Ready to shop for a new car, but have low scores

[shazu]

Hi,

My husband and I are ready to shop for a new vehicle.  Currently we have no auto loans, but our van needs too many repairs and is 10 years old with 145,000 miles on it.  I'd rather put money towards a new (used) vehicle.

The last time we shopped for a car, we still owed on the one we were driving.  We did have scores in the lower half of the spectrum (I don't know the numbers, though) and bought our van at a 12% interest rate.  We had put very little down so most of our trade in went to pay off the car loan.

Now we have different circumstances:

Cons:

Low Scores (this website shows us at 560 & 590 for Eqifax, with all bills currently being paid on time, mostly the low score due to high credit usage and some old 30-day lates...old auto loan shows (2) 30 day lates)

Low down payment - aprox. $1,000 trade in with old van, plus $1,000 down

Pros (?):

Make $85,000/year before taxes
Own a home

Can afford $350 - $400/month payment (But of course would rather have lowest payment possible).

No current car payments

I know the low scores = high interest rate, so realistically we're probably shopping for a $15,000 vehicle.

Does anyone have an idea if the pros listed will be of much benefit considering the low credit scores?  We have been on track paying our credit cards, but really should get the balances down ASAP.  I just need to get a new vehicle before the current one bites the dust.

Thanks for any help,
Shannon

[Anonymous]

Others on this forum have tried roadloans.com, although I can't vouch for them personally. Maybe try a goodwill letter on your old 30 day lates?

[daisyduke]

Hi,

Can you try to raise your score first before apping for a new auto loan? Pay down some debt, get your utilization b/t 1 - 9% and that should raise your score which I would think might qualify you to get a better deal on finance rate.

I too am shopping for another vehicle - will buy in December...started to clean up my credit in april so that I don't get hit with some high interest rate.

Ford I'm pretty sure is more lenient. I had a terrible low 500' score, but got co signer and my rate was 1.5 or 1.9%, but that was a lease rate....Or consider joining a CU and get a loan.

Also you state what you can afford, payment wise - your payments are predicated on the actual finance rate you will recieve - so with that said, say you get another 12% loan, you could afford a car b/t 12.5 K and 15 K for 48 months with 2 k down total. But if that interest rate is higher, the less car you can afford.  Always negotiate car price first. You will know what you can afford based upon the financing you can get.

I plan to get financing in hand BEFORE i visit the dealerships. If the dealer can beat that rate, then fine, I will go with what they offer.... I plan to  join a CU at the last minute and apply for an auto loan that same day.

[Anonymous]

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@shazu wrote:

Hi,

My husband and I are ready to shop for a new vehicle.  Currently we have no auto loans, but our van needs too many repairs and is 10 years old with 145,000 miles on it.  I'd rather put money towards a new (used) vehicle.

The last time we shopped for a car, we still owed on the one we were driving.  We did have scores in the lower half of the spectrum (I don't know the numbers, though) and bought our van at a 12% interest rate.  We had put very little down so most of our trade in went to pay off the car loan.

Now we have different circumstances:

Cons:

Low Scores (this website shows us at 560 & 590 for Eqifax, with all bills currently being paid on time, mostly the low score due to high credit usage and some old 30-day lates...old auto loan shows (2) 30 day lates)

Low down payment - aprox. $1,000 trade in with old van, plus $1,000 down

Pros (?):

Make $85,000/year before taxes
Own a home

Can afford $350 - $400/month payment (But of course would rather have lowest payment possible).

No current car payments

I know the low scores = high interest rate, so realistically we're probably shopping for a $15,000 vehicle.

Does anyone have an idea if the pros listed will be of much benefit considering the low credit scores?  We have been on track paying our credit cards, but really should get the balances down ASAP.  I just need to get a new vehicle before the current one bites the dust.

Thanks for any help,
Shannon

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1- bad news: If your van has that much wrong with it, and its that old and has that many miles- you are NOT getting $1,000 for it.

Your utilization is killing you.

I hate to suggest this but I recommend buckling down and downgrading your lifestyle a LOT, budgeting severely and saving up for a $5K plus down payment to ensure fianncing at a good rate with your scores.

If you find it works? keep doing it and pay some of your debt off.

Drive the van until it dies, in 90% of cases the cheapest vehicle you have is the apid off one you have. 141K miles and 10 years your van has more value if you can keep driving it for 3 months and not pay a 350 a month car payment for those months then what you are getting on a trade in.

Granted if you purchase a more economical on fuel vehicle it could save you real money.

But you need to surpass sub 600 scores and you need a down payment for that,

[Zahnrosen]

I agree with the post above. If you can spend a while working on your credit utilization then you'll be in much better shape credit wise.