I'm 22 and planning on hopefully applying for my very first auto loan in the very near future (this month). This would be my first auto loan and i'm not sure how all of this works exactly. I've been looking at banks and CU where I may possibly qualify. My income might be my biggest issue and also the fact that I took out a 5k personal loan about 3 months ago from Wells Fargo. The car im trying to purchase is 15k but my downpayment would be 4k. I have 7 credit cards with a $0 balance on all of them this month. The personal loan currently has a balance of $4,600 and I got it for 3 years. I dont pay anything for rent or anything else that might affect my utilization (other then the $170 for the PL). I don't plan on getting a Co-signer if I can't get it myself. I am really hoping that the 4k downpayment helps me. I was thinking of first applying to PenFed CU but im not sure and my second choice might be Wells Fargo. Thank you all in advance for your advice and suggestions! If you have questions, please ask and ill try to answer them as best as I can.
Gross Income: 17K
Time at job: 1 year and 6 months
Monthly Debt: $170
FICO 08 TU - 730
FICO 08 EQ - 728
FICO 08 EX - 726
I don't know or have Fico auto scores.
Oldest account: 3 years and 1 month
Newest account: 3 months
AAoA: 1 year 4 months
Hard Inquiries: 3-5 (depending on which report is pulled)
100% payment history
0 Deragatory marks and no BK's
According to the DTI ratio calculator on WF's website, im currently at a 12%? (that doesnt look right though)
First time poster but I'm always reading on other topics
Youre golden. Believe it or not, a 700+ score for cars is pretty much a guarantee youre going to get a good deal. Income is only a factor if youre trying to buy something thats worth more than your annual income, considering youre spending 15k with 4k down, youre gonna finance 11k. While that may seem like its too much considering your 17k annual income, think about it like this. Its 11k to be paid in the amount of time youre going to make 85k (and possibly more as your income increases over time). So by itself the loan in the long term is more like a 12 percent DTI addition, which would still be below the 25% danger zone most lenders balk at. (your lender wont use this logic, this is for your peace of mind only really). But youre going to be approved more likely than not.
For the first year or two though after youre gonna have a REALLY hard time getting approved for anything else, be mindful of that. Once this new loan is on your profile your DTI is gonna hit 25 or more, and then our conversation would have been a lot different
Your payment is going to purely depend on the term of the loan, which I reckon is going to be 48 or 60 months at about 4-5 percent and maybe less. 11k over 60 payments at 4 percent is going to be very low, and might even rival your personal loan. (im coming up with 203 for 60 at 4%). Tax title and delivery might increase this a little bit, like 5-10 dollars a month because the loan will actually probably be 12-12.5k to cover that part.
Id reckon 200 a month is easily doable for you, and your lender will see this too. The biggest thing you should worry about at this point are any addon costs like warranties and GAP, which might make your final loan higher. Be aware of these and prepared.
For perspective, when I did my refi earlier this year, my Auto score was 671 (lower than yours by a good margin) but they for whatever reason used my TU mortgage score of 666, and I still got a 5.1 interest rate, and I ended up with a 240 payment over a 36 month term. I could have gone out 60 months at like 120 if id wanted, but I wanted to pay the car off before it would be 10 years old. I had less than a year of good credit history at the time, and some derogs even. Youre gonna do well mate.
Prime scores? 4k Down? 15k car? The dealer/lender is gonna throw the keys at you. Trust me. Let us know when you have it.
Addendum - What kind of car is it? Once you own it, be mindful of its actual Clean Retail value for potential future refinancing or when you decide to trade it in, because LTV becomes a real issue down the road.
Thank you for the very detailed reply!
I'm waiting for my credit report to update before I put in my application. I really hope the LO's look at my auto loan application, the same way you did. Also those scores aren't my auto scores since I have never financed a car before. Wish me luck and I'll update the good or bad news
My oldest niece bought a 6 when she was around your age as her first almost new car. It has served her very well with 115k on the clock now. She makes her last payment in a few months and is keeping up with maintenance to get 200k or more out of it