyone else.

And even at that, it's 4 years newer than this Lexus thing. I wouldn't want anything to do with this Lexus, especially with interest. Nope.

You'll pay a garage 3 times what it costs to go down the list or you'll have a lawn planter and a problem with OneMain Financial. Neither is good.

He doesn't have to look into exclusively Hondas or Toyotas. There's some places like the local auto auction site that sells cars to the public. You could probably get him into a nice older Chevy or GMC pickup truck with a V8 for not much more than $4,000-5,000 cash. Get it inspected to make sure it's not falling apart. (Ask the mechanic if it has a cast iron or aluminum block, you're looking for iron.) You don't have to pay a ton to like your car.