Lot's of Questions from a First Time Buyer

[Anonymous]

Hello all,

I'm looking at trying to get a car loan in July, after I've been at my present employer six months.  I'm 30 and I've never had a car loan before, or even applied for one, so I have tons of questions.

I'm looking at an economy level car that's good on gas, maybe a Chevy Aveo or a Ford Focus, and probably getting it through a rental car company trying to update it's inventory, so max 11,000. Looking at putting 4-5,000 down.

My scores last time I checked were in the high 500's and one in the low 600's.  At the time I almost maxed out my credit cards, but I have since paid off all but one completely (at the end of February I'll be completely free of credit card debt). So,I'll be looking at no recent late payments, no credit card debt, and one medical collection account for $300 from 2004 that's closed but still shows up (to make a long story short, my son died, and his dad was responsible through court order for what my insurance didn't cover, but he didn't pay it, so they came after me). But overall, I'm cleaning up my credit slowly but surely.

I have low interest government student loans close to 17,000, I've always paid as agreed. I'm saving up for a down payment.  Would it be smarter to use what I'm saving for the car (about 700/month) to pay down the loans? Which looks better, a bigger down payment, or lower student loan debt?

I have had Chase bank for almost five years, and have had a credit card with them for over a year now that has a zero balance. I've never been late with them, overdrawn, or anything.  Does this raise my chances of being approved for an auto loan through them?  I've been considering going to a credit union instead....

I don't make that much money (less than 25,000 a year), but my rent is only $200 because it's a mix of keeping the place up and helping take care of a family member, plus utilities, so my rent's not high.  It's been the case for over three years.  Will they take that into account when they look at my ability to pay a car loan on my income? Will I need a cosigner?

Are there companies that finance less than $7,500?

Thanks for any help!

[settleordelete]

I would pay down atleast half of that student loan, get my income up by getting a raise or second job then go buy my new car if I were you.

[WhirledPeasPlease]

First of all, I'm very sorry about your loss. 

 If I were you, I wouldn't worry much about the SL debt.  It's there, it's not much of a hit on scores and it isn't going anywhere anytime soon.  Continue saving 700/mo and socking it away.  I would not use your whole savings for the down payment unless it's absolutely necessary to obtain financing.  Building your emergency fund is a HUGE plus -- at least in my eyes.

I would also suggest pulling your current scores from myFICO (fakos don't count) to get a good idea of your current credit picture.

As kind of an aside, I would also suggest staying away from a former rental car.  I did that ONCE and will never do it again.  People beat those cars to death since they're just 'rentals'.  My car was constantly in the shop for one thing or another.  I'd feel much better w/ a certified used car from a dealership. 

Disclaimer (lol):  Then again, I've become a car snob.  It's not that the car has to be amazing or pricey, I am just really comfortable with leasing.  I was eaten alive w/ car repairs in the past and have vowed that I never want to worry about that stuff.  I also admitted to myself that every time I've paid off a car loan, I've purchased again w/in 6 months.  If I'm going to have a car payment, it might as well be for something I want and that is really reliable.