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New Car Loan

New Member

New Car Loan

Credit Score: 584EQ, 564TU, 586EX

AAoA: 8 yrs

# of positive trade lines: 9 open/current

# of negative trade lines: 3 collection accounts, 3 accounts with late payments (last late payment was over a year ago)

Income: $130k/yr or $10,883/month before taxes

Lenght of Employment: 7 months current employer, 1 year prior to move with another

Previous Loan Experience: Car Loan "Charge Off", was laid off in 2013 :/

Debt-to-Income (DTI): About 20%

Year of Car: 2016

Miles: Under 100

Purchase/Refinance: Purchase New

Requested loan term (XX Months): 60 Months (yeah, I know, I know)

Down payment amount: up to $5000-$6500, maybe more

Co-borrower/Co-Signer: None/None Available

Other: Purchase price of desired car is $29-34K. In 2013 I was laid off and my credit suffered. Since I regained employment in late 2014, I have been able to maintain a near perfect payment record. The big ding is obviously the auto loan charge off. My credit was much worse over a year ago lol... I'm under no illusions about my situation.

Message 1 of 8
7 REPLIES 7
Regular Contributor

Re: New Car Loan

Have you worked to have some fo those collections and lates removed from your CC reports?

You have a strong income. My suggestion would be to save a 50% downpayment and purchase a used late model vehicle. Then refinance in a year once your score has improved. I suggest used and large downpayment to increase odds of approval now and down the line when its time to refinance. If you have too much negative equity it will suck to refinance.- 

Message 2 of 8
Established Contributor

Re: New Car Loan

Capital One will approve you with your scores so long as you have no negative 'auto' history with them and this will be your only open auto loan. It will be subprime. They have a max exposure on subprime auto loans of $35K so your requested amount will fit. Be prepared for a higher rate but likely single digit based on the information you provided (down payment, LTV, term and that it is a new car). You will most likely be asked for income and residence proof as well.

I understand others will advise you against your intentions and attempt to steer you towards a different process of purchasing your next car but I am not a lifestyle advocate and see this forum as an Auto Loans discussion forum (no offense to anyone intended) and prefer to limit my answers to the facts based on the questions asked.
Message 3 of 8
New Member

Re: New Car Loan

Thanks for the reply.

I have one collection that is supposed to be removed this month, it's from when I lost my job and got evicted. And I'm working on the other two right now.

Is your primary viewpoint that a new car based on my situation isn't possible or that the terms would be unacceptable? What about with say 30% down? Do you think that will attract better terms?

I am a lot better with managing personal finances these past few years after getting laid off, but had previously to 2013 stretched myself on lifestyle living in Los Angeles like a moron (I also made more back then). Paying and repaying for those sins now lol

Thanks!
Message 4 of 8
Senior Contributor

Re: New Car Loan


@AlabamaMGN wrote:


Is your primary viewpoint that a new car based on my situation isn't possible or that the terms would be unacceptable? What about with say 30% down? Do you think that will attract better terms?



You can probably get a new car... at a not so good rate.

 

Bottom line is lenders will see that auto C/O and not like it.  Not sure if a bigger down payment would help all that much.

 

My suggestion would be what was said upthread... start small with a used late model vehicle.  That's what I had to do... and 2 years later got my dream car... 2015 Dodge Challenger R/T.

Gardening since: 3-25-15
Message 5 of 8
Regular Contributor

Re: New Car Loan


@AlabamaMGN wrote:
Thanks for the reply.

I have one collection that is supposed to be removed this month, it's from when I lost my job and got evicted. And I'm working on the other two right now.

Is your primary viewpoint that a new car based on my situation isn't possible or that the terms would be unacceptable? What about with say 30% down? Do you think that will attract better terms?

I am a lot better with managing personal finances these past few years after getting laid off, but had previously to 2013 stretched myself on lifestyle living in Los Angeles like a moron (I also made more back then). Paying and repaying for those sins now lol

Thanks!

Oh, you will get approved for a new car.

 

My recommendation of a used car is to improve your odds of getting approved for a refinance in a year or so. The problem with new cars is you are taking a massive hit on its value up front. So if you lose 40% of its value on day 1 and with a high interest rate your balance might be too high to refinance in a year. You might be fine but you can see examples in this forum of people running into this issue. They want to refinance but cant because the bank wont approve a loan for more than the car is worth. You might get stuck with that 20% interest even when your credit improves.

 

If you can wait till the collections and lates get removed from your credit then that might help you a lot.

 

I'm not making recommendations of lifestyle choices. I didnt advise again buying a car because getting the loan will actually help your credit.

Message 6 of 8
Established Contributor

Re: New Car Loan

Many credit unions have refinancing options for original owners of new vehicles up to 3 model years old at lower rates and higher LTV guidelines than just applying for a used car loan to help circumvent the depreciation issues.
Message 7 of 8
Senior Contributor

Re: New Car Loan


@fury1995 wrote:
Many credit unions have refinancing options for original owners of new vehicles up to 3 model years old at lower rates and higher LTV guidelines than just applying for a used car loan to help circumvent the depreciation issues.

Mine was more of a credit issue... at the time I had a Ch 13 reporting and scores in the mid 600's.

 

I traded my 2009 vehicle in 2013 on a used 2012 model $20k at an 8.9% rate... then in Jan 2015 I applied for a loan with my home CU on my dream car... a $40k 2015 Challenger.   My home CU denied the loan.. citing "not enough experience at this level" I guess because the new car was twice the value?

 

Another CU did approve the loan.. 4.49% with $0 down.  I didn't complain... I still had a Ch 13 reporting. EX FICO was 680... Auto FICO was 703.

 

Here we are 15 months later... the baddies are gone... and with the payment history I'd wager that I can refi at will at a top rate.  It's my first ever new car and I can still get new car rates.

 

 

Gardening since: 3-25-15
Message 8 of 8
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