What To Expect?

[Anonymous]

Hello, everyone! I've been a lurker here for the past few months reading threads here and there. I'm trying to make my first car purchase and would like some input to know what to expect on getting a loan. I would like a 2008 Saab 9-3. I've found the range appears to be $17,000 - $20,000+ with less than 40,000 miles. If at all possible, I'd like to keep it below $20,000 after TTL and dealer fees. I've got $2,000 - $2,500 to put down.

Here's some data which I hope will paint an accurate picture of my financial situation and hopefully you can tell me I'm dreaming or I might have a shot at getting a loan.

First, as of today, my TU score is 678. This should go up soon (fingers crossed) as I've recently paid off quite a bit of credit card debt.

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My monthly gross income: $2,730 (If I averaged out the bonuses we have received to date from Jan 1st it averages out to $250 a month. But I don't know if I can use this since it's ever changing and not guaranteed money.)

My credit card utilization: 18.4% (was 73% - this is what my TU credit score reflects as of today)

I rent - Payment: $600/mo

I have student loans of: ~$14,000 - Payment: $208/mo

Length of Employment: 1yr 7mo (first job, right out of college)

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Are there any other factors take need to be taken into account?

I'm not a member of any credit union. I bank with JP Morgan Chase. At minimum I'd need to qualify to a $17,000 loan. I'd probably do it for 72 months. Think I got a shot? What variables would have to change if not? Also, any idea as to what interest rate I could expect with a $17,000 over 72 months should I get it? I'm keeping my fingers crossed for a credit score of 720+ by the time I do this. ::fingers crossed::

Thanks for any and all input. Constructive criticism is welcome!

[Anonymous]

For what it's worth, I plan on going to my bank today to ask some questions and see if I can get any kind of info out of them, and I'll report back my findings.

[thrasher865]

What are your credit card minimum payments in total?  Utilization doesnt affect chances of approval as much as score and actual monthly payment.  18% util on $30000 is way different than 18% on $5000 in respect to getting a car loan.

Do report what you hear from your bank.  I'm hoping to go to a credit union in about a month when my credit reports update to see if I can pry info out of them by bringing in my report and score, without actually applying for financing at that time.  I hope that's something they are willing and able to do.  My bank doesn't do auto loans, so I'll have to join a credit union, because I don't think PenFed will approve me, but its worth a shot.

[Anonymous]

Hello, and thanks a bunch for the reply. I've noticed on my credit reports that they do list a min payment. I have two major credit cards. One I put maybe 40 a month and pay it off before the end of it's billing period. The other, I have a balance of 950 @ 9.24%. When my balance was 2,500 on that card with the same interest rate, my min payment was like $45. I'm guessing it'll be 15-20 dollars now. So add that to my loan payments of $208, and I'm at $228 a month. That's 8.4% of my monthly gross. Add the rent, I'm at 30.3% of my monthy gross.

[Anonymous]

I spent an hour at the branch speaking with one of the associates. I'll try to give as much info as I remember (P.S. I have a terrible memory, but the figures should be correct).

• She told me that they look at your credit score first, then my DTI, then the value of the vehicle and may or may not counter offer what I asked for.
• She was telling me that for an 08, I could get an interest rate as low as 4.19% to as high as 9.45% depending on what tier I was on and how many months I chose. I asked for a copy of that chart, but she declined.
• She said that my bonuses could be used to calculate, I'd just have to show a couple pay stubs or a W2.
• She told me that a lot of the times, for first time auto financiers, that the dealer may give you a better rate (I found this hard to believe)
• She said that my score in the high 600s / low 700s was good enough (again, don't know about that) and with my income, I should be approved.
• She had to call and find out that as far as insurance goes, I'd have to carry full coverage - I knew this. My question was if there was a limit on the deductible for Col/Comp - I don't know if he said no or yes, but $1000 is all progressive does, and that's fine they said. (cool, I can cover that.)
• She said they pull Equifax or TransUnion. (In my previous experiences, it's only been EQ)

Uhm....I guess everything she said I was expecting. There was nothing earth shattering. It was great being reassured, then again, she doesn't give out the loan, an underwriter does. I was satisfied with her answers and her honesty, seemed to level with me, and was genuine. I'll definitely be going back to her in about a month when I'm ready to go through with it. (And hopefully by that time, my score will have spiked).

[Anonymous]

Just to bump my own thread. I had to create a new account or something because I couldn't buy scorewatch using "hungryforcredit" - for whatever reason. At anyrate, the customer service at myFICO got me back on my feet.

Here's an update as to where I stand:

I checked my Credit Karma FAKO score this morning - 750! Apparently TransUnion updated my Citi card balance! Excellent!

After I called myFICO cs I bought scorewatch, and my EQ FICO is 716. According to SW, EQ is still reporting a $2,500 (it's $950 now) balance on my Citi card. So once EQ updates that, I should be sitting pretty. I'll definately be above 720.

[mygoal750]

Hungry:  I just bought a vehichle this week-end, and I think what the bank lender told you reflects what happened to me.  I checked my scores (TU and Eq) about 2 weeks ago, and TU was 697 and Eq was 694.  I had no problem being approved by a credit union through the dealer.  I tried to apply directly at the credit union, via phone on Friday a.m.but they would only take apps in person at a branch. they also said they would not be able to give me an answer until Monday or Tuesday. I found a car on a dealer's website, went to the dealership (and the price posted on the windshield was $750 less than the website price!) and bought it!  I got 48 months @ 8.44%, with the dealer's various discounts, etc.  
The finance guy told me that going into a branch, the lowest rate i would have gotten would have been 8.94%.  I got a 2002 Toyota.  For the 8.44% rate and to take advantage of all their discounts, I had to get full disablity & life coverage.  But, I can drop the life after 18 months - the lender had that requirement. I was able to negotiate the price down a little and overall, it wasn't as bad as I expected.  Took about 3 hours, but they were pretty busy that day.  But, I knew what I wanted and what I would spend, and was upfront with them.  I got good service, but also let them know that I was ready to walk at any time. 

[Anonymous]

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@mygoal750 wrote:

@Hungry:  I just bought a vehichle this week-end, and I think what the bank lender told you reflects what happened to me.  I checked my scores (TU and Eq) about 2 weeks ago, and TU was 697 and Eq was 694.  I had no problem being approved by a credit union through the dealer.  I tried to apply directly at the credit union, via phone on Friday a.m.but they would only take apps in person at a branch. they also said they would not be able to give me an answer until Monday or Tuesday. I found a car on a dealer's website, went to the dealership (and the price posted on the windshield was $750 less than the website price!) and bought it!  I got 48 months @ 8.44%, with the dealer's various discounts, etc.  
The finance guy told me that going into a branch, the lowest rate i would have gotten would have been 8.94%.  I got a 2002 Toyota.  For the 8.44% rate and to take advantage of all their discounts, I had to get full disablity & life coverage.  But, I can drop the life after 18 months - the lender had that requirement. I was able to negotiate the price down a little and overall, it wasn't as bad as I expected.  Took about 3 hours, but they were pretty busy that day.  But, I knew what I wanted and what I would spend, and was upfront with them.  I got good service, but also let them know that I was ready to walk at any time. 

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Congrats on getting the deal you wanted! This is hungryforcredit, by the way, I had to change accounts.

I have a couple questions if you don't mind me prying a little bit. You credit scores aren't bad at all on the surface. But 8.44% seems kind of high to me for a 48 month loan on a 2002 vehicle (which makes me think the loan amount couldn't have been too high). Could you maybe enlighten me on a few other details? I'm trying to guage my situation. I'm hoping to stay below 8% on financing.

Also, requiring disability and life insurance? I can see where they are coming from, but I hadn't ever thought/heard of that before. Is that an industry standard? I don't have either. I'm 24, single, with a clean bill of health with no dependants, so life insurance isn't something I'm terribly worried about at this point. As far as disability goes, I'd need to almost be paralyzed to perform my job. That or get allergic to a computer.

[mygoal750]

Hungry:  I wanted the disability coverage, since I am a sole provider and have 2 dependents.  I don't have any other disability coverage so if I get hurt, I'd be in trouble.  I'm in my early 50s, with a clean bill of health, but don't really trust the other drivers in my part of the country!   The life coverage I really didn't need, but it translated into a .50% discount in the rate.  I did some quick math and determined the difference in rate would cover the cost of the life coverage.  And, I do plan on dropping that after 18 months, which will move up my final payment.

I checked my credit unions website for their current rates, and called them yesterday to verify what the finance manager told me.  I just asked the credit union for rates...did not give them any personal info (credit score, etc.).  Not that I didn't trust the finance guy, but he works for a car dealer, so I had some reservations about everything he said!  He was right, they said a 2002 would be at 8.75% to 13.25%, depending on my credit.  The finance manager told me my scores were TU 702, Equifax 712 and Experian 728.  So, he was able to get me the lowest rate based on my Experian score, apparently.  I did check other credit unions websites, too, and my rate was in the ballpark.  The finance guy told me they could also go with Fifth Third Bank, but their lowest rate for an '02 was 9.00%.  The credit union he went with is local, and my credit union, so I was happy with that.  I did give him the names of 2 other local credit unions but he said neither of them do financing on '02s. Actually, he said the only lenders he could find for an '02 was my CU & Fifth Third Bank.  Fifth Third is a big national banking association based out of Ohio, I think.  I have heard of them before.

My loan was right at $10,000, and I can't prepay for 18 months, but that works out for me.  

In a previous life, I worked for a local bank, and they do make quite a bit of $$ on the life and disability insurance, but it's not required.  So, you probably won't need it.  That, along with the gap coverage, added about $25 to the monthly payment.  But, I do know people that didn't have any coverage and should have.  I got gap insurance - not too smart on a used car, I know, but I wanted to cover all my bases.  I needed a new car (after my old one broke down 2x last week) and won't be completely out of debt for another 5 years.  I did quite a bit of research on Edmunds and Kelly Blue Book as well as looking at AutoTrader for prices on the same vehicle.  I think I got a reasonable deal on the car.  I've been looking for about 6 months (doing research, calling banks and credit unions, reviewing ads, etc.).   This is not a spur of the moment decision, so please take the time to be sure you're comfortable with whatever deal you make.  - this is voice of experience!!  I've wasted a lot of $$ over the years on spontaneous decisions, and have become wiser (i hope) over the years! Good Luck and take care!

[Anonymous]

So the disability and life insurance coverage was offered through your lender? I was more afraid that I'd have to go through my employer (and our open sign ups are over, so I'd have to wait a whole 'nother year).

With a EX FICO of 728 our scores are similar. I'll be asking for a larger amount and a longer repayment period. I'm not a member of any credit unions (nor can I seem to join one locally), so I'm a bit wary that I may get above 8%, unless that was because the particular model was an '02.

My vehicle is nearly shot. I've had the thing since 2001. It's a '97 Ford Escort. The engine was replaced in December for what I believe was a good deal, $1,600. I just was in no position to afford a newer vehicle. But now, I think the transmission is going out and I've been fighting a leaking/squirting radiator for two weeks now. It's just time.

My father is also singing the song of experience to me, and I have been thinking this out for quite some time, getting all my ducks in a row. I've positioned myself financially, and I believe that should I be approved for the terms I want, I'll be fiscally sound.

Appreciate the feedback, sir.