Long situation.. Many questions

[nada9188]

I bought a car this week and need a loan. Confused? read on.

Last week I selected the car I want and bought it. While fighting with the hesitation to have my credit pulled and ran many times at different banks to find the best rate-I decided that the best option would be to buy the car cash (with someone elses money) and then get a loan on my own at a credit union. 

I traded in a car that had a lien from State Farm Bank. According to my State Farm account, they have not released the balance. 

On my last loan I did the same procedure of buying the car cash, then getting a loan to pay back the person that bought it. 

Will there be any issues if I go into a bank saying this is the car I want, you can have the title that is currently free and clear, and they will give me a check for the amount determined?

I paid 28.5K for the vehicle. I am giving 3.5K (like a down payment) to the person that gave me the money to pay for the car then I need a loan for 25K. The KBB value of this car retails used at 29K. 

I about 2 days ago I got a credit limit increase on my AMEX card from 3K to 6.5K via soft pull. 

Should I wait for this new credit limit and/or the loan that will report to 0 whenever the banks get around to reporting that to apply for the new loan at a Credit union? 

I had a cosigner on the last loan from state farm because I had very limited credit history at the time. I now have 12 months of auto loan payment history. 

My income is only an embarrasing 26K annually. I do not have any other expenses, this is not a too expensive of a car for me-I am a full time college student and worker. 

My credit profile:

730 Plus scores across all 3 bureau's. (761 AMEX FICO pull 11/27/11) (738 EQ Myfico score 11/20/11)

AAoA is roughly 1.5 years. Oldest account is from 3/1/09.

3 INQ on EXP

2 INQ on EQ

2 INQ on TU

EXPERIAN® EQUIFAX® TRANSUNION® Account NameAccount #Account TypeBalanceDate Opened  AMEX CURRENT 800-874-2717 PO BOX 297871 FORT LAUDERDALE, FL 33329             AMEX AMERICAN EXPRESS AMEX   XXXX -XXXX XXXX   Credit Card Revolving or Option Revolving account   $233.00 $233.00 $233.00   12/1/2011 12/1/2011 12/2/2011

EXPERIAN® EQUIFAX® TRANSUNION® Account NameAccount #Account TypeBalanceDate Opened  DISCOVER FIN SVCS LLC CURRENT No Phone Provided PO BOX 15316 WILMINGTON, DE 19850             DISCOVER FIN SVCS LLC DISCOVER FINANCIAL S DISCOVER FIN   6011XXXX 6011XXXX 6011XXXX   Credit Card Revolving or Option Revolving account   $0.00 $0.00 $0.00   12/1/2010 12/1/2010 12/1/2010

EXPERIAN® EQUIFAX® TRANSUNION® Account NameAccount #Account TypeBalanceDate Opened  STATE FARM FNCL SVCS F CURRENT No Phone Provided 3 STATE FARM PLZ BLOOMINGTON, IL 61791             STATE FARM FNCL SVCS F STATE FARM BANK ST FARM BK   XXXX XXXX XXXX   Auto Loan Installment Installment account   $14,173.00 $14,173.00 $14,173.00   1/1/2011 1/1/2011 1/7/2011

EXPERIAN® EQUIFAX® TRANSUNION® Account NameAccount #Account TypeBalanceDate Opened WELLS FARGO BANK CURRENT 800-642-4720 PO BOX 14517 DES MOINES, IA 50306             WELLS FARGO BANK WELLS FARGO CARD SER WELLS FARGO   XXXX XXXX XXXX   Credit Card Revolving or Option Revolving account   $0.00 $0.00 $0.00   3/1/2009 3/1/2009 3/22/2009

[pizzadude]

Ok I'm totally confused. WHY are you doing this ??? Money laundering ???

You are saying that a friend gave you $28,000 in cash to buy a car......and the title is now In your name only ? And you want to take out a loan secured against the value if the car to pay your friend back ???

I doubt if the bank would loan you the full amount because of depreciation.

[nada9188]

Let me simplify this.. I figured I would have a hard time explaining it. 

Forget what I wrote above. I am going to go into a CU and apply for a loan for this vehicle. All they are going to want is their own approval on the loan and the title for the vehicle.

As to why I am doing this. 

I have semi short credit history. I didn't want a car dealership running my credit at many places. So my parents bought the car cash, now I just need to get a loan to pay them for the amount. I do not see where depreciation plays into this. I will be asking for a loan for a lesser amount that the car is even worth!

[pizzadude]

Ok, I think it will come down to how much the bank will loan you, which may be a maximum of 80% or 90% of the book value of the car.    They might loan you more but that will depend on various factors like your credit and previous loan experience, etc...

And the book value that the bank will likely use is not the retail value of the car, but will be closer to the wholesale value.    So assuming that they value the car at $26,000, and loaned you 80% of that, the loan amount would be ~$20,800.

[Anonymous]

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@nada9188 wrote:

I have semi short credit history. I didn't want a car dealership running my credit at many places. So my parents bought the car cash, now I just need to get a loan to pay them for the amount. I do not see where depreciation plays into this. I will be asking for a loan for a lesser amount that the car is even worth!

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Multiple credit pulls for auto finance within a small window (30 days I believe) only count as one pull for scoring purposes, if I understand correctly. But that probably doesn't help you at this point.

As for getting a loan to pay back another person, sounds like a basic refi to me... Might be slighly complicated in this case, but I would expect to follow the normal specifics of a refi. Still not sure why this approach was chosen, but whatever floats the boat.

***** EDIT *****

Depriciation is lost as soon as you drive off the lot... Now that it can only be sold as a "used" or "pre-owned" or "experienced" car or whatever. The value of the car is instantly worth some amount less than what you paid. Not a bad thing, just needs to be figured into the math.

I would recommend you get a loan from someone who reports to the CRAs though, becuase if you make all your payments, it will help your credit for 10+ years.

***** EDIT 2: BECAUSE ONCE IS NOT ENOUGH *****

You inicated the used value is 29k. My bad. But, any amount less than the value will increase the odds of favorable loan terms.