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New Car Loan Approval

hmorrow04
New Visitor

New Car Loan Approval

My credit union has a financing special where they will loan up to 125% of MSRP on a new car. I’m interested in getting a new vehicle, but I have a high DTI right now (I took my sibling’s small children in for almost a year and it really impacted my finances with all the time off and the added expenses). My DTI is about 45% currently (approximately 50% if you include a credit card I am only an authorized user on), but after the loan, my DTI would be essentially the same as I will be trading my current vehicle in (which is financed) and using the extra funds to pay off a credit card, pay taxes/licensing fees, and obtain GAP coverage. I have a 701 credit score using FICO Score 8 using TransUnion (which is what the credit union uses). I have an excellent payment history (no late/missed payments) and my credit score should increase significantly if I pay off the credit card with the extra funds. Will my high DTI kill my chances or will most credit unions look at the fact I have been making this work just fine for the last several years?
Message 1 of 4
3 REPLIES 3
Yes-Its-Me
Super Contributor

Re: New Car Loan Approval

Welcome to the board... To answer your question correctly, how old is your credit file?  And which Credit Union were you thinking of getting a loan from?

Message 2 of 4
hmorrow04
New Visitor

Re: New Car Loan Approval

My oldest active account is 14 years and my average is 7 years. It is my employers credit union (fairly small).
Message 3 of 4
samadkins29
Contributor

Re: New Car Loan Approval

I would recover from the incurred debt before going out and buying a new car.

 

Im not saying you don't deserve a new car, but I don't get the point of having to have something new while you currently hold 50% DTI? Even if you were planning to use the auto loan for some type of debt consolidation, Id still consider passing on it. 

 

Opinion aside, yes your credit union will look at your DTI. Will it kill your chances? Most likely not - but are you sure the 125% is available for all? A lot of times those "bonus" terms are only reserved for people with excellent credit. 

Message 4 of 4
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