Need to purchase car: Subprime credit high income have co-signer with excellent credit fixed income

[Anonymous]

Hey there,

I need to purchase a car within the next month. A little background about my situation:

I have a high income and low debt to income ratio. ( yearly income ~120k total debt ~18k )

I have a current car trade line for my wife’s car that we are about to pay off with an inheritance. It has ~14k left and will be paid off this month. We purchased it through Chrysler capital in 2013 when we both had subprime credit and the interest rate was high and the payments were insane. We will be keeping this car for my wife’s use.)

I need a car by aug 1st with a new job promotion comes loss of company vehicle. However, despite working to improve credit, my credit is still prime. It depends on which bureau and Fico model you look at but currently my scores are:

Experian Fico 8: 615
Equifax: 579
Transunion: 589

Auto Fico 2 for
Experian: 449
Equifax: 556
Transunion: 593

It’s slowly going up but not near where I want it obviously.

My goal is to get a car payment that is not going to be simply placing the high interest longer term mess we are paying off with my wife’s car.

I first looked at Carvana, thinking used would be the way to go. They gave me an interest rate of 15%.

Any new dealership roughly gave me a interest rate of anywhere from 16.5-20!

My mother in law, who has near perfect credit ( score at 830) said she’d be more than willing to co-sign if it would help. However, she is on a fixed income and has her own lease in her name.

I’m truly not a wanting to have to do that, but if it lowers an interest rate significantly it is worth it to me.

I called around some dealerships and tried to get some answers questioned but they all tell you “we will make it happen” in typical salesman type mode and I like being prepared and Educated.

1- if she were to co-sign, who’s income do they go off? As I mentioned I have more than adequate income and dti- she has a fixed income.

2-when giving the interest rate/apr, do they only consider her credit score? do they do an average of some kind? Only mine?

Are we more likely to get a better interest rate going new/used? We were wanting to go new only because I have a family discount control number ( essentially giving us dealer invoice price) for any dodge/Chrysler/Jeep, and wanted to take advantage of it.

What is the likely difference in rates between lease and finance?

Thanks so much!

[Jnbmom]

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@Anonymous wrote:
Hey there,

I need to purchase a car within the next month. A little background about my situation:

I have a high income and low debt to income ratio. ( yearly income ~120k total debt ~18k )

I have a current car trade line for my wife’s car that we are about to pay off with an inheritance. It has ~14k left and will be paid off this month. We purchased it through Chrysler capital in 2013 when we both had subprime credit and the interest rate was high and the payments were insane. We will be keeping this car for my wife’s use.)

I need a car by aug 1st with a new job promotion comes loss of company vehicle. However, despite working to improve credit, my credit is still prime. It depends on which bureau and Fico model you look at but currently my scores are:

Experian Fico 8: 615
Equifax: 579
Transunion: 589

Auto Fico 2 for
Experian: 449
Equifax: 556
Transunion: 593

It’s slowly going up but not near where I want it obviously.

My goal is to get a car payment that is not going to be simply placing the high interest longer term mess we are paying off with my wife’s car.

I first looked at Carvana, thinking used would be the way to go. They gave me an interest rate of 15%.

Any new dealership roughly gave me a interest rate of anywhere from 16.5-20!

My mother in law, who has near perfect credit ( score at 830) said she’d be more than willing to co-sign if it would help. However, she is on a fixed income and has her own lease in her name.

I’m truly not a wanting to have to do that, but if it lowers an interest rate significantly it is worth it to me.

I called around some dealerships and tried to get some answers questioned but they all tell you “we will make it happen” in typical salesman type mode and I like being prepared and Educated.

1- if she were to co-sign, who’s income do they go off? As I mentioned I have more than adequate income and dti- she has a fixed income.

2-when giving the interest rate/apr, do they only consider her credit score? do they do an average of some kind? Only mine?

Are we more likely to get a better interest rate going new/used? We were wanting to go new only because I have a family discount control number ( essentially giving us dealer invoice price) for any dodge/Chrysler/Jeep, and wanted to take advantage of it.

What is the likely difference in rates between lease and finance?

Thanks so much!

---

With those scores your rates are going to be high. Why are your scores so low, do you have alot of negatives? I personally don't like the cosigner route myself but that's just my opinion. I wouldn't ever ask anyone as that is risking them financially even though everything is stable at the moment .

How high is the rate on your current loan, how is your wife's credit and income? Could she refinance on her own?

If you are getting 14K, you could easily get a decent used car and still have some left to knock down your current loan?

Just my radom thoughts

[Anonymous]

Interest rates on new cars tend to be lower than interest rates on used cars because the lender views a new car as less risky of an investment. Also, how is your wife's credit? I also tend to agree with the prior post, what's holding your scores down?

[Jannelo]

See what you pre-qualify for with Capital One Auto Navigator online.  I have an Experian Fico 8 score of 594.  My automobile loan offer was 6.28  for a 48-month or 60-month loan or 6.99 on a 72-month loan on the 2016 car I chose with one of their participating auto dealers.   With my  low scores,  I considered myself lucky, and thankful, with the interest rate I received.  

[Anonymous]

I saw others mention that in forums! I just did the prequalify app and I uploaded income info waiting for verification but I’m surprised at how low some rates are. Some as low as 6.5. I’m just curious to know if that’s pretty solid or will it change dramatically when taken to dealer.

[Anonymous]

From what I’ve seen on here, the CapOne pre-qual rate has been fairly solid.

[Anonymous]

I was in your position 4 years ago minus the co-signer, my scores were actually worse BTW.  Its not fun at all but here is my advice.  First is you have time, August 1st is a pretty good amount of time, do everything you can to bring those scores up, every point counts.   I would consider the option of using the inheritance cash to pay off any credit card debt or to settle any collections as those are oppourtunites to get a better score thus better rate on this next car.    

Capital One is your best option in my opinion, you don't really want to go into a dealer without a preapproval if you can help it.  They tend to prey on the desperation of sub-prime customers.  I had to take a 12.5 % Roadloans loan then I worked by rebuild and 4 months later refinanced it to 6.25% with Capital One and then a week later I joined NFCU and refinanced again at 4.29%.  I was able to put money down and negotiated a good purchase price (no warranties or any of that crap) which gave me the ability to refinance as my credit improved and saved thousands in the process.  I would suggest joining a good credit union and put tons of effort into rebuilding up to August and then after.  

The good folks here helped me tremendously at a time that I thought I would be stuck with high interest and crappy credit forever.  They can do the same for you.

[Anonymous]

I know you mentioned Dodge/Chrysler/Jeep however I do know for a fact that Audi Financial Services will look at the person with the higher beacon and pretty much disregard the Co-Signer. I have seen a 800 beacon with a 500 beacon get approved for 2.9%

[Anonymous]

Ill side track a little here. Why not just buy a used car outright? If you are making $120k a year, are fully paying off one car, could you not buy something outright for $10k-$17k? You will have no car payments, can work down the very little debt you still have, and will repair your credit. 

[Anonymous]

It’s eithef one or the other, not both. I have 15k - I could buy a car outright with it but then I’m still stuck paying the car I have nows tradeline that’s a whopping 685 a month.