I thought I had turned a corner with my credit enough to get a $40k auto loan but it was a day of denials. I had paid all 3 collections in full and reduced my debt down to $6k (originally $22k) over the past few months. The last of my major CC payoffs ($9k) payment just reported to all the bureaus yesterday. I re-ran my scores and saw 10-15 point bump in my FICO 8. My FICO 9 (and FICO 9 Auto) also had a major jump.
I applied with PenFed because they use FICO 9 and was hoping the exclusion of my paid collections from the score would help. I was denied with the reason "DELINQUENT PAST/PRESENT OBLIGATIONS." My FICO 9 score was 705. Tried the reconsideration route and was still declined.
I then applied at a local credit union San Diego County Credit Union (SDCCU), but also was declined with exactly the same score FICO 9 Auto 705 (they pulled Experian) and same reason.
Scores from myFICO:
FICO 8: EQ 645 TU 646 EX 636
FICO 8 AUTO: EQ 633 TU 643 EX 638
FICO 9: EQ 705 TU 688 EX 705
FICO 9 AUTO: EQ 705 TU 684 EX 705
I don't really have a shot with anyone that uses FICO 8, which is most, unless I'm willing to accept an outrageous interest rate. No thanks.
My last payment deliquency was 3 years ago, my income is over $200k, DTI is <8%, and I have a very thick file of CC and auto loans, but my misfortune in 2015 still haunts despite all my efforts to reduce debt. I had A LOT of missed payments across multiple credit lines including auto, 3 CC charge-offs, etc. I am at fault and I don't blame the underwriters for not wanting to take the risk. I wrongfully thought 3 years was sufficient time to get larger auto loan amounts.
In the end, I will just have to wait and continue to save for a larger downpayment. My excess funds went to paying off CC debt. Just proves it is more than income and score, especially for anything manually reviewed. Going to take a few years for the baddies to drop which will put me in a much better place credit wise.
The ironic part is I just got an E-mail from Discover tonight thanking me for my responsible credit management. They auto increased my limit by $1300 to $10k without me requesting it. Go figure!
I think some change is afoot in the auto finance market. I believe credit in that space is tightening due to rising defaults. Unfortunately, I think you are getting caught up in it. The $40k is probably a little aggressive, even with your income. You did not mention a downpayment. With compromised credit, I'd definitely want to see at least 20% down, preferably 30% down. I think you should be able to be approved at the $20-25k mark. You might also need to accept a higher interest rate and try to refinance at a later date if you need the car immediately.
I would agree that there must be something that has changed. I've financed several cars with PenFed...2 of them DURING my BK13 and since since discharge and my BK13 is still alive and well on my reports and will be for some time to come.