Newbie with Auto Loan Questions

[Anonymous]

Hi Everyone!

I have learned quite a bit from this website and have raised my credit score significantly in the last three years. I am looking at purchasing a used auto  (like most of us here) and was curious if anyone knows the effect of student loan debt on credit approvals. I am asking because about 6 months ago I went through the pre approval process for an auto loan and was asked by 2 lenders how much longer until I complete my degree. I guess I am a little confused as to why they would ask when I plan on completing my degree, Considering I am employeed full time by the Governement (4+ years). what I am wondering is does the fact that they are deffered hurt or help me? How does all of this play into my credit worthiness?

I was approved at that time with Capital One for 12% (YIKES) and Wells Fargo (i dont remember interest), the both asked this question. 6 months ago my credit score was below 600. Since then I have raised it to  TU: 667 , EQ: 652, EX: ??. I am hoping to get better rates this go around.

More Info if needed:

I have approx $24,000 in defferred student loans, I am still in school but no longer using borrowed money to pay my tuition so this amount will not increase. I will be graduating May 2012 with a BS and then continuing on for a masters. I should complete my education by 2014 and this is when my student loans will go into repayment.  I have paid off all owed debts other than student loans. I have 1 baddie on both reports, other items I was able to PFD. Perfect Auto loan history with chrysler financial, took out a $10,500 loan in 2007 and have never missed a payment.  Also have American Express, 2 capital one mastercards, $0 balances, no late payments. Since 2007 I have raised my credit score from the 480's to TU: 667 , EQ: 652, EX: ??.

Thanks!

[Tazman81]

Welcome to the forums.  The lenders were asking when you graduate because they wanted to determine if they needed to include your student loan payments in your debt to income ratio as they were calculating the monthly payments of your vehicle.   As far as FICO, having your student loans deferred is not really hurting or helping your score.  However, if you do have the means, I would start to pay down the student loans (preferrably pay on the unsubsidized ones first).  Even though you are not taking out any more student loans, if you have unsubsidized student loans, then they normally captialize the interest every 6 or 12 months (depending on the company) so your debt will continue to grow.

Based on your current scores and having a good auto loan payment history, it sounds like you are in good shape to be approved for a loan.

[Anonymous]

Thanks Tazman! I should of been able to figure that one out! =)

Great Advice on paying down the student loan debt. I have been paying the interest everytime the bill comes in the mail, it really can add up! I hate the Idea of paying interest on interest, if that makes any sense. I am in the process of working a budget to start chipping away at the student loans and this is the main reason I am not buying a new car just something that is more reliable. Once the student loans are paid off and I am 100% out of debt, I plan to save up enough cash and reward myself with an almost new car!