Looking for an auto loan.

[Anonymous]

Hello, hopefully someone could shed some light on my situation. I have a couple of questions and I will provide as much detail as I can.

So I am looking at getting a new car soon and trying to set a limit of $20k. My first concern is I have never had an auto loan under my name. My monthly gross salary is $3,520. My debt to income ratio is 3%. I pay $50 a month on my student loan and $200 a month in rent. My FICO score is around a 690. I have 2 credit cards with a total limit of $1,500 between both along with a student loan with $850 left on it. The only bad is one of my credit cards has a 60 day late payment effecting my score.

How likely am I to get approved for an auto loan. I don’t care about APR. just getting approved. I’m trying to stay under $20k because of the lack of payment history on big loans or credit lines to help approval rates. Also what would be a good percent of the cost to have as a down payment to increase my odds?

Thank you in advance for any input.

[Anonymous]

Follow this link https://www.capitalone.com/cars/prequalify and fill out the info and see what they prequalify you for. It is a softpull so no ding to your credit. I used CapOne Auto Nav last year to purchase a brand new car but I refinaced a month later for a much better APR with my local credit union.

This will help give you a baseline of where you might stand for free. If your score is close to the 700 range you should get a pretty good APR and the 60 day late payment shouldn't stop you for getting an auto loan. So start there and see what they toss back at ya.

[Anonymous]

I would consult the local credit unions that are in you're area BEFORE you sign the line on you're new dream car. Consult with the delearship before they actually pull ANYTHING to see if you can get 0% APR. This is the ideal as you will only be paying for you're car, and saving money in the long run. Ask to see if they have any credit unions that they work with that provide pretty good deals. I have bought many cars by dealing only with my credit union. Credit Unions typically will help you determine if they will work with you, and if not provide 

Another thing. DO NOT think you have to buy the same day. You can deffinitly look for cheaper interest rates. Cars do not move this time of year as many people are recovering from Christmas, and dealing with horrific weather. 

More than likely you will get approved as you stated you have not have any issues thus far, and make pretty significant income.

[Anonymous]

For an update. I did that capital one prequalify. Got approved at 8.49% APR. I was expecting to get denied. But from research I don’t know how I feel about the capital one prequalify. I’ve seen a lot of people say they got approved them went to the dealership and got denied. I’m not worried if my apr goes up a little after a hard pull. Just really worried about getting everything together and showing up to just deal with problems

[ridgebackpilot]

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@Anonymous wrote:
I don’t care about APR. just getting approved. 

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You should care about APR! It determines the cost of your loan. A high APR means that you'll pay hundreds of dollars more interest over the life of the loan.

You can probably do better than the APR you were quoted by CapitalOne. A dealership might be able to do better. Good luck!

[DaveInAZ]

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@Anonymous wrote:
For an update. I did that capital one prequalify. Got approved at 8.49% APR. I was expecting to get denied. But from research I don’t know how I feel about the capital one prequalify. I’ve seen a lot of people say they got approved them went to the dealership and got denied. I’m not worried if my apr goes up a little after a hard pull. Just really worried about getting everything together and showing up to just deal with problems

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Great, use that as a "ceiling" the highest APR you'll pay and see what the dealer can do for you or a credit union. I bought a new car last year and as I recall Cap One offered me around 5.99% and I'm good with Cap One, a couple high limit CCs I've had for years. But I went with a credit union for 2.99%. And you do care about the APR, with the typical car loan of 60 months a single 1% difference in the APR will be hundreds of dollars in interest. With your low debt to income you should be able to get 5% or better.

[Anonymous]

Op you absolutely should care about apr. That $20k limit can end up costing you $40k total if the apr is high enough. You don't wanna groosly overpay for a car that won't even be worth half the sticker price once the loan ends. The number 1 thing you wanna do first when buying a car is securing financing at the best terms/rate possible. Walk into the dealership with an approval in hand. Do not settle for a high apr just to get approved. Read this forum about all the people who made this mistake and are stuck thousands in the hole with no way out. Go apply for a loan at your local credit union. I'm willing to bet they can beat capital ones rate. Also check with the dealer for 0% finance offers. Also be ready to walk away from any car if the terms are not right. Do not settle, the dealer loves desperate people just trying to get in a car. They will get you into whatever car you want while simultaneously straight robbing you on the terms. Hope you take this advice.

[Anonymous]

One word OP - PenFed

[Anonymous]

APR is the most important part about borrowing money anywhere! You do not want to pay a bank thousands of dollars if you do not have too right?

Auto Rates have gone up but not enough to justify that with you're going circumstance.

[Anonymous]

Thank you everyone for all the advice on this. For an update. Still have a couple months before I even try applying. I know the capital one came back with the 8.49%. But I’ve read a lot of bad things about them. Also, I have so credit card balances that brought my score down. But I plan on having them back at $0 and reported to the bureaus before applying. Currently with my dropped score I’m at a 620. But the simulator is saying once I get back to $0 it will be at a 690-700. I guess thanks to you guys I feel more confident in this process. As long as I keep all my balances at $0 and make sure I have 20% down I should be fine