Tips for auto loan approval!!!! PLEASE ANSWER.

Anonymous · ‎01-10-2015

I am looking to get approved for an auto loan in the next few months and as a new comer to the credit world all together I am looking for all of the information and tips I can get before I get shopping. I want to finance around 30k but will settle for 25k.

Heres the situation:

My Capital One Tracker & CREDITKARMA is showing a credit score of 639. It has my Kohls card with a $300/limit. $0 used. I have also gotten approved for a Capital One $300/limit with $0 used that is not reporting yet because it hasnt been 30+ days. My credit utilization is 0%. I havent spent a dime of either and those are the ONLY items on my credit. Should I make a small purchase on each??

I work full time making around $3000 before taxes paid biweekly and I also co-own a janitorial franchisee with my mom. After all royalties and employess are paid we split around $3500 per month usually a few buck short of $1500. (Should I include the amount before royalties or the $1500??)

NOT INCLUDING THE CAP ONE CC & KOHLS, I only pay my cell phone $50/month. Netflix $9 and I live with a roommate and I pay $275 for rent and utilities total. Comes to around $384 month. DTI with those items is 7%. Should that number be higher or lower? I see everyone talk about it in loan approvals.

I will not have a co-signer and this will be my first auto loan. I recently got an account at a credit union since it seems that those are good back ups with better rates, how long do I need to be a member before applying. Also, does Capital One Blank Check approve first time buyers. They seems like a good company and I would like to try them as well. Also if it helps I'll be putting aroung $1500 down for sure can def. do more once I get my yearly allowance from Uncle Sam. (INCOME TAX)

Please help!

Dj4Money · ‎01-10-2015

@ericabreeding007 wrote:
I am looking to get approved for an auto loan in the next few months and as a new comer to the credit world all together I am looking for all of the information and tips I can get before I get shopping. I want to finance around 30k but will settle for 25k.

Heres the situation:
My Capital One Tracker & CREDITKARMA is showing a credit score of 639. It has my Kohls card with a $300/limit. $0 used. I have also gotten approved for a Capital One $300/limit with $0 used that is not reporting yet because it hasnt been 30+ days. My credit utilization is 0%. I havent spent a dime of either and those are the ONLY items on my credit. Should I make a small purchase on each??

I work full time making around $3000 before taxes paid biweekly and I also co-own a janitorial franchisee with my mom. After all royalties and employess are paid we split around $3500 per month usually a few buck short of $1500. (Should I include the amount before royalties or the $1500??)

NOT INCLUDING THE CAP ONE CC & KOHLS, I only pay my cell phone $50/month. Netflix $9 and I live with a roommate and I pay $275 for rent and utilities total. Comes to around $384 month. DTI with those items is 7%. Should that number be higher or lower? I see everyone talk about it in loan approvals.

I will not have a co-signer and this will be my first auto loan. I recently got an account at a credit union since it seems that those are good back ups with better rates, how long do I need to be a member before applying. Also, does Capital One Blank Check approve first time buyers. They seems like a good company and I would like to try them as well. Also if it helps I'll be putting aroung $1500 down for sure can def. do more once I get my yearly allowance from Uncle Sam. (INCOME TAX)

Please help!

Ford, Hughes Credit Union, GM and others all have First Time Buyer Programs.

With $3,000 a month income, you should be able to get a loan up to $25K, maybe a bit beyond that. $1,500 down will knock about $15-$20 off your payment, nothing dramatic.

I would put that $1,500 in a money market fund to start your Emergency Fund, like I said that little amount down on a car $25K won't make much difference.

To prevent being 4 Squared which is what has been happening to me, lol.

Get your lending ahead of time. Capital One doesn't really have a first time buyer program but lenient underwriting. Capital One online score is the actual TU FICO score, so at 639 you'll easily get a Capital One Blank Check. I keep getting pre-approvals and approved by them for an auto loan with a slightly lower score. Go for it! You won't get your best rates from them however, you will a better rate from a credit union.

2. Use Truecar or another service to get your price and make sure they have the car you want or can get it easily. Otherwise print out the certificate anyway and use it as tool against the salesperson and the closer.

3. Prices above all else, don't talk about payment and don't talk about down until the price is agreed too, in writing. The other parts will sort themselves out as you work them out one by one.

4. Shop Interest rates! Like I said, get the Cap One Blank Check and put it in your pocket, it's good for 30 days. Take whatever the interest rate is and compare that to whatever they (dealer) are offering you. Some captive lenders like Ford, Toyota, etc should, can and usually do beat whatever Capital One can come up with.

5. Like I said, PRICE! Get the price with TAX, TITLE and LICENSE. THEN apply rebates, incentives and other discounts. Also if you have a trade, consider taking it to Car Max first for appraisal, put that in your pocket. If the Car Max deal is better, take it and take one square away from the dealer.

Anonymous · ‎01-11-2015

Thanks so much for the info! How do you get the pre approvals? I've never gotten one.

Anonymous · ‎01-11-2015

I have similar scores to you and I got approved for Capital One and NFCU. Not to mention I have a few baddies(a judgement from 2009, and two defaulted student loans). I was approved for 25k with NFCU and 26k with CapOne.

I ended up going with NFCU due to them offering me the best rate out of anyone else... 2.79%.

I've heard DCU get brought up as well. If I were you I'd look into DCU or if at all possible, NFCU. CapOne is okay, but the lowest they went for me was 6.95%.

Mandatory Edit: If this is your first time buying a car(as it was for me as well), make sure you do some research before you go into the dealerships regarding extended warranties and GAP coverage. My CU offered GAP coverage for a flat $199 on top of the loan so I took that(Honda dealer wanted about $800 or so for the same thing). As for the extended warranty, the dealer priced it for me at $2400. I came home and found the same thing through a dealer online for ~$800. Huge savings to be had on those, and I'm willing to bet you can get similar deals for other manufacturers warranties as well.

StartingOver10 · ‎01-11-2015

Here is a good short video on how to buy a vehicle which is especially important if you have never purchased one before: https://www.youtube.com/watch?v=bLre5s2Yf9o

Always get pre-approved with your bank or credit union before you ever shop for a vehicle. Know your figures before you buy.

Sometimes the dealer can beat the CU price, but what happens more often is the dealership slips extra costs onto the contract. So read your contrat carefully.

If the dealer wants you to sign electronically, make them print out the contract with all the blanks filled in so you see the figures. That way there are no surprises.

Did you know that GAP insurance can be purchased through your auto insurance company for a whole lot less than what the dealer charges (as mentioned above). No matter what the dealership says, GAP is not mandatory. In cases where you are financing all or nearly all of the purchase GAP is advisable, but not required. Never buy it at the dealer because it is much more costly to you for a lot of reasons + they roll it into the loan and you are paying interest on it too!

Always read the contract before you sign. You would be amazed at how often the figures change from what was told to you - if the contract has different figures, get up and walk away without signing. Go to another dealership that is reputable.

Anonymous · ‎01-11-2015

Yes I'll definitely be getting the GAP insurance. I've saw it come in handy for my mom and wouldn't go without it. The $199 offered is a steal! I will be trying at my CU as well but I just opened and wonder if I have to be a member for a certain amount of time. Also I don't think I mentioned that I've only had my CC for a month or so. So this matter??

Also, as far as knowing the price how do you negotiate the price on their inventory if they already have set prices? Any exams or help. I know very little about credit and would hate to be taken advantage of by the dealership.

Anonymous · ‎01-11-2015

Also if you are buying a NEW car don't worry about extended warranty now. You can always get that later, when your mfg warranty is close to expiring. Most credit unions offer maintenance plans, or you can research auto warranties on the internet. All are cheaper than mfg warranty, and NEVER finance a warranty. It just increases your payment and the interest you pay over the life of the loan.

Anonymous · ‎01-11-2015

I apoligize in advance, but this will be a very long post. But I think you will find the information very helpful and worth your time. In the last 25 years I've bought 9 new cars, so I've had a lot of experience.

First, if you're at the dealer and feel like you're getting screwed, you probably are. If you don't get the feeling that you're getting screwed, you still probably are. Even myself, that has done this many times, only does it once every few years. The guy sitting across from you does this every day, all day long. Your adversary in this is someone that does it for a living.

Use the Internet to your advantage. Trucar has already been mentioned, and it's an important step. But websites such as KBB.COM (Kelly Blue Book) and Edmunds are other good places to do research. They also have a service that sends an email to the Internet managers at dealers in your area and can get a dialog started negotiating price via email. One my last two purchases I actually got better numbers via email than Trucar. But when I've been checking lately Trucar seems to be coming up with some great pricing. Either way, you can take that price to any dealer you want.

Having a solid price in your pocket is the only way to start. This is the most important piece of information you will find in the long response. If you read nothing else, read this. DO NOT NEGOTIATE. Know going in that you've got a good price and stick to it. The salesman will quote you full sticker or close. He'll take your offer to his 'manager' and come back with a few hundred less than his first offer. Just tell him, "No, this is what I'm will to pay." Eventually, after a few more trips to the 'manager' he'll say something like, "My manager has come down $2000 (or whatever), you've got to come up a little bit." Well, no you don't. And you can tell him exactly that, no you don't. Don't feel bad that you're taking money out of his pocket. They won't sell it to you at a loss so if you get the deal you want, they'll make money.

Here's one trick they'll pull though so watch out for it. If you're going to trade in your car, they'll take your keys to have someone get a value on it. Do not even talk to them until you get your keys back. They know you can't leave without your keys and they hold you hostage to try to wear them down. When you insist on getting your keys back first they know that you're on to their games.

The advice to pre-arrange your financing is a good one, but the dealer has always been able to beat my outside financing. But here's a gotcha. Often if you take the cheap financing you lose the rebate that's offered. Look closely at the 0% for 60 month or $2500 rebate. Notice the or in that statement. So before you go to the dealer, take your smartphone or tablet and load a loan calculator program on it. This will let you quickly start playing with all the difference numbers like 60, 72 or 84 months and different interest rates and down payments. It's also a good way to double check the paperwork you eventually sign.

Never talk payment with the saleman, always talk actual car price. How you're going to pay for it isn't his business. Wait until you get to the finance officer before you talk payment and interest rates. Let him know you've already got financing lined up and don't tell him the rates.

Trade-ins are tricky. You'll always get the most selling to a private party. Next best value is Carmax. Worst value is as a dealer trade-in. But there is one vital factor to keep in mind and that's taxes. This varies depending on where you live, but here in Illinois the sales tax is based on the new car price minus the trade-in. That means if you buy a car for $25 and trade one in that's worth $10K, you only pay sales tax on $15K. Considering the sales tax in the city of Chicago is 10.75%, you're looking at over $1000 more in sales tax if you sell your car to Carmax. If they only offer $1200 more than the dealer it's really not worth the hassle.

Make sure you negotiate the sale price on the car before you start to talk the trade-in. Tell the salesman you already have an offer from Carmax. Otherwise what happens is they will give you a great price on the new car but bury you on the trade. If you don't agree to the trade price the whole deal is off. You really didn't get that great price on the new car.

As already mentioned extended warranties are overpriced. But don't be afraid to make them an offer on it if you're really interested. I've had them eventually offer one third the price of what they first quote. But this is important, make sure the warranty is direct from the manufacturer. Do not accept 3rd party warranties from the dealer. If the 3rd party goes out of business your warranty goes with it.

One thing I forgot to mention, secondary stickers. Lots of dealers have a second sticker on their cars added 2 or 3K more with things like seat and paint protection, wheel locks, VIN etching. The list goes on and on. If they try to add this to your agreed upon price, just walk out.

When dealing with these guys via email, make sure the price included everything, dealer prep, doc fees, title and license fees. I wouldn't ask for taxes to be included because they are vary depending on where you live rather than where you're buying. As an example, even if you buy your car in the suburbs here, if you live in Chicago they will charge you the Chicago tax rate. I once had, what I thought was a great deal until I found out they didn't include the destination fee in the quote. It's a legit charge, but all my other offered quotes included it, this one didn't.

I told you this would be long. Let me leave you with this. I had a friend that sold new cars for a while. He told me that about 30% of people pay full sticker price. They don't even know you can negotiate. He said a good price was if you could get out the door for what the sticker said. That came out to about 12 or 13% off sticker. From that you can then subtract any rebates. I'm sure that people are more educated now with the Internet; But the last salesman I talked to admitted that some people still pay full list, even today.

I hope you find some help in this.

sam818 · ‎01-11-2015

I would have to disagree on your comment that the CapitalOne Credit TU tracker score and the MyFico TU Fico score are one and the same.

According to the Capital One tracker: they use the TU "New Account Model" and who knows what we see on My Fico.

When I compared my TU on BOTH sites, the CapOne site indicated my score was 30 points higher. They were dated within 2 days of one another.

Furthermore when I applied to Capital One for a credit increase I see they used Equifax.

None of this adds up.

Anonymous · ‎01-11-2015

Midas.... Thanks so much for the info. Seems like you know your stuff! I will be browsing trucar.com until I fall asleep. I had no idea you could negotiate.

Secondary sticker pricing. If there is one do I ask to negotiate for the vehicle as is??