Need Auto Loan on a Fixed Income...is this possible?

[Bound_for_850]

Hi all.  I need some major advice.  I live on a fixed income and I am trying to get an auto loan.  My score is  good (TU:705/EX:688/Exp:680) but the problem I was told I have is the banks don't like the source of my income (social security)-- because they can't come after me if I default.  Derogs: I have a BK that was discharged 4/08 and will fall off my report in 11/09 (I filed Ch 13 back in 11/02).  Plus 2 other negs that were paid through the BK and discharged. (These are going to fall off the report in 11/09 as well) Since the BK I got a CC the bal is $75 and the CL is $900, never late. I am very responsible with my credit.  I live off SS and student loans that are deferred (still in school).   I have a mortgage, 1K/month, with absolutely no lates!! I pay everything on time.  I was trying for a car around 20K (probably put 3K down) and Bank of America denied me, Chase denied me & Volvo financing denied me as well.  I don't know what to do or where to turn because the source of my income won't change.  The finance manager told me that no one would finance me because of SS and that my income is just under 3K, they want 4K/month or more.  Can anyone offer me any advice, I need a car like yesterday.

[Anonymous]

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Bound_for_850 wrote: 
Can anyone offer me any advice, I need a car like yesterday.

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The following advice is given based on factual experiences with the auto finance industry. It is not meant as a personal attack.

1- You have a really poor and minimal recent credit history. STRIKE ONE

2- You are trying to Buy way too much car for what you can afford (20K-3K+FEES/TAXES=19K which equals 380 a month car payment) STRIKE TWO

3- You simply do not make enough money to purchase a car in that price range, just under 3K. STRIKE THREE

Now:

1- is pretty self explanatory, You have little to no good credit, nor have you re-establised credit in any meaningfull way.

2-3: Well you make just under 3k so lets say $2750 a month.

$2750- $1000 mortgage, minus 650 for utilities and taxes and insurance leaves you with 1100 a month to live on, subtract a 400 car payment and 100 for car insurance and you cannot afford a vehicle as you literally have no money left over each month to eat.

Your student loan income that is deferred is not really income as if you don't go back to school you no longer have it and you need to start paying them off.

The fact is you cannot afford a car in the price range you want, assuming you are financeable with all the negatives you could possibly be financed for something 15K or cheaper.

You may need to buy a 3K beater car.

After all your schooling will you be able to find employment with a higher income?

[Anonymous]

I'm confused because you say you live off SS and Student Defferred loans.........Where I come SL's are negatives. and SS is your income.......

So........do you have any PT job?  The way around this WITHOUT fraud would be I have a job and my income is X.

Your scores are MORE than decent and shouldn't cause that much of an issue......the other poster forgot that taxes and insurance are included in your mortgage payment so I am confused again.

SS $ is more secure than ANY job out there right now, so you shouldn't have an issue buying a car ! 

Volvo is "exclusive" go with GM or Ford or one of the good guys that offer low interest rates for which you should qualify for.

I own a KIA, the best car for my money thus far!...and I have owned & fiananced some kick ass cars $$ wise !

Good Luck! 

[Anonymous]

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@Anonymous wrote:

Your scores are MORE than decent and shouldn't cause that much of an issue......the other poster forgot that taxes and insurance are included in your mortgage payment so I am confused again.

Good Luck! 

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Property taxes and personal home insurance are not, by standard that I know of, included in all home loan monthly payments. At least in my state.

And yes those particular credit scores are not terrible, until you take into account the BK without re-establishing, the low credit lines currently had, and the low available monthly free income

[Bound_for_850]

Thank you usmc58555 for your advice.  I've been working so hard on my scores, and learning how to manage credit & money; I thought my 680-700ish scores would make me a knock out --guess not.  I wanted a car for about 9K-11K but since my scores were higher they wanted to see where I would fall.  It never occurred to me that I didn't have enough "substantial credit". I thought the student loans, mortgage, and the CC helped and all the derogs were falling off so my score was climbing steadily. I read here that after BK ppl got student loans and secured CC's (that reported to all 3 CB) and an auto loan.  BTW, I have 8 open accounts in good standing and 3 negs. So I am aiming to high getting a 20K Volvo eh?  The finance lady has me totally spooked because she said the first problem was the source of my income and then the second problem is not enough income.   My taxes and insurance is included in the mortgage, and my utils are 500 or less each month (about 350 -400 in the summer months).    Yes, I will be able to find employment at a much higher income than what I have now.  So the bottom line is I need more income, that's not SS, and I have to buy a piece of crap car.  I'm afraid if I go to Bill & Ted's auto expo then I will end up with a car that was in Hurricane Kurtrina or Ike!   This is so depressing.

So how could I get "substantial credit" or build more credit if I can't get financed anywhere?  I don't understand why I am not financable, my scores are good... I don't know what to do?

[Bound_for_850]

Thank you 1111mel for your advice.  Social Security is my income and that is what I live off of.  The SL's I use to supplement (it's not really that much) the cost of my education such as books, supplies & transportation.  No, I do not have a PT job since I am in school full time.   I never thought that SS money would be a bad thing, it never occurred to me to tell them that ahead of time -- it would have saved me a few hours and a trip to the dealership. 

I'm bummed because I worked so hard through the BK to get my scores from 400's back to 700's and it's not good enough.  I understand that I need more income, but to be flat out denied because of the "source" of my income just floors me!  How will I refinance my home?  I was planning to do that when all the negs fell off in nov.  I just need a car now,  which is why I am doing this now.

Doesn't Ford own Volvo, so since Volvo turned me down so won't Ford?   The finance lady told me to not let anyone else run my credit because they are all going to turn me down and just ruin my credit.  Was she right?

[alsawye]

well i just got financed for 21,272.69 through wachovia at $2500 a month income (not SS) with only 2 years credit history (no negs)   no i know our reports are way diff but my point is that it CAN be done, you just have to find someone that wants your business, and is willing to go to bat, my advice 1) stay away from volvo  they might have turned you down due to the small amount of extra income and volvos cost a lot for maintenance, i just traded in mine for a 09 hyundai elantra 2) go with something newer because lenders know that it wil be more likely to outlast the loan 3) unfortunately if still no love, you might just have to get a beater for now and wait til december and get a nicer car then

[Anonymous]

To last poster....

Post Bk financing is alot different.  Once a lender sees a Bk in the past, they will not take risks taht they might take otherwise (short credit history or questionable income)

I believe the reason ss income is questionable is that they if you default they can not file a claim against it (i.e garnishment) to recover the money you owe.

And yes, if you are making roughly 30-35K per year you are way overshooting trying to buy a 20K car.  I think it is generally unwise to ever have a car laon that is more than 30% of your yearly income... For example for a 30K income, I would try very hard to keep any car loan I was looking for at under 10K.  It is not a hrad nad fast rule and as income goes up, so can the number...

Anyways, if you are in school and living on Gov't loans/assistance you should not be looking for a 20K vovlvo that is also somewhat more expensive to operate/maintain.  Find a 3-4 year old certified used car like a camry or a civic/accord and buy it.  If you have extra money, put it towards the car payment to pay it off early and then when you graduate tradeit in and get the nicer car.

[Bound_for_850]

Thank you everyone for your really great advice; this helps alot!  I don't know who to assign a "solution" to for you all provided me with a solution, I am VERY grateful!    Now that I have pulled myself out of the 400 dungeon up to the land of 700's I will continue my education and work on increasing my income and establishing credit.

BTW, I did some calling around and spoke directly with the finance managers at various dealerships. Carmax will work with ppl on SS and within my income; so will Hyundai.  The finance mngr at Carmax advised me to look at cars 11K and under.  I'll keep a picture of the Volvo on my wall for inspiration.