@NeedinHelp42 wrote:
I am currently in the process of rebuilding credit. My wife and I each have a car loan for the vehicles we drive, taken out prior to our getting married-one sedan and one SUV-we're upside down on both. Starting this fall we have two kids going back to school and our 4 month old will start day care. As of September, we'll both be working full time. We are lucky enough to have a grandma to act as nanny/shuttle in the afternoons, except grandma doesn't have a car large enough for 3 car seats. My wife and I both need our cars to commute to and from work, and we have pretty active kids, so everyone needs the flexibility to pick them up from places as schedules dictate.
By the time we go car shopping, I'll have credit scores in the low-mid 600s, and minimal debt save for student loans-think $800 in payments a month, with $400 of that being my current auto loan. I make around $85k a year and I'm wondering if anyone has experience qualifying for a second auto loan in a similar case. Loan can't go in wife's name as her debt load is higher and salary is lower-credit is similar. Goal would be to purchase a newer SUV or minivan.
What are my chances of being able to make this happen?
Hello,
I have been through this situation several times, and one a little more complex then this when trying to get several Auto Loans.
I have two under my name now, and I am a single man, and only make 55k a year. I am actually going for a third and there are ways to work around situations like yours.
First I would say with your salary, that is great, but I cannot give you solid advice without knowing exactly your debts, and negative info giving your low scores. (I know it gets personal). When going for a second loan they want to know why. I strictly wouldn't mention saying that grandma would be using it. Unless you own a business, and get a loan under your business this is in THEIR eyes is considered a 'straw' purchase, (when you buy for someone other then yourself) and many lenders frown, and stop the deal quick! Even though you are going to buy it, and pay for it with your money. (How do they know you aren't lying). I am just letting you know how they think.
So with that said don't mention that anyone other then yourself will be using the car.
When buying a second car they look for low DTI because you have a large installment already. So they want to make sure you can pay for it.
I suggest paying off anything that is calculated into your DTI and get your DTI as low as possible.
The big thing with a second loan is credit scores, and reports. This is the most important because you are putting yourself farther into debt with another car, and that can scare them off. Getting a second car loan with high 680's FICO's is difficult even with a 13% interest rate. With low scores like yours I am assuming there are several baddies on your report. If any of those have to deal with a late car payment, you won't get a second car loan period.
I had a Charge Off on my report at one point, and I still got the second car loan, but this was 5 years old at the time, but this was the only thing I have ever had and now it is gone. You can still get a second car loan with a few dings, but with several dings, you can hang up the deal.
IME, you should get your scores up at least mid 600's lower your DTI, clean your report(if anything is bad) and save for a huge down payment, I would say at least 20%. (I put 10,000 cash in hand once and had anything on the lot available to me for a second car loan even with a 660 FICO. So money talks and BS walks!
IMHO, with an 85k salary, (not sure how much income goes out on expenses), but I would save and pay cash for the car, you won't get screwed on interest, and won't have to worry about not getting financed.
If you say what is true about using the second car as a commuter car, I am sure you could find something decent for grandma to drive the kiddies around that you could pay cash for. I am not saying buy a 3k hunk of junk, but there are many great cards, maybe a year or two old for less then 15k. If this is for shuttle, you don't NEED a brand new car. I would save for a big down payment, or pay cash, just my opinion. Like I said, I am a single make with only a 55k income, and I am already set to finance a 3rd car (BMW 128i convertible, just for fun, but only after I buy my house, and I am hoping that is soon!), so its very possible, you just need something on your side like high FICO's, and a nice piece of green in your wallet!
Hope this helps!
