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Rebuilder looking for a car loan...advice?

Your FICO® Scores can impact your loan interest rates, terms, approvals and more.
Established Member

Rebuilder looking for a car loan...advice?

I have a 515 FICO (Discover scorecard) and unpaid baddies on my CR. One of these baddies is a car loan where the car was repossessed. The CR has no notation of any reposession though. It just shows 30,60,90,CO at the time of reposession. I do have a letter from the creditor on this car loan that is offering a 35% payment to settle the remaining balance.

 

I only have 1 CC with Credit One but plan to get OpenSky for a 2nd CC to drive FICO scores up. So I can see my score going up a little just by paying these CCs on time.

 

Would taking care of the baddie car loan I have greatly help my chances to get another car loan (even if settled for less than full amount)? With such a low FICO, what can I expect to get asked for a down payment if approved for a car loan?

 

Thanks!

21 REPLIES 21
Super Contributor

Re: Rebuilder looking for a car loan...advice?

You're going to need a co-signer. Your score is too low and that repo is having a more serious effect on your auto fico score, which is probably in the 400s. Taking care of the repo won't remove the charge off from your report and any underwriter can put 2 and 2 together to equal repo. If you can't get a co-signer, you'll have to go to a buy here/pay here dealer and they're gonna want at least 30% down. The ones around here typically want 40% down before raking you over the coals with a double digits interest rate. My advice is to save up some cash and buy a used car outright. Civic, Accord, Camry. If you want something a little nicer, get an older Lexus. Typically with those you only have to worry about oil seals and CV joints. The engines of late 90s to early 00s will last you 300k miles with regular maintenance.








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Message 2 of 22
Established Member

Re: Rebuilder looking for a car loan...advice?


@Brian_Earl_Spilner wrote:

You're going to need a co-signer. Your score is too low and that repo is having a more serious effect on your auto fico score, which is probably in the 400s. Taking care of the repo won't remove the charge off from your report and any underwriter can put 2 and 2 together to equal repo. If you can't get a co-signer, you'll have to go to a buy here/pay here dealer and they're gonna want at least 30% down. The ones around here typically want 40% down before raking you over the coals with a double digits interest rate. My advice is to save up some cash and buy a used car outright. Civic, Accord, Camry. If you want something a little nicer, get an older Lexus. Typically with those you only have to worry about oil seals and CV joints. The engines of late 90s to early 00s will last you 300k miles with regular maintenance.


Thanks for the useful information! Yes, I'll be looking for a used car anyway. 

Message 3 of 22
New Contributor

Re: Rebuilder looking for a car loan...advice?

Hi Aglarry,

 

When you’re a subprime buyer credit isn’t the main factor lenders are worried about - it’s your job time. There are several subprime lenders that will give you an auto loan, granted at 22.99 - 24.99, so long as you have good job time and income. A co-signer will definitely help you get a better rate, but if you have at least a year on the same job and you’re paid with a paycheck stub with taxes taken out there are several options available: Credit Acceptance, Westlake Financial, American Credit Acceptance, Nationwide to name a few.

 

How old is the auto charge off? So long as it’s older than 6 months, preferably 12 it’s aged and it’s not a huge factor anymore. Two auto charge offs and it gets much harder.

 

The amount of down payment you’ll need depends on the vehicle and how the dealership is in the vehicle. Subprime lending is entirely different than prime because lenders will only give the dealer a percentage, usually 80-90% of clean trade, of the value of the vehicle. The bad thing is when you’re a subprime lender you don’t really have options. The dealer is going to find out which vehicles work with the lender programs they have for you and that’s what you get. Right now you don’t really have the luxury of choosing.

 

Now depending on the franchise store they might be able to throw you in a new vehicle. The reason being is when I worked at a Toyota dealership in Florida we were able to throw high 400s in new Toyotas through our captive because our portfolio was always in the positive - it’s referred to as dealer consideration. We sent 75% of our business to Toyota Financial that they allowed quite a few baddies, although they didn’t qualify, because we sent so many good buyers there. The reach a franchise store has sometimes is just ridiculous. 

Starting Score: (5/01/2017) -- EXP: 495; TU: 445; EQ: 460
Current Score (05/28/2019): EXP: 672; TU: 692; EQ: 685

Target Red - $500
Discover It Cash Back - $1000
Capital One Quicksilver - $600
US Bank Cash+ Visa Signature - $1000
Message 4 of 22
Established Member

Re: Rebuilder looking for a car loan...advice?


@jordandhale95 wrote:

Hi Aglarry,

 

When you’re a subprime buyer credit isn’t the main factor lenders are worried about - it’s your job time. There are several subprime lenders that will give you an auto loan, granted at 22.99 - 24.99, so long as you have good job time and income. A co-signer will definitely help you get a better rate, but if you have at least a year on the same job and you’re paid with a paycheck stub with taxes taken out there are several options available: Credit Acceptance, Westlake Financial, American Credit Acceptance, Nationwide to name a few.

 

I went to the Credit Acceptance website to look around and saw this "Everyone is Approved. Enrolled Dealers can approve everyone." So how would something like that work? Would I first have to get approved through Credit Acceptance so they can let me know which local dealers are Enrolled Dealers?

 

How old is the auto charge off? So long as it’s older than 6 months, preferably 12 it’s aged and it’s not a huge factor anymore. Two auto charge offs and it gets much harder.

 

My CO is more than 2.5 years old now. It's the only car loan CO I've ever had.

 

The amount of down payment you’ll need depends on the vehicle and how the dealership is in the vehicle. Subprime lending is entirely different than prime because lenders will only give the dealer a percentage, usually 80-90% of clean trade, of the value of the vehicle. The bad thing is when you’re a subprime lender you don’t really have options. The dealer is going to find out which vehicles work with the lender programs they have for you and that’s what you get. Right now you don’t really have the luxury of choosing.

 

So let's say Credit Acceptance refers me to a few local dealers to visit. I go to these local dealers and I won't be able to choose which car I'd like? Rather they would tell me these specific vehicles are the ones we can get you approved for?

 

Now depending on the franchise store they might be able to throw you in a new vehicle. The reason being is when I worked at a Toyota dealership in Florida we were able to throw high 400s in new Toyotas through our captive because our portfolio was always in the positive - it’s referred to as dealer consideration. We sent 75% of our business to Toyota Financial that they allowed quite a few baddies, although they didn’t qualify, because we sent so many good buyers there. The reach a franchise store has sometimes is just ridiculous. 

 

For now I'm focusing on a used car. However, if I were to change my mind and look for new, how would I know which of my local franchise stores could have such a leniency for approving low scores? Using Toyota as an example, would I start off by calling local Toyota franchise dealerships and checking which bank is the financing through, hopefully Toyota Financial?

 

Thanks!


 

 

 

Message 5 of 22
Super Contributor

Re: Rebuilder looking for a car loan...advice?


@aglarry wrote:

@jordandhale95 wrote:

Hi Aglarry,

 

When you’re a subprime buyer credit isn’t the main factor lenders are worried about - it’s your job time. There are several subprime lenders that will give you an auto loan, granted at 22.99 - 24.99, so long as you have good job time and income. A co-signer will definitely help you get a better rate, but if you have at least a year on the same job and you’re paid with a paycheck stub with taxes taken out there are several options available: Credit Acceptance, Westlake Financial, American Credit Acceptance, Nationwide to name a few.

 

I went to the Credit Acceptance website to look around and saw this "Everyone is Approved. Enrolled Dealers can approve everyone." So how would something like that work? Would I first have to get approved through Credit Acceptance so they can let me know which local dealers are Enrolled Dealers?

 

How old is the auto charge off? So long as it’s older than 6 months, preferably 12 it’s aged and it’s not a huge factor anymore. Two auto charge offs and it gets much harder.

 

My CO is more than 2.5 years old now. It's the only car loan CO I've ever had.

 

The amount of down payment you’ll need depends on the vehicle and how the dealership is in the vehicle. Subprime lending is entirely different than prime because lenders will only give the dealer a percentage, usually 80-90% of clean trade, of the value of the vehicle. The bad thing is when you’re a subprime lender you don’t really have options. The dealer is going to find out which vehicles work with the lender programs they have for you and that’s what you get. Right now you don’t really have the luxury of choosing.

 

So let's say Credit Acceptance refers me to a few local dealers to visit. I go to these local dealers and I won't be able to choose which car I'd like? Rather they would tell me these specific vehicles are the ones we can get you approved for?

 

Now depending on the franchise store they might be able to throw you in a new vehicle. The reason being is when I worked at a Toyota dealership in Florida we were able to throw high 400s in new Toyotas through our captive because our portfolio was always in the positive - it’s referred to as dealer consideration. We sent 75% of our business to Toyota Financial that they allowed quite a few baddies, although they didn’t qualify, because we sent so many good buyers there. The reach a franchise store has sometimes is just ridiculous. 

 

For now I'm focusing on a used car. However, if I were to change my mind and look for new, how would I know which of my local franchise stores could have such a leniency for approving low scores? Using Toyota as an example, would I start off by calling local Toyota franchise dealerships and checking which bank is the financing through, hopefully Toyota Financial?

 

Thanks!


 

 

 


The dealership has to have a vehicle that fits CAC's criteria for a loan. As an example, I went with a friend who got financed with CAC. The dealer, which was a Honda/Ford dealer with 3 lots, only had 1 vehicle that qualified. And, he didn't know what the vehicle was until after he had already basically went through the approval process because the dealership was going through their stock at the same time.

 

As for Toyota financial, any brand financing (Toyota, Lexus, Honda, Mercedes) can technically approve you. They have tiers for everyone. But, like what was stated above, the dealership is basically calling in a favor. The question is, do they want to call in that favor. Really, all it takes is a phone call to the finance company. Saw it plenty of times while working at Chase auto. Unfortunately, someone in finance usually has to be friendly with someone at the bank.

 

It also goes both ways though. When I was shopping for a car, I called an old friend at Chase and she sent me to a dealer and told them to give me the best price which ended up being below cost. The whole process from app to approval was 30 minutes and I never left the house. Simply got dropped off at the dealer, paperwork for 15 mins and drove off.








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Message 6 of 22
New Contributor

Re: Rebuilder looking for a car loan...advice?

Credit Acceptance technically is a guaranteed credit approval lender. It’s actually a pretty unique system from a dealer’s perspective. If you apply online through CAC’s (Credit Acceptance) website they’ll send your application to the three dealerships closest to your residence as a lead. Those dealers will reach out to you, have you come in and the process begins. CAC doesn’t focus so much on credit because they’re second chance financing, what they do focus on is job time and income. CAC is the largest subprime lender available so you can expect most dealers to be signed on with them.

 

2.5 years on the CO is definitely old enough. Don’t worry about it anymore.

 

With CAC, you can be approved for literally any car the dealer has available so long has it doesn’t not have frame or structural damage. The amount of money you may need down to be approved is different. You can, in theory, point out a Dodge Charger and they’ll run it through CAC. You’ll be approved, but you may need $6,000 down. What CAC’s system does is it populates the entire dealer’s inventory, the dealer then puts in the amount of down payment you have available, and CAC spits out what vehicles work (that are profitable) based on the down payment provided.

 

Franchise stores all have captives - Toyota Financial, Chrysler Capital, American Honda a Financial, etc. They also have an arsenal of other lenders, but their captives are going to be the best bet because they’re full spectrum. Dealerships that do a lot of volume are going to have that kind of reach. Unfortunately the only way to know is to submit an app and let their desk guys work it.

 

at the end of the day, CAC is probably going to be your best bet in starting your auto rebuilding journey.

Starting Score: (5/01/2017) -- EXP: 495; TU: 445; EQ: 460
Current Score (05/28/2019): EXP: 672; TU: 692; EQ: 685

Target Red - $500
Discover It Cash Back - $1000
Capital One Quicksilver - $600
US Bank Cash+ Visa Signature - $1000
Message 7 of 22
Valued Member

Re: Rebuilder looking for a car loan...advice?

Please don't buy new since you will have a high interest rate with your score.  So borrowing that much money is such a waste of money. when you look at all of the interest rate you are paying and buying new, unless you have a very large down payment.  You can't have everything you want when rebuilding your credit.   My car is three years old andwas listed at a firm $14,400, I think.  I've already forgotten.  LOL  I was in the low 520s last year.   I am now in the low 590s.  Go on Capital One's Auto Navigator and see if you pre-qualify.  I was stunned I did and at the interest rates offered depending on the cars I clicked on and down payment.  You can build your loan on there and get an idea as to what your payment will be.  If you pre-qualify, you go on their site and check out all of the dealers connected to the Auto Navigator program.  I also recommend when buying used to buy a car that retains its value for less repair and maintenance problems and strong resell value.  Toyotas are known for that, as are Hondas.  Even the smaller cars, the Honda Civics and Toyota Corollas are looking great.  And the RAV 4s are a great little SUV.  My cousin bought a two-year old one, a Limited.  So she was up around 20, 000.  But you have to remember to add on tax and title  and usually a dealer's fee.  So it's never just the listed price, sadly.

 

So two weeks ago, I bought through Cap One a 2016 black Camry SE with 40,000 plus miles on it in pristine condition, one previous owner, not rental car, no accidents.  The APR offered to me by Cap One was 6.29 for 60 months or 6.99 for 72 months.  For my credit history and baddies, I was delighted, thinking I would have to pay in the mid to high teens as far as interest to buy a car.  And my payments are only 237 a month.  I will pay it off sooner, hopefully, in four years, though.  Cap One has been very forgiving to me, even with my past with them with charge-offs.  I'm still paying on one. And I am making saving a priority also.

 

I would have loved to have bought a 30,000 car or even a low 20s used, but I felt I needed to be smart about this as I am in the rebuilding stage.  And the car drives like new and looks new.  I loved the interior.  My new, to me, car:

http://2-photos7.motorcar.com/used-2016-toyota-camry-4drsedani4automaticse-13231-16248756-1-1024.jpg

 

It won't hurt to see if you pre-qualify, as it's only a soft pull.  And the interest rates I pre-qualified for stayed true once I took my pre-qual info and number assigned to me to the dealer and they ran it through Cap 1 Auto Finance.  I didn't have to show proof of income or anything.  It was painless.  And Toyota dealerships are on their Auto Navigator site.  Although, my used one happened to be at a Mazda dealership as a trade-in for an SUV.  It gave me piece of mind and a sense of power knowing what I was approved for before I went to the dealership.

 

Good luck in your credit rebuilding efforts and car-buying experience.  

Message 8 of 22
Established Member

Re: Rebuilder looking for a car loan...advice?


@Brian_Earl_Spilner wrote:

The dealership has to have a vehicle that fits CAC's criteria for a loan. As an example, I went with a friend who got financed with CAC. The dealer, which was a Honda/Ford dealer with 3 lots, only had 1 vehicle that qualified. And, he didn't know what the vehicle was until after he had already basically went through the approval process because the dealership was going through their stock at the same time.

 

As for Toyota financial, any brand financing (Toyota, Lexus, Honda, Mercedes) can technically approve you. They have tiers for everyone. But, like what was stated above, the dealership is basically calling in a favor. The question is really, do they want to call in that favor. Really, all it takes is a phone call to the finance company. Saw it plenty of times while working at Chase auto.


Did your friend end up getting the car they offered him or did he continue looking elsewhere? What APR% and term was he given?

 


@jordandhale95 wrote:

Credit Acceptance technically is a guaranteed credit approval lender. It’s actually a pretty unique system from a dealer’s perspective. If you apply online through CAC’s (Credit Acceptance) website they’ll send your application to the three dealerships closest to your residence as a lead. Those dealers will reach out to you, have you come in and the process begins. CAC doesn’t focus so much on credit because they’re second chance financing, what they do focus on is job time and income. CAC is the largest subprime lender available so you can expect most dealers to be signed on with them.

 

2.5 years on the CO is definitely old enough. Don’t worry about it anymore.

 

With CAC, you can be approved for literally any car the dealer has available so long has it doesn’t not have frame or structural damage. The amount of money you may need down to be approved is different. You can, in theory, point out a Dodge Charger and they’ll run it through CAC. You’ll be approved, but you may need $6,000 down. What CAC’s system does is it populates the entire dealer’s inventory, the dealer then puts in the amount of down payment you have available, and CAC spits out what vehicles work (that are profitable) based on the down payment provided.

 

Franchise stores all have captives - Toyota Financial, Chrysler Capital, American Honda a Financial, etc. They also have an arsenal of other lenders, but their captives are going to be the best bet because they’re full spectrum. Dealerships that do a lot of volume are going to have that kind of reach. Unfortunately the only way to know is to submit an app and let their desk guys work it.

 

at the end of the day, CAC is probably going to be your best bet in starting your auto rebuilding journey.


I actually just did a quick search "local dealer that approves everyone" and one of the first ones that came up was a local Toyota Dealership. The area this dealership is located in my town is basically a hotbed for cars, there are also many competing dealerships in this area. The website for the Toyota Dealership is a Bad Credit loan page and it says they can find lenders that can approve you even if you've had repos, bankruptcy, judgments, small claims, garnishments, foreclosures, short sales. The requirements to get started says 1) proof income (paystub/bank deposit) 2) min income $800/mo 3) proof home residence. 

 

The Toyota dealership page also says this "Because we have an extremely high volume of good and bad car loans, we can offer special financing rates/terms that other local bad credit dealerships can't." Sounds exactly what you said in your earlier post.

 

Should I start out with CAC or directly with the Toyota Dealership I found (who may have CAC as one of the lenders after all)?

Message 9 of 22
Super Contributor

Re: Rebuilder looking for a car loan...advice?

Well, what had happened was the transmission in his car was starting to slip so he wanted a newer car. Went to the dealer with down payment and a trade-in. After running his credit, the manager came out and told him they weren't able to finance him. He came out and we were gonna leave when he pointed out the manager and I knew him so I went in and asked him to do me a favor. That's when he mentioned CAC. We went back in and the application was sent to CAC with several cars. They kept rejecting the cars for one reason or another. Finally, they got an ok on a Ford Ranger and he filled out the paperwork. I don't remember what his APR was, but can find out. I believe it was in the 16s. He never saw or test drove the truck. When we came out they had a base model ranger with no options. He was crushed until the manager realized it was the wrong truck. 20 mins later they pulled up a fully loaded edge and he was stoked, lol. His scores were around yours and he got a call a few days later that they needed an additional $1500 down. He paid half and went back 2 weeks later to pay the other half. I believe his contract wasn't a standard length either. 34 or 36 months. I will say, CAC was willing to work with him when he ran into financial distress and started missing payments. I think he fell 2 or 3 payments behind for a while. They never talked about repo and set up a plan for him to catch up. He did and paid off the truck. This was back in, I want to say 2005 or 6. Back then you couldn't apply online. It had to be offered by the dealer to even be considered by them.








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Message 10 of 22